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3133
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non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 163/06
In the matter between:
McCARTHY LIMITED
APPELLANT
and
STEPHEN MALCOLM GORE N.O.
RESPONDENT
In his capacity as the duly appointed liquidator of
Ramsauer Transport (Pty) Ltd (In Liquidation)
CORAM: HARMS ADP, BRAND, NUGENT, JAFTA JJA et
THERON AJA
DATE OF HEARING: 20 MARCH 2007
DATE OF DELIVERY: 28 MARCH 2007
Summary:
Insolvency – Insolvency Act 24 of 1936 − Disposition of property – Insolvent
selling property – No notice of sale given in terms of s 34(1) − Definition of ‘trader’ limited to
primary business activities and does not extend to incidental activities .
Neutral citation: This judgment may be referred to as McCarthy Ltd v Gore
N.O. [2007] SCA 32 RSA
_____________________________________________________________________________
THERON AJA:
[1] The respondent, in his capacity as liquidator of Ramsauer Transport
(Proprietary) Limited (in liquidation) (the company) instituted action against the
appellant in the High Court (Cape) in terms of s 34(1) of the Insolvency Act 24 of
1936 (‘the Act’), read with s 340 of the Companies Act 61 of 1973 for an order
declaring the transfer of 28 vehicles by the company to the appellant (‘McCarthy’),
void. The order was granted and McCarthy now appeals with the leave of the court
a quo.
[2] The background to this litigation is the following. The business of the
company was that of a transport haulier conveying goods on a long-haul basis. It
owned and operated a fleet of between sixty and eighty heavy vehicles and
generated an average income from the conveyance of goods of between R32m and
R35m annually during the period 1996 to 1999. The company did from time to time
renew its fleet of vehicles and this involved the purchasing and selling of vehicles.
The evidence was that there had been a recoupment on the sale of vehicles by the
company in the amounts of R3 108 211,50 and R86 903,42 for the 1996 and 1997
financial years, respectively.
[3] In 1996, the company entered into a factoring agreement with Cutfin
(Proprietary) Limited (‘Cutfin’) in terms of which its book debts were sold to Cutfin
on a monthly basis and advance payments by Cutfin to the company were
discounted. According to the evidence, the sale of vehicles and the factoring of
book debts were effected in order to improve the liquidity of the company to allow
it to continue with its transport business.
[4] On 17 December 1999, the company and McCarthy concluded an agreement
in terms of which the company sold to the appellant 28 vehicles for a purchase
consideration of R2 052 000,00. The trailers were transferred to the appellant prior
to the winding-up of the appellant on 29 December 1999. It is common cause that
the company did not benefit from the sale as the proceeds thereof were paid by the
company to an associated company. It is also common cause that the sale was not
advertised in terms of s 34(1) of the Act.
[5] The liquidator, in the court a quo, contended that inasmuch as the primary
business of the company was that of a transport contractor, the company was a
‘trader’ for the purpose of s 34(1) as it sold its vehicles from time to time on a
substantial basis and also sold its book debts as a regular and integral feature of its
business. It was alleged that the company had disposed of the vehicles and
transferred them otherwise than in the ordinary course of the company’s business.
By reason of the fact that the company had not published a notice concerning the
sale and transfer of the vehicles to the appellant as provided for in s 34(1) of the
Act, the transfer was voidable at the instance of the liquidator. McCarthy, on the
other hand contended that the company was not a trader as defined in s 2 of the Act
and that therefore the provisions of s 34(1) were not applicable to the transaction.
[6] Davis J in the court a quo held that the sale of the vehicles to the appellant
was the kind of transaction which the company ‘had performed regularly in the past,
namely, the sale of vehicles pursuant to and as part of its business’. The learned
judge found that ‘trader’ should not be interpreted restrictively and is not to be
limited to the company’s primary business but includes transactions concluded in
the ordinary course of a business ancillary to its primary (haulage) business. The
trial court held that the transfer of the vehicles to the appellant was void for want of
compliance with the provisions of s 34(1).1
[7] The sole issue in this appeal is whether the company was a ‘trader’ within the
meaning of s 34(1) as read with the definition of ‘trader’ in s 2 of the Act. Section
34(1) reads:
‘If a trader transfers in terms of a contract any business belonging to him, or the goodwill of such
business, or any goods or property forming part thereof (except in the ordinary course of that
business or for securing the payment of a debt), and such trader has not published a notice of such
intended transfer in the Gazette, and in two issues of an Afrikaans and two issues of an English
newspaper circulating in the district in which that business is carried on, within a period not less
than thirty days and not more than sixty days before the date of such transfer, the said transfer
shall be void as against his creditors for a period of six months after such transfer, and shall be
void against the trustee of his estate, if his estate is sequestrated at any time within the said
period.’
[8] The purpose of the legislature in enacting s 34(1) is clearly to protect
creditors by preventing traders who are in financial difficulty from disposing of
1 The judgment of Davis J in the court a quo is reported as Gore NO v McCarthy Ltd 2006 (3) SA 229 (C).
their business assets to third parties who are not liable for the debts of the business,
without due advertisement to all the creditors of the business.2 But the provisions of
s 34(1) can be invoked only if the company is a ‘trader’ as defined in s 2 of the Act.
Section 2 reads as follows:
‘“trader” means any person who carries on any trade, business, industry or undertaking in which
property is sold, or is bought, exchanged or manufactured for purpose of sale or exchange, or in
which building operations of whatever nature are performed, or an object whereof is public
entertainment, or who carries on the business of an hotel keeper or boarding-house keeper, or who
acts as a broker or agent of any person in the sale or purchase of any property or in the letting or
hiring of immovable property; and any person shall be deemed to be a trader for the purpose of
this Act (except for the purposes of subsection (10) of section twenty-one) unless it is proved that
he is not a trader as hereinbefore defined: Provided that if any person carries on the trade,
business, industry or undertaking of selling property which he produced (either personally or
through any servant) by means of farming operations, the provisions of this Act relating to traders
only shall not apply to him in connection with his said trade, business, industry or undertaking;’
[9] A ‘trader’ is therefore a person carrying on any trade, business, industry or
undertaking of the types specified in the balance of the definition after the words ‘in
which’. This emerges from the judgment of Mthiyane JA in Kevin and Lasia
Property Investment CC v Roos NO3 where it was held that each clause in s 2 of the
Act is separate and distinct from the other:
‘The definition commences with the words ‘“trader” means any person’. There follows a number
of clauses which commence with the word “who” and thereafter, the words “or who”, ie “who
2 Galaxie Melodies (Pty) Ltd v Dally 1975 (4) SA 736 (A); Gore NO v Saficon Industial (Pty) Ltd 1994 (4) SA 536
(W); Bank of Lisbon International v Western Province Cellar Ltd 1998 (3) SA 899 (W); Kelvin Park Properties CC v
Paterson NO 2001 (3) SA 31 (SCA).
3 2004 (4) SA 103 (SCA) para 14.
carries on any trade … or who carries on the business … or who acts as a broker”. Each clause is
separate and distinct from the others.’
[10] The question then is not whether the company carries on any trade, business,
industry or undertaking at all but whether it carries on such a trade falling into one
of the specified categories. It is apparent that a transport haulier is not included in
the definition in s 2. The only category which could possibly be relevant and upon
which the liquidator relied in the court a quo, is the first, namely, that the company
was a person carrying on a business ‘in which property is sold’.
[11] The question whether the company is a trader is answered by having regard to
the nature of the undertaking (in this instance the sale of book debts and vehicles)
and determining whether such undertaking is part of the core business of the
company (transport haulier) or incidental thereto. Counsel for the liquidator
accepted that the sale of vehicles and the factoring of the book debts were incidental
to the company’s main business but contended that the factoring of the book debts
and the selling of vehicles, although incidental to the core business of the company,
was a substantial and integral part of its business, in effect arguing that there are
degrees of incidentality.
[12] In my view, once it is established that these undertakings are incidental
activities, that is the end of the matter. There are no degrees of incidentality. The
construction of ‘trader’ contended for by the liquidator would apply to any business
in which property is sold for whatever reason. Why then have a definition of trader
in the Act which circumscribes the nature of the trades, businesses, industries or
undertakings that are conducted by traders? In my view, the purpose of the
definition is to identify those types of trade, business, industry or undertaking
which, by reason of the fact that they engage in specified activities, attract the
obligations of traders in terms of the Act. It is not the function of this court to
extend the list created by the legislature. Mthiyane JA put the matter thus in Roos:4
‘It was also submitted that there is no apparent reason why a business consisting of a letting or
hiring of immovable property should be excluded. But it cannot be submitted that the omission
results in an absurdity entitling a court to fill the lacuna. It might equally be asked why the
Legislature did not include, as it obviously did not, a person who acts as a broker or agent of any
person in the letting or hiring of movable property. In the absence of some factor common to the
enterprises which are included − and there is none − a court cannot add to that list on the basis that
the omission was an obvious oversight.’
[13] I accordingly conclude that the court a quo erred in finding that -
‘to restrict the meaning, of the word “company which carries on trade, or business in which
property is sold” to the narrow ambit of its haulage business is to ignore the very nature of the
business and the transactions conducted pursuant thereto by the company over a lengthy period’.5
The error in my view lies in the fact that it extended the definition of ‘trader’ as
contained in s 2 of the Act to virtually every type of business by elevating the
incidental activities of that business above its actual trade, business, industry or
undertaking. The interpretation of ‘trader’ adopted by the court a quo is thus far too
broad for the purposes of the Act. It is difficult to envisage a business in which it is
not necessary at some stage to sell or buy goods. In my judgment, the definition of
a trader must be linked to the primary business activities of the enterprise concerned
4 Kevin and Lasia Property Investment CC v Roos NO 2004 (4) SA 103 (SCA) para 15.
5 Gore NO v McCarthy Ltd 2006 (3) SA 229 (C) 237C-D.
and not be extended to activities incidental thereto. Extending the definition of
‘trader’ would result in undue hardship and operate unfairly against innocent third
parties, such as the appellant, who enter into transactions unaware that publication
as provided for in s 34(1) of the Act is required. That the legislation does not
contemplate.
[13] For these reasons the appeal is upheld with costs. The judgment of the court a
quo is set aside and substituted with the following:
‘The plaintiff’s claim is dismissed with costs.’
L V Theron
Acting Judge of Appeal
CONCUR:
HARMS ADP
BRAND JA
NUGENT JA
JAFTA JA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
Wednesday 28 March 2007
Status:
Immediate
Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal
McCarthy Ltd v Gore N.O.
In a judgment today the Supreme Court of Appeal has upheld an
appeal relating to the definition of ‘trader’ in s 34(1) of the
Insolvency Act 24 of 1936.
The respondent, in his capacity as liquidator of Ramsauer
Transport (Proprietary) Limited (in liquidation) (the company)
instituted action against the appellant in the High Court (Cape) in
terms of s 34(1) of the Insolvency Act, read with s 340 of the
Companies Act 61 of 1973 for an order declaring the transfer of 28
vehicles by the company to McCarthy, void.
The liquidator, in the court a quo, contended that inasmuch as the
primary business of the company was that of a transport
contractor, the company was a ‘trader’ for the purpose of s 34(1)
as it sold its vehicles from time to time on a substantial basis and
also sold its book debts as a regular and integral feature of its
business. It was alleged that the company had disposed of the
vehicles and transferred them otherwise than in the ordinary
course of the company’s business. By reason of the fact that the
company had not published a notice concerning the sale and
transfer of the vehicles to the appellant as provided for in s 34(1) of
the Act, the transfer was voidable at the instance of the liquidator.
McCarthy, on the other hand contended that the company was not
a trader as defined in s 2 of the Act and that therefore the
provisions of s 34(1) were not applicable to the transaction.
Davis J in the court a quo held that the sale of the vehicles to the
appellant was the kind of transaction which the company ‘had
performed regularly in the past, namely, the sale of vehicles
pursuant to and as part of its business’. The learned judge found
that ‘trader’ should not be interpreted restrictively and is not to be
limited to the company’s primary business but includes
transactions concluded in the ordinary course of a business
ancillary to its primary (haulage) business. The trial court held that
the transfer of the vehicles to the appellant was void for want of
compliance with the provisions of s 34(1).
The SCA, in a judgment by Theron AJA in which Harms ADP,
Brand JA, Nugent JA and Jafta JA concurred, found that the the
purpose of the definition is to identify those types of trade,
business, industry or undertaking which, by reason of the fact that
they engage in specified activities, attract the obligations of traders
in terms of the Act. It was stated that it is not the function of this
court to extend the list created by the legislature.
The SCA found that the trial court had erred in extending the
definition of ‘trader’ to virtually every type of business by elevating
the incidental activities of that business above its actual trade,
business, industry or undertaking. The SCA held that the definition
of a trader must be linked to the primary business activities of the
enterprise concerned and not be extended to activities incidental
thereto.
--ends--
|
1274
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 568/2007
ANDRé MALAN
1st Appellant
FRANCOIS MALAN
2nd Appellant
and
THE LAW SOCIETY OF THE NORTHERN PROVINCES Respondent
Neutral citation: Malan v The Law Society of the Northern Provinces
(568/2007) [2008] ZASCA 90 (12 SEPTEMBER 2008)
Coram:
HARMS ADP, STREICHER, CLOETE JJA, LEACH and
KGOMO AJJA
Heard:
28 AUGUST 2008
Delivered:
12 SEPTEMBER 2008
Updated:
Summary:
Attorney – striking from the roll – restatement of approach
ORDER
On appeal from: High Court, Pretoria (Botha J and Murphy J sitting as court
of first instance).
1.
The appeal is dismissed with costs.
2.
The costs are to be paid jointly and severally by the appellants and are
to be taxed on the scale of attorney and client.
JUDGMENT
HARMS ADP (STREICHER, CLOETE JJA, LEACH and KGOMO AJJA
concurring):
[1] This is an appeal by two attorneys, the brothers André and Francois
Malan, who had practised in partnership in Alberton under the name Malan &
Partners. Both were removed from the roll of attorneys and conveyancers
(and the first appellant, André, from that of notaries) by the High Court,
Pretoria. They appeal with leave of the high court on the ground that the high
court had erred in the exercise of its discretion by deciding to remove them
from the roll. Instead, they say, they should have been suspended from
practice for a given time, bearing in mind that they had been provisionally
suspended since 10 September 2002.
[2] The leisurely pace of the proceedings needs some explanation. The
appellants did not file affidavits to oppose the application for their provisional
suspension because, they said, they were so shocked and traumatised by the
allegations that they were unable to reply. (Since most of the allegations
turned out to be true and of their own making their shock is somewhat difficult
to understand.) During March 2003, the present respondent, the Law Society
of the Northern Provinces (the Society), filed a short supplementary affidavit. It
took the appellants more than three years to file their answering affidavits.
The high court delivered its judgment on 14 May 2007 and granted leave to
appeal on 10 September 2007.
[3] Although the principles applicable to striking off applications have often
been stated, it is necessary to restate them once more to emphasise aspects
that tend to be ignored or misunderstood. The Society launched its
application under s 22(1)(d) of the Attorneys Act 53 of 1979, which provides
that ‘any person who has been admitted and enrolled as an attorney may on
application by the society concerned be struck off the roll or suspended from
practice by the court. . . if he, in the discretion of the court, is not a fit and
proper person to continue to practise as an attorney”.
[4] As was said in Jasat v Natal Law Society 2000 (3) SA 44, [2000] 2 All
SA 310 (SCA) at para 10, s 22(1)(d) contemplates a three-stage inquiry:
First, the court must decide whether the alleged offending conduct has
been established on a preponderance of probabilities, which is a factual
inquiry.
Second, it must consider whether the person concerned ‘in the
discretion of the Court’ is not a fit and proper person to continue to practise.
This involves a weighing up of the conduct complained of against the conduct
expected of an attorney and, to this extent, is a value judgment.
And third, the court must inquire whether in all the circumstances the
person in question is to be removed from the roll of attorneys or whether an
order of suspension from practice would suffice.
[5] As far as the second leg of the inquiry is concerned, it is well to
remember that the Act contemplates that where an attorney is guilty of
unprofessional or dishonourable or unworthy conduct different consequences
may follow. The nature of the conduct may be such that it establishes that the
person is not a fit and proper person to continue to practise. In other instances
the conduct may not be that serious and a law society may exercise its
disciplinary powers, particularly by imposing a fine or reprimanding the
attorney (s 72(2)(a)). This does not, however, mean that a court is powerless
if it finds the attorney guilty of unprofessional conduct where such conduct
does not make him unfit to continue to practise as an attorney. In such an
event the court may discipline the attorney by suspending him from practice
with or without conditions or by reprimanding him: Law Society of the Cape of
Good Hope v C 1986 (1) SA 616 (A) at 638I-639E; Law Society of the Cape of
Good Hope v Berrangé 2005 (5) SA 160 (C) at 173G-I, [2006] 1 All SA 290
(C) at 302.
[6] As pointed out in Jasat, the third leg is also a matter for the discretion
of the court of first instance, and whether a court will adopt the one course or
the other depends upon such factors as the nature of the conduct complained
of, the extent to which it reflects upon the person’s character or shows him to
be unworthy to remain in the ranks of an honourable profession, the likelihood
or otherwise of a repetition of such conduct and the need to protect the public.
Ultimately it is a question of degree. It is here where there appears to be some
misunderstanding.
[7] First, in deciding on whichever course to follow the court is not first and
foremost imposing a penalty. The main consideration is the protection of the
public.
[8] Second, logic dictates that if a court finds that someone is not a fit and
proper person to continue to practise as an attorney, that person must be
removed from the roll. However, the Act contemplates a suspension. This
means that removal does not follow as a matter of course. If the court has
grounds to assume that after the period of suspension the person will be fit to
practise as an attorney in the ordinary course of events it would not remove
him from the roll but order an appropriate suspension. In this regard the
following must be borne in mind:
‘The implications of an unconditional order removing an attorney from the roll
for misconduct are serious and far-reaching. Prima facie, the Court which makes
such an order visualises that the offender will never again be permitted to practise his
profession because ordinarily such an order is not made unless the Court is of the
opinion that the misconduct in question is of so serious a nature that it manifests
character defects and lack of integrity rendering the person unfit to be on the roll. If
such a person should in the years apply for re-admission, he will be required to
satisfy the Court that he is “a completely reformed character” (Ex parte Wilcocks
1920 TPD 243 at 245) and that his “reformation or rehabilitation is, in all the known
circumstances, of a permanent nature” (Ex parte Knox 1962 (1) SA 778 (N) at 784).
The very stringency of the test for re-admission is an index to the degree of gravity of
the misconduct which gave rise to disbarment.’
(Incorporated Law Society, Natal v Roux 1972 (3) SA 146 (N) at 150B-E
quoted with approval in Cirota v Law Society Transvaal 1979 (1) SA 172 (A) at
194B-D.) It is seldom, if ever, that a mere suspension from practice for a given
period in itself will transform a person who is unfit to practise into one who is
fit to practise. Accordingly, as was noted in A v Law Society of the Cape of
Good Hope 1989 (1) SA 849 (A) at 852E-G, it is implicit in the Act that any
order of suspension must be conditional upon the cause of unfitness being
removed. For example, if an attorney is found to be unfit of continuing to
practise because of an inability to keep proper books, the conditions of
suspension must be such as to deal with the inability. Otherwise the unfit
person will return to practice after the period of suspension with the same
inability or disability. In other words, the fact that a period of suspension of say
5 years would be a sufficient penalty for the misconduct does not mean that
the order of suspension should be 5 years. It could be more to cater for
rehabilitation or, if the court is not satisfied that the suspension will rehabilitate
the attorney, the court ought to strike him from the roll. An attorney, who is the
subject of a striking off application and who wishes a court to consider this
lesser option, ought to place the court in the position of formulating
appropriate conditions of suspension.
[9] Third, the exercise of this discretion is not bound by rules, and
precedents consequently have a limited value. All they do is to indicate how
other courts have exercised their discretion in the circumstances of a
particular case. Facts are never identical, and the exercise of a discretion
need not be the same in similar cases. If a court were bound to follow a
precedent in the exercise of its discretion it would mean that the court has no
real discretion. (See Naylor v Jansen 2007 (1) SA 16 (SCA) at para 21.)
[10] The appellants relied on Summerley v Law Society, Northern Provinces
2006 (5) SA 613 (SCA) for the proposition that unless a court finds dishonesty
during the first leg of the inquiry, it ought not to remove the attorney
concerned from the roll. In Summerley the following was said in connection
with the exercise of this discretion (at para 21):
‘The further argument on behalf of the appellant was that, as a general rule, striking-
off is reserved for attorneys who have acted dishonestly, while transgressions not
involving dishonesty are usually visited with the lesser penalty of suspension from
practice. Although this can obviously not be regarded as a rule of the Medes and the
Persians, since every case must ultimately be decided on its own facts, the general
approach contended for by the appellant does appear to be supported by authority
[citations omitted]. This distinction is not difficult to understand. The attorney’s
profession is an honourable profession, which demands complete honesty and
integrity from its members.’
Obviously, if a court finds dishonesty, the circumstances must be exceptional
before a court will order a suspension instead of a removal. (Exceptional
circumstances were found in Summerley and in Law Society, Cape of Good
Hope v Peter [2006] ZASCA 37 and the court was able in the formulation of its
order in those cases to cater for the problem by requiring that the particular
attorney had to satisfy the court in a future application that he or she should
be permitted to practise unconditionally.) Where dishonesty has not been
established the position is as set out above, namely that a court has to
exercise a discretion within the parameters of the facts of the case without any
preordained limitations.
[11] As mentioned in Summerley (at para 15), the fact that a court finds that
an attorney is unable to administer and conduct a trust account does not
mean that striking-off should follow as a matter of course. The converse is,
however, also correct: it does not follow that striking-off is not an appropriate
order (compare Prokureursorde van Transvaal v Landsaat 1993 (4) SA 807
(T); Law Society of the Transvaal v Tloubatla [1999] 4 All SA 59 (T)). To the
extent that the judgment in Law Society of the Cape of Good Hope v King
1995 (2) SA 887 (C) at 892G-894C propagates an ‘enlightened approach’,
requiring courts to deal with misconduct which does not involve dishonesty
with (in my words) kid gloves, I disagree. In order to stem an erosion of
professional ethical values a ‘conservative approach’ is more appropriate
(Incorporated Law Society, Transvaal v Goldberg 1964 (4) SA 301 (T) at
304A-F).
[12] A court of appeal has limited powers to interfere with a decision of the
court of first instance. In relation to the first leg of the inquiry, which is factual,
appeals are subject to the general limitation that courts of appeal defer to the
factual findings of courts of first instance (R v Dhlumayo 1948 (2) SA 677 (A)).
This rule has limited, if any, application if the court of first instance decided the
case on paper, i e, in application proceedings, because in such a case the
court of appeal is in as good a position to judge the facts as was the court
below. There are factual disputes in this case and the high court decided the
matter with reference to the so-called Plascon-Evans rule, namely to base its
decision on facts that are common cause or otherwise on the appellants’ (the
then respondents’) version. The high court did not consider the second and
important leg of the Plascon-Evans rule namely whether the disputes raised
were real, genuine or bona fide, or whether the allegations or denials were so
far-fetched or clearly untenable that the court would have been justified in
rejecting them merely on the papers. (Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634I-635D.) The application
of the ‘rule’ in cases such as this requires a consideration of the fact that it is a
sui generis procedure, and that an attorney is not entitled to approach the
matter as if it were a criminal case and rely on denial upon denial and, instead
of meeting the allegations, to deflect them and, as part of the culture of blame,
always blame others (Prokureursorde van Transvaal v Kleynhans
1995 (1) SA 839 (T) at 853E-G).
[13] The ‘discretion’ of the court of first instance in relation to the second
and third leg is in the nature of a value judgment. In principle, a court of
appeal is entitled to substitute its value judgment for that of the court of first
instance if it disagrees. However, this Court has held consistently that the
discretion involved is a strict discretion, which means that a court of appeal
may only interfere if the discretion was not exercised judicially: Kekana v
Society of Advocates of SA, 1998 4 SA 649, [1998] 3 All SA 577 (SCA);
Vassen v Law Society of the Cape of Good Hope 1998 4 SA 532 (SCA) 537.
This means that a court of appeal is not entitled to interfere with the exercise
by the lower court of its discretion unless it failed to bring an unbiased
judgment to bear on the issue; did not act for substantial reasons; exercised
its discretion capriciously, or exercised its discretion upon a wrong principle or
as a result of a material misdirection. (See also Mabaso v Law Society,
Northern Provinces 2005 2 SA 117 (CC) at para 20; Giddey NO v JC Barnard
& Partners 2007 (5) SA 525 (CC) at para 20.)
[14] As stated at the outset, the appellants argue that the high court should
not have imposed the ‘ultimate’ penalty of striking off but should rather have
suspended them from practice. They accept that they are not fit and proper
persons to continue to practise as attorneys. Because of this it is unnecessary
to deal with the facts in any detail although the essence of the case against
them has to be set out in order to evaluate the alleged misdirections
underlying the exercise of the court’s discretion on which the appeal is
premised.
[15] The practice of Malan & Partners had only the two partners and it had
no other professionals in its employ. André conducted a deeds practice while
Francois dealt, exclusively it would appear, with claims against the Road
Accident Fund that fell within the jurisdiction of the magistrates’ courts. André
in addition bore the bookkeeping responsibility, which he entrusted to a
bookkeeper, Mrs Steyn.
[16] The problems that led to the application came to light as a result of the
conduct of the RAF practice. Francois, as the sole professional, carried
between 6000 to 7000 files at any given time. The files were the result of
active touting. The firm engaged about 18 ‘consultants’. The consultants
(some of whose names Francois could not recollect) ‘found’ RAF claimants,
prepared the necessary documentation, produced a file and ‘sold’ the file to
the firm. The firm would then file a claim against the RAF and, if the case was
not settled, issue summons. Francois did not consult with the claimants and
he provided little, if any, professional services to the clients. In this regard the
business model differed from the ordinary case of touting where the tout
produces a client and the attorney provides professional services to the client.
One of the touts, Wilken, who had no qualifications to deal with such matters,
was later brought into the firm on a more or less permanent basis as
administration manager, apparently on a commission basis, having been paid
per file ‘sold’ to the firm. His duties were, according to Francois, to prepare all
the documentation, to process claims and to submit them to the RAF.
[17] After Wilken had left his post, but while still selling claims to the firm,
Francois became aware during September 2001 that Wilken had falsified
claims. According to Francois’s affidavit this was brought to his attention by
Wilken’s successor as administration manager but according to an earlier
letter of his the problem was brought to his notice when the local branch office
of the RAF informed him that one of the plaintiffs had denied any knowledge
of the accident on which the claim was based. He had also been informed by
the RAF on an unspecified date during 2001 that there were difficulties
regarding the handwriting and signatures on affidavits and accident reports.
He solved the problem by simply withdrawing all problem claims and giving an
instruction (to whom, we are not told) that no further claims should be bought
from Wilken and that no further Wilken claims should be submitted to the
RAF. There were at the time apparently some 138 fraudulent claims in the
pipeline. On 8 January 2002 (maybe during February), Wilken made an
affidavit admitting some fraud while exonerating the firm. Nevertheless,
Wilken was paid by the firm until end of January and he had a set of keys of
the office during March when he entered the office and allegedly attempted to
set it alight. He died shortly afterwards.
[18] Only on 8 March 2002 did Francois write to the RAF, mentioning the
possibility of fraud by Wilken. (The RAF denied receiving the letter and it was
resent on 28 March.) He did this as a result of problems he had experienced
‘recently’ with lodged claims. He thought that some 10 cases could have been
involved. He said that he would lay a charge against Wilken and
magnanimously undertook to indemnify the RAF against all false claims. On
11 April 2004, the RAF informed him that they had appointed a firm of
assessors and investigators to investigate the firm’s claims. On unspecified
dates (probably as a result of this information) the firm appointed first one and
then another investigator to investigate the Wilken files. As a result of this
some 600 Wilken related claims were withdrawn; once again the dates are not
available.
[19] The Society became aware (without the intercession of the appellants)
of the fraud. It also received a complaint from a client concerning
overreaching and the failure to account, and it decided to conduct an
investigation into the affairs of the firm, which commenced on 25 June 2002.
The appellants explained their modus operandi to the investigator during
which they represented that the ‘consultants’ were paid for assessing
quantum and for ‘consultancy’ work. This does not accord with the admitted
modus operandi set out above.
[20] Francois’s response to the charge of touting in his answering affidavit,
which was made four years after the event, was that they had been ‘advised’
by their lawyers that their modus operandi could be viewed (‘kan gesien
word’) as ‘pro-aktiewe werwing’ (touting) and this, he said, may have been
due to naivety or because of the prevalence of the practice amongst other
attorneys. As to the prevalence excuse, the high court correctly remarked that
wrongdoing of others does not provide any justification and that reliance
thereon is indicative of ‘hoe morele waardes verval’. Furthermore, there is no
evidence that touting, in the manner conducted by the firm, was practised by
others. I shall revert to the naivety excuse in another context.
[21] The Society’s investigation into the affairs of the firm opened the
proverbial can of worms. The firm’s bookkeeping was in a mess and nearly
each rule in the book had been broken. I shall merely list them (the list may be
incomplete): the firm failed to print quarterly lists of trust creditors since
February 2001 and, accordingly, failed to balance the trust account, which
made it impossible to determine whether there was a trust shortfall
(contravening s 78(1) of the Act); the firm issued bearer trust cheques; trust
cheques were cashed at the bank counter; fees were transferred to the
business account in lump sums; it failed to comply with s 78(2A) when
investing trust money on behalf of individual clients; closing debits are
arbitrary; there were occasional trust debits; accounting to clients was done
improperly and payments were made late; trust and business funds were
commixed; it failed to transfer interest on the trust account to the Society in
contravention of s 78(3); it failed to account to clients within a reasonable
time; it failed to comply with the provisions of s 78(4) and (6); it failed to
exercise proper control over staff; it kept a ‘slush fund’ to pay touts and other
consultants; and it failed to provide clients with professional services.
[22] All of this cannot be gainsaid although there are excuses and
explanations,
some
unconvincing
or
unlikely.
It
is,
accordingly,
understandable why the appellants do not argue on appeal that they are fit
and proper persons to continue practising as attorneys. I therefore turn to a
consideration of the grounds on which the appellants seek to impugn the
exercise of the high court’s discretion to remove them from the roll.
[23] The first ground relied on is that the high court should have followed
the approach adopted in Law Society of the Cape of Good Hope v Berrangé
2005 (5) SA 160 (C) where, in a case ‘akin to touting’, the attorney concerned
was suspended from practice and not removed from the roll. I have already
expressed my serious reservations about the precedential value of such
cases but, in any event, the court in that case did not find that the attorney
was unfit to continue to practise and, accordingly, the court could not have
struck him from the roll. Instead, it exercised its inherent disciplinary
jurisdiction to penalise the attorney by suspending him from practice. (At
173G-I.)
[24] The court below relied on Cirota v Law Society Transvaal 1979 (1) SA
172 (A), where striking off was ordered, holding that it was more comparable
than Berrangé to the case at hand. Counsel for the appellants’ submission
that the high court followed this case ‘slavishly’ is without merit because the
court said explicitly that this case is ‘meer vergelykbaar’ with Cirota. I have
already stated that a factual analysis of earlier cases is not called for.
However, counsel sought to convince us that in Cirota the court had found
dishonesty and since no such finding was made by the high court, Cirota was
a more serious case and not less serious as the high court held. Counsel’s
argument has no merit. The ratio for the striking off is to be found in this
dictum in Cirota (at 194E-F):
‘But, having regard to what I have said concerning the seriousness of the appellants'
contraventions in both the respects mentioned above, viz touting and not keeping
proper books, I am of the view that they indeed displayed a lack of integrity thus
rendering them unfit to be on the roll.’
[25] Although the high court did not find that the appellants were dishonest
in conducting their practice, I question their honesty. Considering the
provisions of s 19(c) of the Road Accident Fund Act 56 of 1996, namely that
the RAF is not obliged to compensate if the claim concerned has not been
instituted and prosecuted by an attorney, the procedure followed by the firm in
this regard can only be considered as a dishonest circumvention of the
provision. Also, touting on the scale and in the manner found here can also
only be ascribed to dishonesty. Only a naïve person would believe that the
modus operandi followed was due to naivety as Francois alleged. It is
dishonest to charge a client for professional fees unless professional services
are rendered. It is dishonest to charge a client for the cost of a tout under the
heading ‘disbursements’. Finally, at least part of the explanation for the failure
to keep proper books is also untrue, as was the initial explanation of the
modus operandi concerning the RAF claims.
[26] The high court found as aggravating the fact that in this case clients
were prejudiced, something absent in Cirota. Counsel sought to attack this
finding but, once again, the high court had it right. Allowing touts to perform
professional services without oversight was reckless in the extreme and
created potential prejudice. The record contains instances where claims had
to be withdrawn because of the way the touts had prepared the claims. The
high court also held that the appellants had shared fees with their touts.
Counsel sought to assail this finding. The facts are these: the deponent of the
Society’s founding affidavit made such an allegation and the appellants did
not deal with the allegation at all. But, says counsel, the founding affidavit
contained no underlying facts to support the allegation and that the appellants
were, accordingly, not called upon to deal with the allegation. This reflects a
cavalier approach towards a serious disciplinary matter, which is not an
ordinary civil case but, as mentioned earlier, is sui generis (Cirota at 187H).
In any event, the underlying documents provided sufficient grounds for making
the allegation and the allegation had to be met, even on the ground that there
were no facts to justify it.
[27] The appellants also argue that the high court had failed to take the
extenuating circumstances into account. These in sum relate to the steps the
firm had taken once the wrongdoings of Wilken became known. From this it is
sought to argue that the high court had erred in holding that there was no
indication on the papers that the appellants had any realization of the
seriousness of their transgressions. It is true that the firm took the steps set
out earlier after it had become aware of Wilken’s fraud. What is also true is
that it was rather slow in taking those steps. The time delays in the light of the
seriousness of the problem are inexplicable. The lack of notification to the
Society is incomprehensible. One cannot but gain the impression that the firm
did little more than damage control. Of greater concern is that there was at
that stage either no appreciation of the risk involved in the touting practice or a
total recklessness by disregarding the risk. There is no evidence that the
practice was discontinued. It was only some years later that the appellants
accepted the advice that what they did ‘could be viewed’ as touting. If one
turns to the bookkeeping charges, the position is simply that there is no
allegation of a realization of the seriousness of the offences. They are
brushed off on the basis that the Society had failed to prove a trust shortage,
that the bookkeeper had erred, that they did not know the rules, that their
auditors had erred, or simply by not dealing with the pertinent allegations.
Furthermore, instead of dealing with the merits of the allegations, the
appellants conducted a paper war and they attacked the Society and its
officers, they attacked the Fidelity Fund and they attacked the attorneys who
had to take over their files – in short, their approach on the papers was
obstructionist.
[28] These factors are ‘aggravating’ and not extenuating because they
manifest character defects, a lack of integrity, a lack of judgment and a lack of
insight. The conduct of the practice was reckless in the extreme. It follows that
the high court did not err in the exercise of its discretion. Counsel was unable
to suggest any conditions of suspension that could cater for the situation.
Implicit in the high court’s judgment is a finding (with which I agree) that the
appellants should only be allowed to practise once they are able to convince a
court that they know and understand professional ethics and the rules of
bookkeeping, i e, that they are fit and proper persons to practise as attorneys.
This will require an application for re-admission with the obstacles mentioned.
To let the appellants loose on the unsuspecting public without that satisfaction
would amount to a dereliction of duty.
[29] In the result the following order issues:
1.
The appeal is dismissed with costs.
2.
The costs are to be paid jointly and severally by the appellants and are
to be taxed on the scale of attorney and client.
__________________
L T C HARMS
ACTING DEPUTY PRESIDENT
APPEARANCES:
FOR APPELLANT:
L W DE KONING
FOR RESPONDENT: A T LAMEY (Attorney)
ATTORNEYS:
FOR APPELLANTS: BUITENDAG’S INC,
c/o BARKHUIZEN DU BUISSON, PRETORIA
MATSEPES INC, BLOEMFONTEIN
FOR RESPONDENT: ROOTH WESSELS MALULEKE, PRETORIA
NAUDES INC, BLOEMFONTEIN
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 12 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
A MALAN AND ANOTHER v THE LAW SOCIETY OF THE NORTHERN
PROVINCES
The SCA today dismissed an appeal by two attorneys who had been
struck from the roll. They accepted that the court of first instance had correctly
found that they were not fit and proper persons to continue to practise as
attorneys but, they argued, the court should, instead of removing them from
the roll, have suspended them from practice for a period of time. The SCA
found that the court below had exercised its discretion to remove them in a
judicial manner and that no reason existed for interfering with the order. The
SCA revisited the approach to matters such as this and held that in order to
stem an erosion of professional ethical values a ‘conservative approach’ is
more appropriate than an ‘enlightened approach’, which requires of courts to
deal with misconduct which does not involve dishonesty with kid gloves.
---ends---
|
1537
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 263/08
In the matter between:
NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
Appellant
and
SAROJINI MOODLEY
First Respondent
SHUNMUGAM JAMES MOODLEY
Second Respondent
SHAWN BEHARIE
Third Respondent
Neutral citation: National Director of Public Prosecutions v Moodley (263/08) [2008]
ZASCA 137 (26 November 2008)
______________________________________________________________
Coram :
SCOTT, MAYA, COMBRINCK, CACHALIA JJA
et MHLANTLA AJA
Date of hearing
:
10 NOVEMBER 2008
Date of delivery
:
26 NOVEMBER 2008
Summary: Written authorisation of NDP in terms of s 2(4) of POCA given prior to
accused pleading to charge of racketeering – whatever meaning given to 'charged' in
s 2(4), prosecution lawful at least from date of authorisation.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: the High Court, Pietermaritzburg (NICHOLSON J and
NTSHANGASE J concurring, sitting in review of a decision of the Regional
Court:
The following order is made:
(1)
The appeal is upheld with costs, including the costs of two counsel.
(2)
The order of the court a quo is set aside and the following substituted
in its place.
'The application is dismissed with costs.'
JUDGMENT
SCOTT JA (MAYA, COMBRINCK, CACHALIA JJA and MHLANTLA AJA
concurring):
[1] This is an appeal from the judgment of Nicholson J, with whom
Ntshangase J concurred, sitting in the High Court, Pietermaritzburg. It
concerns the interpretation and application of s 2(4) of the Prevention of
Organised Crime Act 121 of 1998 ('POCA'). Before considering the
contentions advanced by counsel in this court it is necessary to set out as
briefly as the circumstances permit the events which culminated in the appeal.
[2] The three respondents are respectively accused numbers one, two and
four in a pending criminal trial in the Pietermaritzburg Regional Court. On 8
July 2003 the second and third respondents were arrested together with two
others (accused number three and five) on drug related charges, ie dealing in
and the possession of mandrax (methaqualone) tablets. On 10 September
2003 the matter was postponed to 2 December 2003 at the request of the
prosecutor to enable the State to investigate the possibility of preferring
racketeering charges against the accused. On the latter date the matter was
postponed for trial in the regional court commencing on 31 May 2004.
[3] On 10 December 2003 the respondents' attorney, Mr Kogulan Chetty,
was handed a charge sheet containing 14 counts of which three related to
racketeering. According to the prosecutor, Mr Hansraj Cheetanlal, the charge
sheet was given to Chetty in an envelope marked 'Draft Charge Sheet' and
was not lodged with the clerk of the court. This allegation was not denied by
Chetty in his replying affidavit and must be accepted. The first respondent
was cited as accused number one although she was in fact arrested only
subsequently on 15 December 2003.
[4] The charge sheet runs to 21 pages. It sets out in detail the State's case
against the accused. In short, it alleges that the first and second respondents,
who are married to each other, have for many years engaged in a drug
dealing business on a large scale involving the purchase in bulk, storage and
selling of drugs, mainly mandrax tablets. It is alleged further that as the
enterprise increased in size, the other accused (including the third
respondent) were employed to assist in the sale and distribution of drugs.
Count one is the contravention of s 2(1)(e) of POCA and relates to all three
respondents and one other. The offence, in short, is the conducting of, or
participation in, the affairs of [a drug dealing] enterprise through a 'pattern of
racketeering activity'.1 Count 2 is the contravention of s 2(1)(f) of POCA,
1 'Pattern of racketeering activity' is defined in s 1 of POCA to mean:
"the planned, ongoing, continuous or repeated participation or involvement in any offence
referred to in Schedule 1 and includes at least two offences referred to in Schedule 1, of
which one of the offences occurred after the commencement of this Act and the last offence
occurred within 10 years (excluding any period of imprisonment) after the commission of such
prior offence referred to in Schedule 1."
The offences listed in Schedule 1 include
"any offence referred to in section 13 of the Drugs and Drug Trafficking Act 140 of 1992." '
namely the management of a [drug dealing] enterprise through a 'pattern of
racketeering'. This count relates only to the first and second respondents.
Count three is the contravention of s 2(1)(g). It relates only to accused
number five who is not a party to these proceedings. The remaining counts
relate to one or more of the accused. They include counts of possession and
dealing in methaqualone in contravention of various provisions of the Drugs
and Drug Trafficking Act 140 of 1992, assault with intent to do grievous bodily
harm, theft and intimidation in contravention of the Intimidation Act 72 of 1982.
[5] On 11 May 2004 the respondents' attorney wrote to the prosecutor
requesting a copy of the appellant's written authorisation in terms of s 2(4) of
appellant's POCA. The subsection reads:
'A person shall only be charged with committing an offence contemplated in subsection (1) if
a prosecution is authorised in writing by the National Director.'
(The first three counts all relate to offences contemplated in subsection 1.) On
17 May 2004, the prosecutor replied, enclosing the appellant's authorisation
which is dated 24 March 2004. This document is headed 'Authorisation in
terms of section 2(4) of the Prevention of Organised Crime Act, no 121 of
1998'. Beneath the heading appear the words: 'The State versus' followed by
the names of the five accused. Thereafter, the document proceeds:
'I, BULELANI THANDABANTU NGCUKA, the National Director of Public Prosecutions of
South Africa, do hereby, in terms of section 2(4), read with section 1 and 2 of the Prevention
of Organised Crime Act, No 121 of 1998, authorize the institution of prosecution in respect of
a contravention of section 2(1)(e), 2(1)(f) and 2(g) of the Prevention of Organised Crime Act,
No 121 of 1998, against the above accused.'
The signature of Mr Ngcuka appears at the foot of the page under the words
'Given under my hand at Pretoria this 24th day of March 2004'. The signature
is followed by Ngcuka's full names and title, 'National Director of Public
Prosecutions'. On 28 March 2004, ie after the written authorisation had been
given, a second charge sheet (albeit identical to the first) was handed to the
respondents' attorney.
[6] The trial did not commence on 31 May 2004, although the prosecutor
was ready to proceed. Instead, the regional magistrate heard and rejected an
application brought by the accused for an inquiry to be held into an alleged
unreasonable delay in the proceedings in terms of s 342A of the Criminal
Procedure Act 51 of 1977. On 1 June 2004 the accused applied for the
'recusal' of the prosecutor. This application dragged on for a total of 27 court
days. Ultimately on 1 December 2006 the application was 'suspended' when
another prosecutor was assigned to the case so as to avoid further delay.
[7] In the meantime on 19 August 2005, and while the 'recusal' application
was still pending, the respondents launched an application in the High Court,
Pietermaritzburg, in which they sought an order (a) declaring counts 1, 2 and
3 to be unlawful and (b), setting those counts aside. The relief sought was
founded on the contention that the respondents had been 'charged' with
racketeering on 10 December 2003, ie prior to the written authorisation by the
appellant which was signed on 24 March 2004. The matter was enrolled for
hearing on 3 November 2005 and again on 25 November 2005. On the latter
occasion the application was postponed sine die, apparently because the
judge had indicated in chambers that the relief sought should be pursued in
the regional court.
[8] On 28 November 2005 the respondents launched an application in the
regional court in which the same relief was sought, founded on the same
grounds. In its judgment, delivered on 3 April 2006, the regional court declined
to consider the merits of the application but dismissed it on the grounds of
lack of jurisdiction and that it amounted to an abuse of the process of the
court. By this time the application in the High Court had been withdrawn.
[9] The next step was the application by the respondents in the High Court
for an order reviewing and setting aside the regional magistrate's decision and
the substitution of an order declaring unlawful, and setting aside, counts 1, 2
and 3 of the charge sheet. This application was launched on 21 September
2006. Various grounds of review were advanced but the central issue raised
and the one that was argued in the court a quo was that the three counts were
unlawful because the respondents had been 'charged' before the appellant
had given his written authority as required by s 2(4) of POCA. The matter
came before the High Court which upheld the application and set aside the
three racketeering counts. It did so, however, not on the grounds relied upon
by the respondents but on a ground raised mero motu and in respect of
which, we were told in this court, no argument was presented. The ground
relied upon was that the authorisation by the appellant was inadequate
because it 'was too broad and lacked the necessary specificity required'. In
support of this conclusion, Nicholson J, who delivered the judgment of the
court, observed that there 'was a total failure to mention any dates, or places
at which the offences were committed' and that 'it would lead to abuse for
such an authorisation to be permissible'. In the result the court a quo made
the following order with regard to the merits of the application:
'(a)
The authorization issued by the National Director of Public Prosecutions dated 24
March 2004, purporting to authorize charges against the three applicants [now the
respondents] in terms of section 2(4) of the Prevention of Organised Crime Act 121 of 1998 is
declared to be invalid and of no force and effect.
(b)
Counts 1, 2 and 3 of the charges brought against the two applicants [now the
respondents] before the Regional Court, Pietermaritzburg under Case No 430/04 are
declared to have been invalidly instituted and are set aside.'
When the appellant applied for leave to appeal the respondents abandoned
the judgment in so far as paragraph (a) of the order was concerned. Although
para (b) of the order flowed directly from the order in para (a), the
respondents nonetheless sought to uphold the order granted in terms of para
(b) but on the basis that they had been 'charged' on the counts of racketeering
prior to the written authorisation required in terms of s 2(4) of POCA.2 This
issue was not dealt with by the court a quo in its judgment.
[10] In view of the abandonment, it is unnecessary to say anything more
about the validity of the authorisation save to comment that in my view the
respondents were correct in the circumstances to abandon para (a) of the
order, which is clearly not to be regarded as a precedent.
[11] As pointed out by Kriegler J in Sanderson v Attorney-General, Eastern
Cape 1998 (1) SACR 227 (CC) para 16 at 236e-g, 'the word "charge" is
ordinarily used in South African criminal procedure as a generic noun to
2The subsection is quoted in para 5 above.
signify the formulated allegation against an accused' but that 'used as a verb it
bears no defined or precise meaning in the [Criminal Procedure Act] nor in
criminal law procedure.' The learned judge observed 'that "charged" can be
interpreted very narrowly, so as to refer to formal arraignment or something
tantamount thereto, or broadly and imprecisely to signify no more than some
or other intimation to the accused of the crime(s) alleged to have been
committed.' He cautioned that 'it is not useful to attempt a universally valid
interpretation of a word so vague and which therefore derives much of its
content and meaning from the particular context in which it may be used'. In
this court counsel for the appellant contended for a narrow interpretation of
'charged' in s 2(4) of POCA to mean 'charged' in the sense of a charge or
indictment being put to an accused who is asked to plead. In the alternative, it
was contended that 'charged' had to be construed as a reference to the stage
when the charge sheet is lodged with the clerk of the court. The basis for this
contention was s 76(1) of the Criminal Procedure Act which provides that the
proceedings at a summary trial in a lower court (unless the accused has been
summoned to appear) 'shall be commenced by the lodging of the charge
sheet with the clerk of the court'. I should add that there is no evidence that a
charge sheet has been lodged with the clerk of the court. It is, however,
common cause that the respondents have not yet been asked to plead. The
respondents, on the other hand, contended for a broad interpretation. They
argue that for the purposes of s 2(4) a person is 'charged' when advised by a
competent authority that it has been decided that he or she is to be
prosecuted. In the present case, they say, this occurred on 10 December
2003 when the charge sheet was handed to the respondents' attorney. In
support of this submission reliance was placed on the meaning attributed to
'charged' in Du Preez v Attorney-General, Eastern Cape 1997 (2) SACR 375
(E) at 384e. But in that case, as in Sanderson, supra, the court was
concerned with 'charged' in the context of s 25(3)(a) of the Interim
Constitution (Act 200 of 1993) which afforded every accused person the right
'to a public trial before an ordinary court of law within a reasonable time after
having been charged.' Quite clearly the considerations relevant to the
meaning to be attributed to 'charged' in the context of s 25(3)(a) of the Interim
Constitution are very different from those relevant to 'charged' in s 2(4) of
POCA and the meaning attributed to 'charged' in the former context provides
no assistance.
[12] Counsel on both sides sought to rely on various indicators which they
submitted supported the interpretation for which they contended. None, in my
view, can be regarded as decisive. It was argued on behalf of the
respondents, for example, that a charge of racketeering would affect an
accused's prospects of being granted bail and that accordingly the legislature
would have intended the written authorisation contemplated in s 2(4) to be
given before an accused person could be prejudiced in this way. But, as
pointed out by counsel for the appellant, the fact that racketeering charges
were being investigated and could be added to the charge sheet would
similarly weigh with a court when deciding whether to grant bail or not. It
seems to me, however, unnecessary for the purposes of the present case to
decide precisely where the word 'charged' in s 2(4), to borrow from the
language of Kriegler J in Sanderson, 'falls along the continuum of possible
meanings of the word'. In my view, counsel for the appellant correctly
submitted that once the prosecution is authorised in writing by the National
Director there can be no reason, provided the accused has not pleaded, why
the further prosecution of the accused on racketeering charges would not be
lawful, even if the earlier proceedings were to be regarded as invalid for want
of written authorisation. The respondents contended, however, that in the
latter event the further prosecution would be 'tainted' and would remain
invalid. But they were unable to advance any proper basis to support this
contention. Indeed, until an accused has pleaded the state would be at liberty
to withdraw the charge and recharge the accused once the authorisation had
been granted.3 But such an exercise would serve no purpose and I can see
no reason why it should be necessary.
[13] It follows that whatever the position may have been prior to 24 March
2004 – and it is unnecessary to express a view in this regard – once the
3 See s 6(a) of the Criminal Procedure Act.
written authorisation to prosecute was granted, the prosecution, in my view,
was lawful in terms of s 2(4) of POCA.
[14] The following order is made:
(1)
The appeal is upheld with costs, including the costs of two
counsel.
(2)
The order of the court a quo is set aside and the following
substituted in its place.
'The application is dismissed with costs.'
__________
D G SCOTT
JUDGE OF APPEAL
APPEARANCES
:
FOR APPELLANT :
M WALLIS SC
R KEIGHTLEY (MS)
D A DAMERELL
Instructed by
:
State Attorney, DURBAN
Correspondents
:
State Attorney, BLOEMFONTEIN
FOR RESPONDENT:
C J HARTZENBERG SC
G P SCHELTEMA SC
Instructed by
:
Chetty, Asmall &Maharaj PIETERMARITZBURG
Correspondents
:
Webbers BLOEMFONTEIN
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Case no: 263/08
In the matter between:
NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS APPELLANT
and
SAROJINI MOODLEY AND OTHERS
RESPONDENTS
From :
The Registrar, Supreme Court of Appeal
Date:
26 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 of the Supreme Court of Appeal
The SCA today upheld an appeal by the National Director of Public Prosecutions
against a judgment of the High Court, Pietermaritzburg, setting aside three counts of
racketeering in drugs preferred against the respondents.
The respondents had sought to have the counts set aside on the ground that they
had been charged with racketeering before Mr Bulelani Ngcuka, the National
Director of Prosecutions, had given his written authorisation for the prosecution, as
required by the Prevention of Organised Crime Act. It was common cause that the
respondents had not yet been asked to plead to any of the counts contained in the
charge sheet when the written authorisation was given.
In the High Court Mr Justice Nicholson, with whom Mr Justice Ntshangase
concurred, set aside the racketeering counts on a totally different ground and one
not raised by the respondents, namely that Mr Ngcuka's written authorisation was
invalid for want of particularity regarding such details as to dates and the places at
which the offences were committed.
On appeal, the respondents abandoned the ground relied upon by the High Court
and sought the relief they claimed on the ground they had advanced in the High
Court and which had not been dealt with in the judgment of the High Court.
The SCA noted that the abandonment was correct in the circumstances and that the
order made by the High Court regarding the invalidity of the authorisation was not to
serve as a precedent. With regard to the ground relied upon by the respondents, the
SCA held that whatever the position may have been prior to the National Director's
written authorisation, once it was granted the prosecution was lawful. Accordingly
the appeal had to succeed.
--- ends ---
|
2781
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no:537/2011
Reportable
In the matter between:
KING SABATA DALINDYEBO MUNICIPALITY
First Appellant
CAPE GANNET PROPERTIES 118 (PTY) LTD
Second Appellant
WHIRLPROPS 46 (PTY) LTD
Third Appellant
and
KWALINDILE COMMUNITY
First Respondent
ZIMBANE COMMUNITY
Second Respondent
BATHEMBU COMMUNITY
Third Respondent
MINISTER OF AGRICULTURE AND LAND AFFAIRS Fourth Respondent
REGIONAL LAND CLAIMS COMMISSIONER:
EASTERN CAPE
Fifth Respondent
LANDMARK MTHATHA (PTY) LTD
Sixth Respondent
PROUD HERITAGE PROPERTIES 119 (PTY) LTD
Seventh Respondent
UWP CONSULTING (PTY) LTD
Eighth Respondent
Neutral citation: King Sabata Dalindyebo Municipality v KwaLindile Community
(537/2011) [2012] ZASCA 96 (1 June 2012)
Coram:
Mpati P, Cloete, Van Heerden and Mhlantla JJA and Kroon AJA
Heard:
3 May 2012
Delivered: 1 June 2012
Summary: Restitution of Land Rights Act 22 of 1994 – order by Land Claims Court in
terms of s 34(5) that certain land within a municipality not be restored to any claimant or
prospective claimant – order qualified by further directions – revision of orders on appeal –
review of publication in terms of s 11 by regional land claims commissioner of claim to
municipal land lodged in terms of the Act – costs on appeal.
________________________________________________________________________
ORDER
On appeal from: Land Claims Court (Bam JP, sitting as a court of first instance):
1.
The appeals are upheld with costs, including the costs of three counsel, where
applicable, the costs to be paid by the fifth respondent.
2.
Paragraphs (i) to (v) of the order of the court below are set aside and for them are
substituted the following:
‘(i) In terms of section 34(5)(b) of the Restitution of Land Rights Act 22 of 1994 it is
ordered that when claims in terms of the Act in respect of any land situate in the town of
Mthatha, including the Remainder of Erf 912 Mthatha (the land), are finally determined,
the rights in the land or any portion thereof shall not be restored to any successful
claimant.
(ii) No order is made in respect of the application for the review of the publication by the
fifth respondent of claims lodged in terms of the Act to land situate within the
municipality of Mthatha.’
3.
The cross-appeals are dismissed.
4. The costs of the respondents in the cross-appeal, including the costs of three
counsel, where applicable, will be paid by the fifth respondent.
_____________________________________________________________________
JUDGMENT
______________________________________________________________________
KROON AJA (MPATI P, CLOETE, VAN HEERDEN and MHLANTLA JJA concurring):
[1] This judgment concerns two appeals and three cross-appeals against orders granted
by Bam JP, sitting in the Land Claims Court (the LCC), in terms of s 34(5) of the Restitution
of Land Rights Act 22 of 1994 (the Act). The appeals and cross-appeals are with the leave
of Bam JP.
The parties
[2] The first appellant is the King Sabata Dalindyebo Municipality (the municipality), the
legal successor to the former Mthatha Municipality, previously Umtata Municipality. The
municipal area of the municipality includes the land situate in the town of Mthatha, which in
turn includes the land known as the Remainder of Erf 912 Mthatha, and the municipality
owns land within the municipal area. The municipality is accordingly a local government
body as envisaged in s 34(1) of the Act.1 It was the applicant in the proceedings before the
LCC. Its appeal in the present proceedings is the first appeal against part of the order
issued by the LCC.
[3] The second appellant is Cape Gannet Properties 118 (Pty) Ltd (Cape Gannet). It
was the seventh respondent cited in the proceedings before the LCC. The third appellant is
Whirlprops 46 (Pty) Ltd (Whirlprops). It was not cited as a respondent in the proceedings
before the LCC, but intervened in those proceedings as an interested party and, as the
tenth respondent, filed papers therein, such intervention being with the leave of the LCC. It
is a joint appellant with the second appellant in the second appeal in the present
proceedings.
[4] The first respondent is the KwaLindile Community (KwaLindile) a community as
defined in the Act, of the KwaLindile Trust Farms, an area in the vicinity of the town of
1 Para 16 below.
Mthatha. It was the first respondent cited in the proceedings before the LCC. It is the
appellant in the first cross-appeal in the proceedings against part of the order issued by the
LCC.
[5] The second respondent is the Zimbane Community (Zimbane), a community as
defined in the Act, of the Zimbane Administrative Area, an area in the vicinity of the town of
Mthatha. It was the second respondent cited in the proceedings before the LCC. It is the
appellant in the second cross-appeal in the present proceedings against part of the order
issued by the LCC.
[6] The third respondent is the Bathembu Community (Bathembu), a community as
defined in the Act, of an area in and around Mthatha. It was the third respondent cited in the
proceedings before the LCC. Bathembu did not however participate in those proceedings or
in the present appeal proceedings.
[7] The fourth respondent is the Minister of Rural Development and Land Reform
(formerly the Minister of Agriculture and Land Affairs, and cited as such in the proceedings
in the LCC as the fourth respondent) (the Minister). The Minister was joined in the
proceedings as the Minister responsible in terms of the Act, as a possible interested party.
The fifth respondent is the Regional Land Claims Commissioner, Eastern Cape (the
regional commissioner, the fifth respondent in the LCC). The Minister and the regional
commissioner are the joint appellants in the third cross-appeal against part of the order
issued by the LCC.
[8] The sixth and eighth respondents are Landmark Mthatha (Pty) Ltd and UWP
Consulting (Pty) Ltd (respectively, the sixth and ninth respondents in the LCC). They filed
papers in the proceedings in the LCC in support of the municipality’s prayer for an order in
terms of s 34 of the Act (as to which, see below), but in the result abided the decision of the
court. Neither participated in the appeal proceedings.
[9] The seventh respondent is Proud Heritage Properties 119 (Pty) Ltd (eighth
respondent in the LCC). It did not participate in the proceedings in the LCC or in the present
appeal proceedings.
Legislative Framework
[10] The long heading to the Act records that its core purpose is ‘to provide for the
restitution of rights in land to persons or communities dispossessed of such rights after 19
June 1913 as a result of past racially discriminatory laws or practices’. The Act has its
genesis in s 25(7) of the Constitution (Act 108 of 1996) which provides that -
‘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.’
[11] Section 1 of the Act provides inter alia that:
‘ “restitution of a right in land” means –
(a) the restoration of a right in land; or
(b) equitable redress;
“restoration of a right in land” means the return of a right in land or a portion of land
dispossessed after 19 June 1913 as a result of past racially discriminatory laws or practices;
“equitable redress” means any equitable redress, other than the restoration of a right in land,
arising from the dispossession of a right in land after 19 June 1913 as a result of past racially
discriminatory laws or practices, including –
(a) the granting of an appropriate right in alternative state-owned land;
(b) the payment of compensation.’
[12] Section 4 of the Act established the Commission on Restitution of Land Rights and
provided inter alia for the appointment of a Chief Land Claims Commissioner and various
regional land claims commissioners. Section 22 established the LCC, referred to in the Act
as ‘the Court’.
[13] Section 6(3) provides that where the relevant regional commissioner (or an
interested party) has reason to believe that certain dealings (eg the sale, development or
rezoning) relating to land which may be the subject of an order of the LCC or in respect of
which there is an entitlement to claim restitution of a right in land, he or she may, after
lodgement of a claim in respect of such land and on reasonable notice to interested parties,
apply to the LCC for an interdict against such dealings. The LCC may grant such interdict,
subject to such terms and conditions and for such period as it may determine, or make any
other order it deems fit.
[14] Section 11 prescribes the requirements for the acceptance by the relevant regional
commissioner of the lodgement of a land claim, and provides, in subsection (1), that on
such acceptance the regional commissioner shall cause notice of the claim to be published
in the Gazette and take steps to make it known in the district in which the land in question is
situated. Subsection (6) enjoins the regional commissioner, immediately after publishing the
notice, to give notice in writing advising the owner of the land and any other party who, in
his or her opinion, might have an interest in the claim, of the publication of the notice and of
the provisions of subsection (7). The latter subsection provides that after publication of a
notice in respect of any land no dealings, as envisaged, in the land may be undertaken by
any person without his or her having given the regional commissioner one month’s written
notice of his or her intention to do so. Absent such written notice, and good faith, the LCC
may make a variety of orders relating to the dealings undertaken. Further, after publication
of the notice in respect of the land, qualified prohibitions will operate against eviction of
certain occupiers of the land, certain dealings with improvements on the land and entry
upon or occupation of the land without the permission of the owner or lawful occupier of the
land.
[15] Section 33 provides that in considering its decision in any particular matter the court
must have regard to a number of factors listed in the section.
[16] Section 34 provides as follows:
‘(1)
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.
. . .
(5)
After hearing an application contemplated in subsection (1), the Court may –
(a)
dismiss the application;
(b)
order that when any claim in respect of the land in question is finally determined, the
rights in the land in question, or in part of the land, or certain rights in the land, shall not be
restored to any claimant;
(c)
make any other order it deems fit.
(6)
The Court shall not make an order in terms of subsection (5)(b) unless it is satisfied that –
(a)
it is in the public interest that the rights in question should not be restored to any
claimant; and
(b)
the public or any substantial part thereof will suffer substantial prejudice unless an
order is made in terms of subsection (5)(b) before the final determination of any claim.
. . .
(8)
Any order made in terms of subsection (5)(b) shall be binding on all claimants to the rights in
question, whether such claim is lodged before or after the making of the order.
(9)
Unless the Court orders otherwise, the applicant shall not be entitled to any order for costs
against any other party.’
[17] Section 35 empowers the LCC to make orders in respect of the restoration of land or
rights therein or alternative redress (in a variety of forms, including the award of alternative
state-owned land or monetary compensation) in favour of a claimant, and further orders
ancillary thereto.
Delegations by the Minister to the Eastern Cape Government concerning, and donation by
the latter to the municipality of, relevant land
[18] On 1 April 1997 the then Minister (designated the Minister of Land Affairs) signed a
delegation in favour of the Member of the Executive Council for Housing and Local
Government in the Provincial Government of the Eastern Cape (the MEC), or his
successors in office, of the statutory power and authority held by the Minister to dispose of
certain state-owned land, subject to certain conditions.
[19] The land, which thereby vested in the Province of the Eastern Cape (and was so
registered in the relevant register of deeds), was described as:
‘REMAINDER of ERF 912 (formerly known as Umtata Town Commonage West and Umtata Town
Commonage East together representing Umtata Town Commonage), Municipality of Umtata,
District of Umtata, Province of the Eastern Cape.’
[20] One of the stipulated conditions read as follows:
‘. . . where a portion of the properties, formerly known as Municipal Commonages, is to be used for
housing/township development or for any other development, the said MEC or Local Authority or
any other competent authority, . . . must satisfy themselves beforehand that such development will
not result in the dispossession of people’s rights (formal or informal) granted on or over such
commonage land and in the event people’s rights are affected, it is a prerequisite that other
arrangements satisfactory to those people have been made, in consultation with the Department of
Land Affairs and in accordance with the provisions and/or conditions stated in the Policy and
Procedures on Municipal Commonage document by the said Department.’
[21] The delegation referred to was confirmed in a second delegation dated 22 December
1997 in which the wording was substantially the same as in the earlier delegation save that:
(a)
a clause was inserted providing that when properties were to be transferred by the
provincial government to a municipal council, the transfer was to be subject to the
conditions set out in the delegation, which were to apply mutatis mutandis to such
municipal council;
(b)
in clause 4, headed ‘Protection of Existing Land Rights’, the relevant wording of the
first delegation was altered to read that in the event that people’s rights were affected ‘it is
a prerequisite that a Social Compact Agreement with the affected community be concluded
to the satisfaction of those people . . .’, and a further proviso was added that the
development in question was only to commence after such agreement had been concluded
with the affected community.
[22] By letter, apparently dated 14 October 1997, the MEC advised the municipality that a
series of erven in Mthatha, being state-owned land, was being donated to it by the
Provincial Government of the Eastern Cape, acting in terms of delegated authority from the
Minister. The donations were inter alia subject to the specific conditions relating to
alienation of municipal commonage, where applicable, set out in the Ministerial delegation.
One of the erven donated was described as follows:
‘Remainder of Erf No 912 (formerly known as Umtata Town Commonage West and Umtata Town
Commonage East together representing Umtata Town Commonage).’
[23] By deed of transfer dated 29 January 1999, and pursuant to the donation thereof, the
Remainder of Erf 912 Mthatha was transferred by the Province of the Eastern Cape to the
municipality. However, no conditions relating to the alienation of municipal commonage
land were endorsed on the title deed.
Land claims by KwaLindile, Zimbane and Bathembu
[24] During 1998 the office of the regional commissioner received a number of land
claims, including claims by KwaLindile, Zimbane and Bathembu. All of the claim forms
submitted included claims in respect of land within the town of Mthatha, some of the land
falling within the area known as the Remainder of Erf 912 Mthatha.
[25] The answering affidavit of the regional commissioner filed in the proceedings in the
LCC, recorded that the various claims received consideration, and whilst this process was
still in progress in respect of some of the claims, two of the claims were published by the
regional commissioner as provided for in the Act. One of these claims was that made by
KwaLindile. (As will be set out later, the publication of this latter claim was the subject of
part of the relief sought by the municipality in the LCC).
[26] It was the case of the municipality that history revealed that none of the first three
respondents had previously been dispossessed of land which now fell within the boundaries
of the town of Mthatha. Accordingly, to the extent that the land claims lodged by KwaLindile,
Zimbane and Bathembu embraced claims in respect of portions of land within that area, the
claims were invalid. The contrary allegations contained in the papers filed by KwaLindile
and Zimbane had therefore to be rejected. However, as set out below, this court is not
seized with the resolution of these issues.
Commercial agreements between the municipality and other parties
[27] During 2004 to 2006 the municipality entered into various agreements with Cape
Gannet, Whirlprops and the sixth, seventh and eighth respondents relating to the lease and
substantial development of various properties situate in the town of Mthatha, being either
erven in Mthatha or proposed sub-divisions of the area known as the Remainder of Erf 912
Mthatha.
The current situation in Mthatha
[28] The evidence tendered on behalf of the municipality, which was not seriously
disputed, disclosed inter alia the following. The city of Mthatha is completely urbanised. It
comprises many suburbs, consisting of thousands of erven privately owned and developed.
In addition to residential erven, it has schools, hostels, hotels, guest houses, conference
centres, hospitals, medical clinics, taxi ranks, shopping centres, stores, railway lines, pump
stations, a police station, courts of law, private and governmental offices, banks and a
variety of public facilities such as a golf course and recreational park. The central business
district and the industrial areas are thriving. The N2 national road, linking the Eastern Cape
with KwaZulu-Natal, passes through the city. This is a major arterial road making a
substantial contribution to the advancement of the welfare of the city and the region as a
whole. There are also tracts of undeveloped land, including state-owned land. The
municipality is continually engaged in the development of the city in various directions. It
has to ensure that it continues to be in a position to undertake the provision of services to
its various communities in a sustainable manner and to play its part in maintaining its
vibrant economy, which contributes to the economy of the whole region and reduction of
unemployment, both in the city and the surrounding rural areas. The municipality has the
necessary infrastructure to sustain the above-mentioned activities, which are in the
interests of the whole region and the public at large, and to found further development to
meet the ever increasing demand for the contribution it can make. The commercial
agreements concluded by the municipality with other parties referred to in paragraph 27
above are integral parts of the continual developments the municipality is undertaking.
Interdict proceedings instituted by the regional commissioner
[29] The regional commissioner alleged that the municipality was made aware of the
various land claims lodged with her, which embraced claims in respect of land within the
town of Mthatha, including the area known as Remainder of Erf 912 Mthatha. That
notwithstanding, the municipality proceeded, in terms of the commercial agreements in
question, to make the affected land available for development. This, so it was contended,
was in violation of the Act as well as the conditions contained in the delegations by the
Minister, to which reference has been made above. In doing so, the municipality had acted
in bad faith, and had been guilty of misrepresentation in failing to advise the other
contracting parties of the land claims in question.
[30] The municipality recorded that, pursuant to the agreements referred to in paragraph
27 above, development of the sites in question in fact commenced during February 2007,
and in some instances construction was also commenced.
[31] The regional commissioner however approached the LCC to seek, and was granted,
an interdict against the developments in progress ‘pending serious and consultative
negotiations,’ in case no. 66/2007. The negotiations were undertaken, but proved to be
unsuccessful and were aborted in January 2008. Each side placed the blame for the failure
of the negotiations at the door of the other side. This, too, is not an issue with which this
court need concern itself. The municipality was given leave, in the event of an impasse
being reached, to launch an application in terms of s 34 of the Act.
The present litigation
[32] On 8 October 2008 the municipality invoked s 34 of the Act and launched the
present litigation.
(a) Para 4 of the municipality’s amended notice of motion sought an order in the following
terms:
‘that when the claims of the first, second and third respondents in respect of any land situate in the
town of Mthatha, including the Remainder of Erf 912 Mthatha (the land), are finally determined, the
rights in the land or any portions of the land shall not be restored to any successful claimant.’
(b) Para 5 sought, in the alternative, a declarator that, notwithstanding the claims lodged in
respect of the land, the municipality was entitled to develop the land.
(c) Para 6 sought a review, and the setting aside as unlawful, of the decision of the regional
commissioner to publish a notice that a claim had been lodged in terms of the Act by
KwaLindile, insofar as it related to the Remainder of Erf 912 Mthatha and various other
erven in Mthatha. Paras 7 and 8 sought orders ancillary to that sought in para 6.
(d) Para 9 sought an order for costs against any respondent who opposed the municipality’s
application.
[33] In their respective answering affidavits KwaLindile and Zimbane opposed the relief
sought by the municipality and prayed for an order dismissing the application with costs.
Inter alia, reliance was placed on the papers filed by the regional commissioner. The
Minister and the regional commissioner filed a joint answering affidavit, deposed to by the
regional commissioner, which dealt at length with the allegations of the municipality, and
sought the dismissal of the application with costs.
[34] In substance, the sixth respondent and Cape Gannet supported the main relief
sought by the municipality. The ninth respondent also associated itself with the relief sought
by the municipality. Whirlprops supported the main relief sought by the municipality, as well
as the prayers relating to the review of the regional commissioner’s decision to publish the
claims lodged by KwaLindile. It also prayed for an order for costs against the regional
commissioner.
Order issued in the LCC
[35] The order granted by Bam JP read as follows:
‘The following order is made in terms of section 34(5)(c) of the Act.
(i) The Remainder of Erf 912 Mthatha shall not be restored to any claimant or prospective
claimant.
(ii) All the prayers seeking the withdrawal, review and the setting aside of publication of notices
in the Daily Despatch and the Government Gazette by the 5th respondent are dismissed.
(iii) The resumption and the initiation of all development projects upon any portion of the
Remainder of Erf 912 Mthatha by the applicant shall only proceed with the full
transparent and exhaustive consultation with the 4th, 5th and present and prospective
claimant respondents.
(iv) Developers and prospective developers must ensure that whatever agreements [are]
reached with the applicant in respect of Remainder of Erf 912 Mthatha are in compliance
with paragraph (iii) of this order and should revise and re-structure such agreements
accordingly. They must also ensure compliance with the spirit and letter of the
Delegation, the Constitution and the Act on the part of the applicant and the 4th and 5th
Respondents.
(v) The applicant and the 4th and 5th Respondents are ordered and are expected to take their
responsibilities to the public seriously and take the initiative in reaching consensus. They
should jointly research projects and lay down the criteria for the advertising and
acceptance of tenders for developments on the Remainder of Erf 912 Mthatha.
(vi) There is no order as to costs.’
Attacks on appeal
[36] There was no attack on the order of Bam JP in para (vi) that no party be awarded
costs in respect of the proceedings before him. No doubt the learned judge was swayed,
correctly, by the fact that at issue in the court a quo were rights contemplated in the Act as
well as the Constitution, and considered in the circumstances that, as envisaged in s 34(9)
of the Act,2 it would not be proper for any party to be mulcted in costs. As will be shown
below however different considerations apply in respect of the costs on appeal.
2 Para 16 above.
[37] The municipality sought to assail the order in para (i) insofar as the LCC restricted
the relief granted to an order only in respect of the Remainder of Erf 912 Mthatha, in
contradisdinction to the whole of the town of Mthatha. It further attacked the imposition of
the riders set out in paras (iii) to (v) to the order in para (i), and the dismissal in para (ii) of
the prayers in the review application.
[38] Cape Gannet and Whirlprops jointly appealed against the order in para (iv) to the
extent that the order had a bearing on the existing lease agreements concluded between
them and the municipality.
[39] The cross-appeal of KwaLindile was against the grant of the order in para (i), as well
as against the orders in paras (iii) to (v). The cross-appeal of Zimbane and the joint cross-
appeal of the Minister and the regional commissioner were in similar terms.
The judgment of the LCC
[40] The first issue that arises relates to the restricted reference in para (i) of Bam JP’s
order (as well as in paras (iv) and (v)) only to the Remainder of Erf 912 Mthatha in
contradistinction to a reference to the whole town Mthatha, including the Remainder of Erf
912 Mthatha. It appears that the restriction found its origin in the following statement in the
judgment: ‘The land in question is described in the Notice of Motion as the “Remainder of
Erf 912 Mthatha”’.
[41] The statement reflects a misreading of the notice of motion. As set out in para 32(a)
above, the reference in para 4 of the notice of motion was in fact to ‘any land situate in the
town of Mthatha, including the Remainder of Erf 912 Mthatha (the land)’. (The correct
reference was in fact quoted in an earlier passage in the judgment of Bam JP). The
judgment does not reflect that, for the purposes of the orders to be made, Bam JP sought to
draw any distinction between the Remainder of Erf 912 Mthatha and the rest of the town of
Mthatha; no argument along such lines was presented upon behalf of any of the parties;
and in fact no such distinction is to be drawn. The learned judge accordingly erred in
restricting the operation of the order he granted. I will revert to this aspect later when I
consider the attacks on para (i) of Bam JP’s order.
[42] The second issue was also a one of land identification namely of the land that is
embraced in the land claims lodged with the regional commissioner. Bam JP correctly
commented that it was not clear from the papers which specific areas of Mthatha were
encompassed in the Remainder of Erf 912 Mthatha. Nor was there exact clarity on the
precise land that was the subject of the various claims. (In fact, during argument in this
court counsel for Zimbane at one stage intimated that Zimbane’s claim related to the whole
of Mthatha and counsel for KwaLindile recorded that it was no longer pursuing certain
portions of its claim to land within the town of Mthatha). A related issue was the contention
of the municipality that the claims of Kwalindile, Zimbane and Bathembu were invalid claims
in that, whatever the allegations of the three claimants, they had in fact not been
dispossessed of any land situate in Mthatha, including the Remainder of Erf 912 Mthatha.
[43] It is however not necessary that this court concern itself with these issues, and the
conclusion to be reached in the present proceedings is not affected thereby. These issues
would properly fall to be resolved by the LCC when it hears and determines the land claims
in question.
[44] The learned judge noted that, as provided for in s 34(6) of the Act, the issues for
decision were whether it was in the public interest that the rights in question should not be
restored to any claimant and whether the public or any substantial part thereof would suffer
prejudice unless an order in terms of ss (5)(b) were issued before the final determination of
any claim.
[45] As to the concept of ‘public interest’ the learned judge stated –
‘. . . the starting point . . . is simply that “public interest” is that which is in the interest and benefit of
the community or communities served by applicant municipality on the land in question. The
claimant respondents are included in this group irrespective of the validity of their claims. Should
their claims be successful they will, of course, still be entitled to “just and equitable redress” if the
“public interest” supercedes their constitutional right to restitution.’ (Original emphasis).
[46] On one ground the learned judge found that the above test of public interest was not
satisfied, namely with respect to the commercial agreements concluded by the municipality
and certain of the respondents (described by him as ‘unilateral agreements’ concluded by
these parties). In their present formats, so it was found, the developments in question ‘were
designed primarily to promote entrepreneurial pursuits of a few with minimal or peripheral outcomes
to the communities served by the applicant particularly those with present and prospective claims to
the land such as the First and Second Respondent’. The learned judge therefore did not agree
with the contention of the municipality that the setting up of a retail complex, a casino and
upper class suburb (one of the developments) was ‘significantly’ in the public interest,
having particular regard to the shareholding in the developments.
[47] On the other hand, it was held that a strong argument in favour of the public interest
test was reflected in what was referred to as the ‘reality’ recognised in Nkomazi3 in the
following passage:
’Then there is the reality that restoration of land within the towns could well require, as envisaged by
the ninth respondent, towns people to be expropriated of their houses, the expropriation of schools,
churches, parks and other facilities, as could occur also in respect of the numerous business
industries and other economic activities in the town. Major social disruption, the avoiding whereof is
advocated in s 33(d) of the Restitution Act, would be inevitable.’
[48] The judgment of the court a quo continued as follows:
‘Indeed, it appears to me that the intention of the legislature in enacting section 34 preventing
restitution is, among others, precisely to avert the chaos that would follow were established cities
and settlements suddenly carved up piecemeal into as many separate and disparate pieces and
portions as there were claims.’
[49] The learned judge accepted the submission on the behalf of KwaLindile that a
significant facet of public interest, a land claim, provided for in the Constitution and the Act,
could not be left out of the equation. However, he held that the curtailment of the claimants’
rights to restitution consequent upon the grant of an order in terms of s 34(5)(b), would not
entail their claims not being dealt with as contemplated in the Act: they would still be
entitled to equitable redress, in effect the reverse side of the coin of a finding that the tests
of public interest and prejudice have been answered in favour of the municipality.
[50] The learned judge noted that the stance of Zimbane was, firstly, that it was not
seeking restoration to itself of what was referred to as ‘any land in the city of Mthatha or
3 Nkomazi Municipality v Ngomane of Lugedlane Community and others [2010] 3 All SA 563 (LCC) para 29.
land in private hands,’ but would instead in due course seek an award of what was
described as participatory benefits in any developments and projects in respect of portions
of the subject land, in compliance, so it was put, with inter alia the tenets provided for in the
Act, the Constitution and also the ministerial delegations that sanctioned the donation of the
land to the municipality. The second contention of Zimbane was that it was entitled to
restoration of those portions of land within the Remainder of Erf 912 Mthatha which were
undeveloped (and unserviced).
[51] It was further recorded that, in the view of the learned judge, it was clear that the
opposition of Zimbane to the relief sought by the municipality (in the form of an order in
terms of s 34(5)(b) of the Act) was born of suspicions about the municipality’s propensity ‘to
go it alone’ when it came to reaping the fruits of development. Hence, Zimbane inter alia
sought the restoration of undeveloped land to itself so that it could independently be a party
to the development thereof. It was intimated by Bam JP that, in the orders to be made, he
would attempt to address these particular concerns of Zimbane.
[52] It was however made clear in the judgment that the learned judge remained of the
view that an order in terms of s 34(5)(b) was justified by reason of the satisfaction of the
‘public interest’ test. I will revert to this aspect later.
[53] The opposition of the Minister and the regional commissioner to an order in terms of
the section was stamped by Bam JP as being ‘the most serious and damaging’. It was
pointed out that apart from the filing of their joint answering affidavit, the regional
commissioner had been statutorily enjoined by s 34(2) to investigate, and submit a report to
the court on, the desirability of an order that the land in question not be restored. Instead,
so it was put, ‘she submitted a report emphatically on the undesirability of making such an
order’. The gravamen of her opposing argument was that the claimants were entitled to the
restoration of those parts of the Remainder of Erf 912 Mthatha which had not yet been
developed. It was further submitted that ‘feasibility’ was not a bar to the restoration of such
portions and, accordingly, in terms of the case law and the Constitution, the primacy of
restitution required to be recognised, notwithstanding the other forms of equitable redress
that were available. Reliance had been placed on a dictum in Khosis4.
[54] The counter to these arguments by Mr Mbenenge (who appeared for the municipality
in the court a quo), so Bam JP recorded, replicated the submissions that had won the day
in Khosis and Nkomazi:5
‘. . . even the partial restoration of portions of an established metropolitan city such as Mthatha
would seriously disrupt and disintegrate the city’s stability and development. The converse
argument that follows is that the “public interest” would be served by granting the order for non-
restoration.’
Bam JP recorded that he was entirely in agreement with ‘this logic’.
[55] The learned judge’s conclusion on the issue of public interest was couched as
follows:
4Khosis Community, Lohatla, and others v Minister of Defence and others 2004 (5) SA 494 (SCA) para 30: ‘In
considering its decision in this regard a court has to take into account the factors listed in s 33. All of them are
not necessarily applicable in any given case. However, in a case such as the present the general approach
ought to be that the dispossessed community is entitled to restoration of the land unless restoration is
trumped by public interest considerations.’
See too Mphela and Others v Engelbrecht and others [2005] 2 All SA 135 (LCC) at 184; Mphela v
Haakdoornbult Boerdery CC 2008 (4) SA 488 (CC) para 32.
5 See n 3 above.
‘Consequently, I find that it would be in the “public interest” not to restore to any claimants any
portion of the land within the jurisdiction of the applicant and constituting Remainder of Erf 912
Mthatha. I find that it would, indeed, not be in the “public interest” to restore or even reserve or
excise any portion of the city as that could lead to chaos and possible upheaval resulting from
competing claims to the city. The overlapping of claims might lead to serious problems causing
inter-community tensions and strife.’
[56] In respect of the second threshold requirement provided for in s 34(5)(b), substantial
prejudice to the public or a substantial part thereof were an order in terms of s 34(5)(b) not
to be made before the final determination of any claim, the judgment of the LCC read as
follows:
‘This requirement is, in this case, the corollary to the “public interest” threshold in that what has
been shown to be in the “public interest” will be prejudicial to that public if not granted. I accept the
applicant’s submissions that failure to grant the order could stifle or slow down development within
the subject land due to uncertainty in the outcome of claims to the detriment of its entire
communities. Financial institutions will be reluctant to provide any financial assistance, even where
claimants consent to such development, to the detriment or substantial prejudice of many including
the 1st and 2nd respondents. It is, furthermore, common knowledge that the finalisation of land claims
is often a very long process. I am satisfied that the public, or any substantial part thereof, will suffer
substantial prejudice unless the order is granted. Accordingly, the section 34 application is to be
granted.’
[57] Bam JP then reverted to the reasons why he granted the orders set out in paras (iii)
to (v), and he amplified his earlier comments6 by adding the following paras:
‘[27]
However, given the poor track record of the applicant in complying with the spirit and letter of
the delegations, the Constitution and the Act in the unilateral awarding of tenders to the 6th – 10th
Respondents, the application will be granted subject to the conditions to be set out presently.
[28] The conditions to be laid down seek to address particularly the concerns convincingly
articulated in the opposing affidavits on behalf of the 1st, 2nd and 5th Respondents. In addition, this
court has, mero motu, taken judicial notice of the high levels of corruption, factionalism and greed
that have assailed our national and local government structures such as might lead to chaos and
social upheaval if not subjected to scrutiny and transparency.’
[58] Bam JP finally recorded that it was unnecessary to deal with the review application,
save to point out that disputes concerning the validity of land claims as published fell to be
adjudicated by the LCC in due course once it became seized of such proceedings.
Assessment
[59] On the premise that the issue of an order in terms of s 34(5)(b) would be proper in
this matter (as to which, see below) I propose first to consider the propriety of the orders
contained in paras (iii) to (v) of the order issued by Bam JP. Mr Mbenenge (who with
Messrs Havenga and Da Silva, appeared for the municipality in this court), subjected the
issue of the orders in question to trenchant criticism. Mr Pammenter, for Cape Gannet and
Whirlprops, associated himself with the argument.
6 Paras 46, 50 and 51 above.
[60] I agree with the submission that the comments by Bam JP, firstly, that the
developments envisaged in the commercial agreements concluded between the
municipality and the other relevant parties had as primary purpose the promotion of
entrepreneurial pursuits, and, secondly, that the agreements evinced that the municipality
had a poor track record in the matter of compliance with the spirit and letter of the
delegation, the Constitution and the Act, did not enjoy persuasive foundation in the
evidence. Moreover, the learned judge incorrectly sought to stress the position of present
and prospective land claimants (an approach which opposing counsel sought to support
during argument).
[61] In the first place, it needs no argument that developments of the nature of those that
are in issue advance the weal of the broader public, both of Mthatha and of the surrounding
region. As intimated in para 28 above such developments are integral facets of the growth
of the city, with its concomitant benefits to the community as a whole. Second, the
suggestion that to meet the requirement of public interest, ‘shareholding’ in the
developments should now be made available to persons who at this stage are no more than
claimants, or would-be claimants, has only to be stated to be rejected. For development of
a city to stand still and await the determination of which persons have valid land claims,
would of necessity bring in its train manifest disadvantages to the community as a whole.
[62] In seeking to advance a contrary approach, Mr Benningfield (for Zimbane) laid stress
on the terms of the delegation by the Minister to the MEC, in respect of which he supported
the apparent approach of Bam JP that same were binding on the municipality. Thus, he
contended that the municipality was not entitled to proceed with any development until the
Social Compact Agreement referred to in clause 4 of the delegation,7 had been concluded.
To complete his argument he contended that by reason of the land claim lodged by it
Zimbane qualified as ‘people whose rights were affected’.
[63] Even on the premise that the terms of the delegation are binding on the municipality
(which this court is not required to find), the argument cannot be upheld. The relevant
section in the delegation refers, in terms, to existing land rights, in contradistinction to
claimed rights. This issue engaged the attention of Petse J in No-Italy Phindiwe Mtirara v
Landmark Mthatha (Pty) Limited (unreported, case no 607/2007 ZAECM, 1 June 2007).
Explaining the emphasis he placed on the words ‘existing rights’ in clause 4 of the
delegation the learned judge stated:
‘There can be no doubt that this clause cannot be construed to encompass someone who has
lodged a claim with the Land Claims Commissioner for the restitution of land of which the claimant
was dispossessed after 1913 as a result of past discriminatory laws or practices as provided for in
the Restitution of Land Rights Act because in my view the mere lodgement of a land claim with the
Lands Claim Commissioner is by itself an acceptance by the claimant that he/she does not have
existing rights in the land in respect of which a claim is made having been dispossessed thereof “as
a result of past discriminatory laws or practices”. . . hence the claim . . . .’ (Emphasis in the
original. )
I align myself with this approach.
7 Para 23(b) above.
[64] I further cannot endorse the preparedness of the learned judge in the court a quo to
take judicial notice of the ‘high levels of corruption’ etc,8 as part of the foundation for the
making of the orders in question. Whatever the manifestation of corrupt practices etc in
other governmental circles, it was not permissible in this case to visit the municipality with
same, without any evidential foundation therefor and to craft an order against the
municipality on that score.
[65] Two further submissions were made by counsel. First, the content of the orders in
question sought to clothe the Minister and the regional commissioner with more powers
than those envisaged in the Act; in short, the right in effect to veto the terms of a contract
concluded by the municipality, apparently with a view to securing equitable redress for a
claimant. However, so counsel argued, the role of the regional commissioner in respect of
claims under the Act is investigative, facilitative and mediatory, not adjudicative,9 and the
orders were pro tanto impermissible. The submission was valid.
[66] Second, the orders were void for vagueness and uncertainty, and were accordingly
not capable of implementation or enforcement. Suffice it to say that an analysis of the
orders demonstrates the validity of this submission.
[67] As to the two threshold requirements posed in s 34(6), the following principles are
applicable:
8 Para 57 above.
9 See eg Farjas (Pty) Ltd and another v Regional Land Claims Commissioner, KwaZulu-Natal 1998 (2) SA 900
(LCC) para 19 (of the judgment of Bam P) and para 41 (of the judgment of Dodson J).
(a)
While s 34(5)(b) provides for an extraordinary ante omnia order (ie prior to the
determination of claims),10 once the court is satisfied that the two jurisdictional requirements
have been met, the court does not have a further overriding discretion in terms of the
section not to grant an order.11
(b)
The decision on both requirements involves the exercise of a value judgment, based
on the facts found to be proven. On this latter score the court has to take into account the
various factors listed in s 33 to the extent that a particular factor is of application in any
given case, and is also entitled to have regard to a number of disparate and
incommensurable factors, in the result exercising a wide discretion.12
(c) On appeal, the appellate tribunal is obliged to accord deference to the findings of the
lower court, more especially where the latter court is a specialist court called upon to make
value judgments.13
[68] The reasoning of Bam JP in arriving at the conclusion that it would be in the public
interest for an order in terms of s 34(5)(b) of the Act to be issued appears from paras 47-55
above. I align myself with this reasoning (subject to my earlier comments bearing on the
orders in paras (iii)-(v) of the order of Bam JP). Specifically, the learned judge’s references
to ‘the reality’, ‘the chaos’ and the established nature of the city of Mthatha satisfactorily
echo the references in s 33 of the Act to ‘feasibility of restoration’, ‘social upheavel’ and
‘current use’ (said in Khosis14 to bear closely on public interest considerations), to which
may be added the element of forward planning adverted to in para 28 above. These
10 Nkomazi n 3 above, para 8.
11 Nkomazi para 12; Khosis n 4 above, para 7.
12 Nkomazi para 9; Khosis paras 8, 30 and 33.
13 Khosis para 11.
14 See n 4 above, para 33.
considerations are of no less application to land which at the present moment is as yet
undeveloped. It may also be mentioned that in this matter there is no suggestion of an
ancestral umbilical cord between the land claimed and any of the claimants. I agree
therefore that it is in the public interest for an order in terms of s 34(5)(b) to issue.
[69] As to the second requirement of ‘substantial public prejudice’ I again align myself
with the approach of Bam JP as reflected in para 56 above. Depending on the evidence,
the reverse side of the coin of a finding of public interest in the grant of an order is generally
a finding of public prejudice should the order be refused. In addition to the features listed by
the court a quo emphasis may be laid on the fact that it is not in the public interest, and
would therefore be prejudicial to the public, to have trials (re restoration of rights in land)
which have no realistic prospects of success in the light of the finding in respect of the first
jurisdictional requirement.15 Similarly, it may be emphasised that cognisable public
prejudice would follow on a refusal of an order in terms of s 34(5)(b) having the result, as it
would in the present matter, of hampering the municipality in its efforts in striving after a
contribution to the welfare of the broader community of Mthatha and the surrounding region.
I accordingly agree that the second threshold requirement for the grant of an order was
met.
[70] For the reasons detailed in paras 40 and 41 above it is necessary for the order in
para (i) made by Bam JP to be amended to include a reference to the whole town of
Mthatha, instead of merely the Remainder of Erf 912 Mthatha. Further, in the light of the
provision in s 34(8) that an order in terms of s 34(5)(b) is binding on all claimants, present
15 Khosi n 4 above, para 42; Nkomazi n 3 above, para 9.
and future, it would be appropriate for the references in the notice of motion to the first three
respondents, as claimants, not to be included in the order made. These aspects will be
reflected in the order set out at the end of this judgment.
[71] The final substantive issue relates to the application of the municipality for the review
and setting aside of the regional commissioner’s publication of the land claims lodged with
her by KwaLindile. It is however unnecessary and undesirable for any order to be made in
respect of the prayers in question. It is unnecessary because the relief sought in the
prayers does not have a bearing on the main relief which the municipality has secured, ie
an order in terms of 34(5)(b). The publication itself will also not affect the decision of the
LCC in due course when it is seized with a determination of the claims and the relief
(excluding restoration of any land or rights therein) to be granted in respect of any valid
claims. At this stage the only effect of publication of the claims is that, as provided for in s
11(7) of the Act,16 one month’s written notice of the intention to engage in dealings in the
land must be given to the regional commissioner, and the latter, if so advised, is also
entitled in terms of s 6(3) of the Act17 to approach the LCC for interdictory relief against
dealings in any relevant land. And it is undesirable to deal with the review application
because this would involve a consideration of the ambit of the claims made by KwaLindile,
a question properly to be considered by the LCC.
16 Para 14 above.
17 Para 13 above.
Costs
[72] The remaining issue relates to the costs of the appeal proceedings. The submission
that costs should follow the result can only be upheld to a limited extent. In Biowatch18 a
number of principles were enunciated as being applicable to a costs award in constitutional
litigation. Applying those principles to the present matter the following conclusions are
appropriate:
(a)
The municipality and Cape Gannet and Whirlprops, although being the successful
parties, are not entitled to, nor did they seek, a costs order against KwaLindile and
Zimbane, who were private parties seeking to assert a constitutional right against a
government body (the municipality).
(b)
The regional commissioner, representing the state, was the prime mover in resisting
the relief sought, initially in the LCC by the municipality, and on appeal by the municipality
and Cape Gannet and Whirlprops. She launched the interdict proceedings referred to
earlier. Her statutory report in terms of s 34(2)19 unequivocally took up the cudgels on
behalf of the claimants insofar as undeveloped land in Mthatha was concerned and
propounded the view that the claimants were entitled to the restoration of such land,
notwithstanding the factor of ‘feasibility’. She remained adamant in that stance in the
answering affidavit to which she was the deponent. Reliance was placed on her stance by
the other unsuccessful respondents. She was in short the driving force behind the litigation.
Accordingly, Cape Gannet and Whirlprops, private litigants who achieved success in
constitutional litigation against a government agency, the regional commissioner, are
entitled to an order that she bear their costs on appeal. Notwithstanding that the
municipality is a government body, its budget vote is separate from that of the Department
18 Biowatch Trust v Registrar, Genetic Resources, and others 2009 (6) SA 232 (CC).
19 Para 53 above.
of Rural Development and Land Reform; it is therefore to be equated with a private litigant
who achieved success against a government body, and it is accordingly entitled to a costs
order against the regional commissioner. KwaLindile and Zimbane did not seek any cost
order (and, so we were advised from the Bar, they were in any event being sponsored in
the litigation by the Minister and the regional commissioner).
[73] In view of the importance and complexity of the matter, the municipality was justified
in engaging the services of three counsel.
Order
[74] The following order is made:
1.
The appeals are upheld with costs, including the costs of three counsel, where
applicable, the costs to be paid by the fifth respondent.
2.
Paragraphs (i) to (v) of the order of the court below are set aside and for them are
substituted the following:
‘(i) In terms of section 34(5)(b) of the Restitution of Land Rights Act 22 of 1994 it is
ordered that when claims in terms of the Act in respect of any land situate in the town of
Mthatha, including the Remainder of Erf 912 Mthatha (the land), are finally determined,
the rights in the land or any portion thereof shall not be restored to any successful
claimant.
(ii) No order is made in respect of the application for the review of the publication by the
fifth respondent of claims lodged in terms of the Act to land situate within the
municipality of Mthatha.’
3.
The cross-appeals are dismissed.
4. The costs of the respondents in the cross-appeal, including the costs of three
counsel, where applicable, will be paid by the fifth respondent.
________________________
F KROON
ACTING JUDGE OF APPEAL
APPEARANCES:
FOR FIRST APPELLANT:
S Mbenenge SC
H Havenga SC
A Da Silva
Instructed by:
Dayimani Sakhela Inc, Mthatha
Bokwa Attorneys, Bloemfontein
FOR SECOND AND THIRD
APPELLANTS:
CJ Pammenter SC
Instructed by:
Cox Yeats Attorneys, Durban
McIntyre & Van der Post, Bloemfontein
FOR FIRST RESPONDENT:
LB Broster SC
AA Gabriel SC
Instructed by:
M Magigaba Inc, Mthatha
Matsepes Inc, Bloemfontein
FOR SECOND RESPONDENT: PG Benningfield
Instructed by:
Nongogo Nuku Inc, East London
EG Cooper Majiedt Attorneys, Bloemfontein
FOR FOURTH AND FIFTH
RESPONDENTS:
N Dukada SC
T Seneke
Instructed by:
State Attorney, Mthatha
State Attorney, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
1 June 2012
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
King Sabata Dalindyebo Municipality and Others v Kwalindile Community and
Others (537/11) [2012] ZASCA 96 ( 1 June 2012)
Media Statement
Today the Supreme Court of Appeal (SCA) delivered judgment upholding an appeal from the
Land Claims Court (LCC). The appeal was brought by among others the King Sabata
Dalindyebo Municipality and responded to by among others the Regional Land Claims
Commissioner: Eastern Cape (Regional Commissioner) and the Minister of Agricultural and
Land Affairs (Minister).
The appeal centred on an order issued by the LCC in terms of section 34 of the Land Rights
Act 22 of 1994 (Act). The section allows for any national, provincial or local government body
to make application to the LCC for an order that the land the government body owns, or which
falls within its jurisdiction, shall not be restored to a land claimant or a prospective claimant.
Section 34(5) empowers the LCC to make any order it deems fit.
The LCC had to decide whether it was in the public interest that the rights in land should not
be restored to any claimant and whether the public would suffer prejudice unless the order
applied for was issued. The court did not agree with the municipality’s contention that a
development on the land in question, including a casino, a retail complex and an upper class
suburb would significantly be in the public interest, having particular regard to the
shareholding in these developments. It did find however that it would be in the public interest
not to restore to any claimants any portion of the land. It found that indeed it would be against
the public interest if the order were not granted. The failure to grant the order could stifle or
slow down development due to uncertainty in the outcome of the claims to the detriment of
the entire community.
The court however did not grant the section 34(5) order without more; it attached conditions to
the order as it reasoned the King Sabata Dalindyebo Municipality had had a “poor track
record . . .in complying with the spirit and letter of the Delegations [which granted it rights to
the land], the Constitution and the Act”. It reasoned that it was laying down the conditions to,
among other things, address concerns borne out of its taking “judicial notice of the high levels
of corruption, factionalism and greed that have assailed our national and local government
structures such as might lead to chaos and social upheaval if not subjected to scrutiny and
transparency.”
The SCA found that these comments by the LCC did not enjoy persuasive foundation in the
evidence. What is more, the SCA found the LCC had incorrectly stressed the position of
present and prospective land claimants. The court found that the orders of the LCC sought to
clothe the Minister and the Regional Commissioner with more powers than those envisaged
in the Act. They were given the right to veto terms of a contract concluded by the municipality,
while the role of the Regional Commissioner was merely investigative, facilitative and
mediatory, not adjudicative. The orders were therefore impermissible. Furthermore, the court
found the orders were void for vagueness and were accordingly not capable of
implementation or enforcement.
The SCA largely agreed with the LCC’s reasoning in granting the section 34(5)(b) order.
However, it amended the order to reflect the correct land portion it applied to; as the order
was applicable to all future and present claimants, the claimants specified in the LCC order
were removed; and the conditions the LCC attached to the granting of the order were also
removed.
A further substantive issue before the court related to an application by the municipality for
the review and setting aside of the Regional Commissioner’s publication of land claims lodged
with her by one of the respondents. The court found however that it was unnecessary and
undesirable to make any order in respect of that application.
The appeals were upheld with costs to be paid by the Regional Commissioner and the cross-
appeals were dismissed.
--- Ends ---
|
4076
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 804/2022
In the matter between:
ESTATE LATE GOOLAM MURTUZA HAFIZ First Appellant
MOHAMED IQBAL ESSOP Second Appellant
SAYED HOOSEN AHMED Third Appellant
and
AHMED ZAKIR HAFIZ
First Respondent
AKHMED RAZA WAHAB Second Respondent
SAYED MUKTHAR MOHAMMED
Third Respondent
SHAKEEEL AHMED HAFIZ Fourth Respondent
ANEEZ AHMED HAFIZ Fifth Respondent
MASTER OF THE HIGH COURT,
PIETERMARITZBURG Sixth Respondent
REGISTRAR OF DEEDS, KWAZULU-NATAL Seventh Respondent
eTHEKWINI METROPOLITAN MUNICIPALITY Eighth Respondent
Neutral citation: Estate late Hafiz and Others v Hafiz and Others (804/2022)
[2023] ZASCA 114 (27 July 2023)
Coram:
DAMBUZA ADP and GOOSEN JA and MALI, SIWENDU and
UNTERHALTER AJJA
Heard:
Appeal disposed of without the hearing of oral argument 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 via email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is deemed to be
11h00 on 27 July 2023.
Summary: Trust – validity of deed of trust – requirements for valid trust
established – ambiguity in clause relating to succession of trustees – interpretation
of trust deed – appeal dismissed.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg
(Madondo AJP, Seegobin J and Ntshulana AJ, sitting as court of appeal):
Save to the extent set out in paragraph 2 below, the appeal is dismissed.
Paragraph 2 of the order of the full court is varied so that the order reads
as follows:
‘1. The appeal is upheld.
2. The order of the court a quo is set aside and is substituted by the following:
2.1 It is declared that the Goolam Murtuza Hafiz Trust is valid and the said Trust
shall be administered in accordance with the terms of the Memorandum of Trust
Agreement dated 6 September 1994.
2.2 It is declared that the Trustee for the time being of the Goolam Murtuza Hafiz
Trust shall be Ahmed Zakir Hafiz (Identity no. 620928625089).
3. The first respondent, the fifth respondent and the sixth respondent together with
the Goolam Murtuza Hafiz Trust, are directed to pay the first and second
applicants’ costs in respect of the application and counter application in the court
a quo and the appeal costs, jointly and severally the one paying the other to be
absolved.’
The appellants are ordered to pay the first and second respondents’ costs
of appeal.
________________________________________________________________
JUDGMENT
________________________________________________________________
Goosen JA (Dambuza ADP and Mali and Siwendu and Unterhalter AJJA
concuring):
[1] This appeal concerns the validity of the Goolam Murtuza Hafiz Trust (the
Hafiz Trust) created in 1994. The order challenged on appeal is that of the full
court of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the
full court). It upheld an appeal against an order of the KwaZulu-Natal Division
of the High Court, Pietermaritzburg (the high court). Special leave to appeal was
granted by this Court on 3 December 2020.1
The parties
[2] The first appellant is the executor of the estate of the late Goolam Murtuza
Hafiz, who was the settlor and founder of the Hafiz Trust. The second and third
appellants, Mohamed Iqbal Essop and Sayed Hoosen Ahmed respectively, were
declared to be trustees of the Hafiz Trust by the high court.
[3] The first, second and third respondents were declared to be trustees by the
full court. Only the first and second respondents participated in the appeal. The
first, fourth and fifth respondents are the sons of Goolam Hafiz.2 The sixth
respondent is the Master of the High Court, Pietermaritzburg (the Master). The
seventh and eighth respondents, namely the Registrar of Deeds and the eThekwini
Municipality, took no part in the proceedings.
Background
[4] Goolam Hafiz was a prominent member of a Suni Islamic community in
Sherwood, Durban. In 1904, his grandfather, Hajee Shah Goolam Mohammed
(Hajee Mohammed), took ownership, in trust, of a property on which was erected
the Sherwood Mosque. The deed of transfer provided that, on the death of Hajee
1 The application was commenced before the high court in 2013. It was heard in February 2018 and judgment was
delivered on 23 August 2018. The appeal was heard by the full court on 27 January 2020 and judgment was
delivered on 12 May 2020.
2 I shall refer to these parties by name.
Mohammed, trusteeship would pass to his eldest male descendant and thereafter
to the eldest male descendant, in turn.3
[5] Hajee Mohammed handed over control of the mosque to his son, Goolam
Hafiz Soofi (Goolam Soofi), who held office until his death in 1953. Goolam
Soofi’s eldest son, Goolam Hafiz, then took up office as trustee of the Sherwood
mosque (the Mosque Trust).4
[6] In 1983, Goolam Hafiz’s eldest son, Ahmed Hafiz (the first respondent),
took up the running of the affairs of the mosque on a full-time basis. In 1991,
Goolam Hafiz purchased Sub 174 (of 136) of the Farm Riding 15152 (Property
1), situated alongside the mosque. Ahmed Hafiz raised a loan to purchase the
property. The loan was settled from donations by members of the Suni
community. On 6 September 1994, Goolam Hafiz (as settlor) and Ahmed Hafiz
(as First Trustee) entered into a written agreement (the 1994 deed of trust), in
which Goolam Hafiz undertook to donate Property 1 in trust to the Hafiz Trust.
Ahmed Hafiz was named as First Trustee and undertook to administer the trust
for the purposes set out in the agreement.
[7] The Hafiz Trust was registered and the Master issued letters of authority to
Ahmed Hafiz on 21 September 1994. Property 1 was donated to the Hafiz Trust
on 30 September 1995 and was transferred to the trust on 16 February 1996.
During 1996, a second property, Portion 177 (of 135) of the Farm Riding 15152
(Property 2), also alongside the mosque, was acquired. Goolam Hafiz transferred
it to the Hafiz Trust in May 2000.
3 In the event of a failure of progeniture trusteeship would vest in a person elected by the Suni community.
4 The 1904 deed of transfer of the property on which the Sherwood mosque is situated does not name the trust.
In the papers reference was made to the Suni Mohamedan Faith Trust.
[8] In August 2004, Property 1 and Property 2 were linked by a notarial tie
agreement concluded between the Mosque Trust and the Hafiz Trust, represented
by Goolam Hafiz and Ahmed Hafiz respectively. This was to enable the
properties to be developed by the construction of a hall, residential buildings and
an office complex. The Hafiz Trust was advised to register as a public benefit
organisation in terms of the Nonprofit Organisations Act 71 of 1997. This
required an amendment of the 1994 deed of trust.
[9] Goolam Hafiz and his three sons met on 14 December 2004 to amend the
deed of trust. The 2004 deed of amendment was approved by resolution and
signed by each of the participants. At a subsequent meeting held on 3 January
2005, the assumption of two further trustees was approved, namely Akhmed
Wahab and Sayed Mohamed.
[10] On 31 January 2005, the 2004 deed of amendment and resolution
approving the assumption of additional trustees, was lodged with the Master. On
4 February 2005, the Master advised that Shakeel and Aneez Hafiz had not been
appointed as trustees of the Hafiz Trust. The Master was nevertheless requested
to proceed with the appointment of Akhmed Wahab and Sayed Mohamed as
trustees. The Master issued letters of authority to them on 26 August 2005.
[11] The Hafiz Trust was registered as a non profit organisation and managed
by the three appointed trustees, without demure, for a period of six years. In 2011,
Goolam Hafiz decided that his two younger sons, Shakeel and Aneez Hafiz,
should also be appointed as trustees. The Master was requested to appoint them
and did so. In June 2011, Goolam Hafiz convened a meeting where it was decided
to appoint two further trustees, namely the Mohamed Essop and Sayed Ahmed.
[12] In response to the request for appointment of these additional trustees, the
Master convened a meeting of the trustees of the Hafiz Trust. The Master
informed the trustees that she had formed the view that all of the trustee
appointments ought to be withdrawn and that the deed of trust required
amendment. Pending the amendment of the deed the Hafiz Trust was to be
administered by Ahmed Hafiz and Goolam Hafiz.
[13] Ahmed Hafiz and Akhmed Wahab indicated that they intended to
challenge the Master’s decision to withdraw the letters of authority issued in
2005. In the meantime, an agreement of trust was concluded between Goolam
Hafiz and Sayed Mohamed, Shakeel Hafiz, Aneez Hafiz, Mohamed Essop and
Sayed Ahmed (the 2011 deed of trust), on 14 December 2011 which purported to
amend the 1994 trust deed. Ahmed Hafiz and Akhmed Wakab were not involved.
On 22 December 2011, the Master issued letters of authority appointing the five
persons involved as trustees of the Hafiz Trust. Following objections and
representations the Master issued a ruling, on 27 July 2012, which: (a) withdrew
all letters of authority issued after 21 September 1994;(b) withdrew acceptance
of any amendments to the trust deed effected after that date; and (c) expressed the
opinion that the 1994 deed of trust only provided for the appointment of the first
trustee upon the death of the settlor.
The litigation
[14] Goolam Hafiz brought an application before the high court to declare that
the Hafiz Trust was not a valid trust (the main application). He sought the transfer
of the donated property, Property 1, back into his name.5 Ahmed Hafiz and
Akhmed Wahab launched a counter-application, in which they sought a
declaration that the Hafiz Trust was validly founded and that it be administered
5 The notice of motion made no reference to Property 2 which was also donated to the Hafiz Trust.
in terms of the 2004 deed of amendment. They also sought confirmation that they,
together with Sayed Mohamed, were the trustees of the Hafiz Trust. During the
course of the litigation Goolam Hafiz was substituted by the executor of his estate.
[15] The high court found that a valid trust was not established. It held that the
1994 deed of trust was amended by the 2011 deed of trust, and that this latter deed
established a valid trust. It ordered that the parties to the 2011 agreement, together
with Ahmed Hafiz and Akhmed Wahab, were the trustees of the Hafiz Trust.6
[16] The full court set aside the high court’s order. It declared that the Hafiz
Trust was validly created and that it was to be administered in accordance with
the 1994 deed as amended by the 2004 deed of amendment. It declared that
Ahmed Hafiz, Akmed Wahab and Sayed Mohamed were the trustees of the Hafiz
Trust. In addition, it varied clause 4.1 of the 1994 deed of trust to read that the
First Trustee was Ahmed Hafiz and upon his death, the office of trustee would
descend to his eldest male issue.
The issues
[17] Three issues arise for decision. The first is whether the Hafiz Trust was
validly created in 1994. The second is whether the 1994 trust deed was amended,
and if so, by what instrument. The third concerns the identity of the trustees of
the Hafiz Trust.
Was a trust validly established?
[18] The validity of the Hafiz Trust depends upon whether:
(a) Goolam Hafiz intended to create a trust in his life time;
6 These orders were not sought in the notice of motion. They were raised in answer to the counter-application.
(b) his intention was expressed in a manner that created an obligation upon the
trustee or trustees and whether such obligation was accepted;
(c) whether the trust property was defined with reasonable certainty;
(d) whether the objects of the trust were set out with reasonable certainty and
whether they are lawful.7
[19] The lawfulness of the objects of the Hafiz Trust and the definition of the
trust property were not in issue. The controversy centered on the expressed
intention of the settlor and whether the 1994 trust deed envisaged the appointment
of a trustee in the life time of the settlor.
[20] Whether a trust was validly established depends on the evidence. An inter
vivos trust is created by a bilateral agreement between its founder and the
prospective trustee or trustees.8 The agreement may be oral or in written form.
The document alleged to be the trust deed serves as evidence of the creation of
the trust along with other relevant evidence.9 This may concern the declared
intention of the settlor determined at the time that a trust instrument is executed10;
the assumption of the obligations of trusteeship by an intended trustee; the formal
appointment of such trustee; and the transfer of ownership and control of the trust
property into the hands of the person said to be the trustee.
[21] To the extent that a document alleged to be a trust instrument or clause
thereof is equivocal, it will be read in the context of the evidence to determine
7 Administrator, Estate Richards v Nichol and Another 1996 (4) SA 253 (C) at 258D-F; Cameron et al Honorés
South African Law of Trusts 6 ed (2018) at 136-137.
8 Crookes NO v Watson 1956 (1) SA 277 (A) at 298B-C.
9 The intention to create a trust must be expressed in a form that is apt for the creation of an obligation. Where it
is expressed in written form by way of testament, transfer, treaty or contract such formalities as are prescribed for
the written form apply. A trust may also be constituted orally. The written form, where it exists, is evidence of the
requirements for constitution of the trust. See Cameron et al Honorés South African Law of Trusts 6 ed (2018) at
160 -162.
10 Moosa and Another v Jhavery 1958 (4) SA 165 (N) at 169D-F; Mohamed NO and Others v Ally 1999 (2) SA
42 (SCA); [1999] 1 All SA 419 (A) at 424.
whether it supports the conclusion that a valid trust was created thereby.
Interpretation to determine the meaning and effect of the instrument, found to
create a valid trust, would involve the unitary exercise of considering of the text,
context, and purpose of the instrument.11
[22] The 1994 trust deed states that it is an agreement entered into between
Goolam Hafiz, as settlor, and Ahmed Hafiz as First Trustee. It was signed by
them in their respective capacities. The preamble reads:
‘Whereas it has been agreed between the parties that it is the intention and desire of the
SETTLOR that he shall donate sub 174 of 136 of the Farm Riding No 15152 in extent of One
thousand and eighty square metres (1080), to be administered by the Trustee or Trustees to
operate a Trust for the objects set out more fully hereunder and whereas the First Trustee has
agreed to accept ownership of the Trust and to undertake the obligations of the Trust according
to the terms set out in this agreement.’
[23] The expressed purpose was to transfer ownership of Property 1 into a trust.
Ahmed Hafiz was appointed as trustee upon registration of the Hafiz Trust.
Thereafter Property 1 was donated to the Hafiz Trust and was transferred into the
name of the Hafiz Trust. The evidence establishes that a second property was
donated to the Hafiz Trust; that a notarial tie agreement was concluded with the
Mosque Trust; and that the properties were extensively developed.
[24] The only question is whether clause 4 of the 1994 deed of trust was
intended to mean that the First Trustee would only be appointed upon the death
of the settlor. If that is so, then the control of the trust property would remain in
the hands of the settlor until his death and could only then pass to the First
11 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA) para 18. Chisuse v Director-General, Department of Home Affairs [2020] ZACC 20;
2020 (10) BCLR 1173 (CC); 2020 (6) SA 14 (CC) para 52; University of Johannesburg v Auckland Park
Theological Seminary and Another [2021] ZACC 13; 2021 (8) BCLR 807 (CC); 2021 (6) SA 1 (CC) para 65.
Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021]
ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25.
Trustee. The envisaged trust would therefore be constituted on the death of the
settlor.
[25] Clause 4 reads as follows:
‘There shall be perpetual succession as follows:
4.1
On the death of the settlor the office of Trustee shall descend to the First Trustee and
thereafter to the eldest male issue of the first Trustee, if any.
4.2
Failing succession as envisaged in Clause 4.1 the office of the Trustee shall descend to
the second trustee and thereafter to the eldest male of the second trustee, if any.
4.3
Failing succession as envisaged in Clause 4.1 and 4.2 above the office of Trustee shall
descend to the third trustee and thereafter to the eldest male issue of the third trustee, if any.
4.4
Failing succession as envisaged in clause 4.1, 4.2 and 4.3 the office of Trustee shall
pass to the male descendants from the female issue of the settlor in the same manner as
envisaged in clause 4.1 and 4.2 and 4.3 above.12
[26] The phrase ‘office of trustee’ ordinarily refers to the position of trusteeship
and the rights and obligations conferred by law on the occupant of that office.13
In its ordinary meaning, it refers to a specific office occupied in relation to a
specified trust.14 At face value the clause suggests that the office of trusteeship
would ‘descend’ or pass to the First Trustee upon the death of the settlor. There
is, however, no other text in the 1994 deed which confers upon the settlor any
responsibilities or duties as trustee. The settlor was not appointed as trustee. There
is no evidence that he, at any stage, regarded himself as a trustee of the Hafiz
Trust. The evidence is to the contrary, as demonstrated by the notarial tie
agreement. The 1994 deed of trust instead points to Ahmed Hafiz as First Trustee
of the Hafiz Trust, his acceptance of the office and the Master’s acceptance of his
12 Clause 1 states that the ‘second trustee’ shall refer to Shakeel Hafiz and the ‘third trustee’ shall refer to Aneez
Hafiz.
13 See the explanation on Trusteeship as a public office in Cameron et al Honorés South African Law of Trusts 6
ed (2018) at 69 and the trustee’s acceptance of office at 247.
14 Ibid at 248.
appointment. It was not intended that the settlor should hold the‘office of trustee’
in the Hafiz Trust.
[27] The expressed purpose of clause 4 was to provide for perpetual succession
of the Hafiz Trust. It is with this in mind that it must be interpreted. The clause
deals with the continued existence of the trust upon the occurrence of the death
of the settlor. The First Trustee was named as trustee elsewhere in the deed of
trust and was appointed on that basis. Clause 4 therefore provides for the
continued existence of the office of trusteeship after the death of the settlor. Read
in the context of the deed of trust as a whole, it does not mean that the First Trustee
would only be appointed once the settlor had died. Upon the occurrence of the
death of the settlor the office of trusteeship would continue to be held by the First
Trustee as incumbent and thereafter be occupied as envisaged by clause 4. Seen
in this light, clause 4 merely reflects an expression of an intention on the part of
the settlor to ensure that control of the Hafiz Trust would remain with his
descendants. It can thus be read in a manner that is consistent with the overriding
intention expressed in the deed of trust.
[28] The evidence as a whole, overwhelmingly establishes that a trust was in
fact constituted by the deed of trust and that ownership and control of the trust
property passed into the hands of the nominated First Trustee during the lifetime
of the settlor. The full court therefore correctly found that the trust was validly
established.
[29] The full court varied clause 4.1 to read that upon the death of the first
trustee, the office of trustee shall descend to his male descendant. It left clauses
4.2 and 4.3 in their original form. In doing so, it brought clause 4.1 in line with
what had already occurred. It exercised the discretion conferred upon it by s 13
of the Trust Property Control Act, 57 of 1988 (the TPCA).
[30] There was, however, no application made to vary clause 4.1 of the 1994
deed of trust. No case was made out to suggest that the clause served to hamper
the achievement of the objects of the founder, or was prejudicial to the interests
of beneficiaries, or was in conflict with the public interest. Section 13 does not
confer upon a court a general power to vary a deed of trust. A court’s power is
confined to the circumstances which are set out in the section.15 Once the full
court had determined that the Hafiz Trust was validly established, any obstacle
that clause 4.1 might have posed to the achievement of the objects of the trust
was negated. It was not open to the court, mero motu, to vary clause 4.1. The full
court’s order of variation cannot stand.
The amendment of the deed of trust
[31] The second question is whether the 1994 trust deed was amended by the
2004 deed of amendment as sought in the counter-application. The facts giving
rise to the 2004 deed of amendment were common ground. Shakeel and Aneez
Hafiz were not trustees of the Hafiz Trust when they agreed to the amendment of
the 1994 deed of trust at the meeting held in December 2004. Goolam Hafiz had
contended that it was always his intention that his two younger sons also be
appointed as trustees of the trust. Ahmed Hafiz disputed this version.16 He stated
that it was always known that they were not trustees. They were not required to
agree to an amendment of the trust deed in their capacity as trustees. All that was
15 Gowar and Another v Gowar and Others [2016] ZASCA 101; [2016] 3 All SA 382 (SCA); 2016 (5) SA 225
(SCA) para 34.
16 No finding was made by the full court on this aspect, and it is not necessary that such finding be made. The
1994 deed of trust does not appoint them as trustees. If clause 4 is taken to relate to the appointment of trustees to
the ‘office of trustee’ created by the 1994 deed, then on the plain meaning of the language used, they would only
be appointed as trustees in the event of the failure of appointment of a trustee in terms of clause 4.1. It is therefore
difficult to reconcile this with the donor’s assertion that it was always intended that they should be appointed as
trustees. The only indication that they were required to be appointed as trustees appears from clause 7, which
deals with the variation of the trust.
required was that they agree, as ‘potential’ trustees, who may succeed to
trusteeship as provided by clause 4 of the deed of trust.
[32] Clause 7.1 provides that the trust deed may be varied by agreement in
writing between the first, second and third trustees. Clause 7.2 states that any such
agreement shall be binding ‘on any person appointed as Trustee and on any
beneficiaries of [the] Trust, whether majors or minors, born or unborn, at the date
at which such agreement is concluded’.
[33] The question that arises is whether clause 7.1 means that an amendment
can only be effected by the named trustees acting in their capacity as trustees. If
that is so, then the amendment of the trust deed in 2004 (as also in 2011), was not
validly effected. Counsel for the first respondent argued that the clause does not
require that the second and third trustees act as trustees. All that was required was
that the persons named as trustees should agree to the variation of the deed of
trust. The original trust deed did not envisage that the second and third trustees
be appointed as trustees from the outset. They agreed as a matter of fact to the
amendment of the trust deed.
[34] Such construction would give rise to absurdity. It would mean that a trustee
could enter into an agreement with other persons who were not required to act in
a fiduciary capacity to amend a deed of trust. It would offend the essential
principles upon which a trustee assumes the obligations imposed by the trust. The
language of clause 7.1 is clear. It means that a variation of the trust deed may only
be effected by the named trustees acting in their capacity as trustees. Accordingly,
the agreement to vary the original deed by the deed of amendment of 2004, could
not and did not validly vary the original deed of trust. Therefore, the 1994 trust
deed remains extant.
The appointed trustees
[35] The final question concerns the order declaring Ahmed Hafiz, Akhmed
Wahab and Sayed Mohamed to be the trustees for the time being of the Hafiz
Trust. There was no controversy concerning the appointment of Ahmed Hafiz,
who was designated by the trust deed to be the First Trustee. Letters of authority
were issued to him on 21 September 1994.
[36] The 1994 trust deed is, apart from clause 4, silent about the appointment of
other trustees. It says nothing about the number of trustees to be appointed. The
language employed in clauses 5, 6 and 7 of the deed suggests that more than one
trustee may be appointed. Where a trust deed is silent as to the appointment of
additional trustees, the Master may appoint any person to act as trustee of the
trust.17
[37] The affidavits say very little about the appointment of additional trustees
in 2005. The affidavits merely state that they were asked to serve as trustees in
order to ensure that ‘un-related’ persons were appointed to secure registration as
a non-profit organistion. The request emanated from a ‘meeting of trustees’
involving Shakeel and Aneez Hafiz, and took the form of a resolution adopted by
the ‘trustees’. They had no authority to act in that capacity. Nothing is known
about the basis upon which the Master then exercised the discretion to appoint
the additional trustees. The counter application did not seek an order setting aside
the decision of the Master to withdraw the letters of authority. It sought their
appointment by order of court. For such order to be made the court would have
to be placed in the same position as the Master would be to enable it to exercise
17 Section 7 of the Trust Property Control Act 57 of 1988 provides that:
‘(1) If the office of trustee cannot be filled or becomes vacant, the Master shall, in the absence of any provision
in the trust instrument, after consultation with so many interested parties as he may deem necessary, appoint any
person as trustee.
(2) When the Master considers it desirable, he may, notwithstanding the provisions of the trust instrument, appoint
as co-trustee of any serving trustee any person whom he deems fit.’
the discretion. There is, however, no factual basis upon which the court could do
so. In these circumstances, the full court erred in its declaration since there was
insufficient basis in the evidence to support the order.
[38] The position of Ahmed Hafiz is different. He was nominated as a trustee
by the settlor. He accepted his nomination and was duly appointed by the Master
on 21 September 1994. The Master’s subsequent concerns relating to the
appointment of trustees did not relate to the appointment of Ahmed Hafiz as
trustee.18
[39] In relation to costs, it was submitted that the full court ought to have
ordered that the costs be borne by the Hafiz Trust. This was premised on the
contention that the litigation arose because of the actions of the settlor and the
disputed appointment of trustees by the Master. The litigation was said to have
been conducted in the interest of the Hafiz Trust. However, what is plain from
the record is that the real dispute relates to the position of trusteeship of the Hafiz
Trust. There is, therefore, no basis to interfere with the full court’s costs order.
As regards the costs on appeal, the appellants unsuccessfully persisted in
supporting the high court order. The fact that the full court’s order must be varied
does not warrant a departure from the ordinary rule regarding costs. There is also
no reason why the costs should be borne by the Hafiz Trust.
[40] In the result, the following order will issue:
Save to the extent set out in paragraph 2 below, the appeal is dismissed.
Paragraph 2 of the order of the full court is varied so that the order reads
as follows:
‘1. The appeal is upheld.
18 The Master’s ruling related to appointments made after 21 September 1994. See para 17 above.
2. The order of the court a quo is set aside and is substituted by the following:
2.1 It is declared that the Goolam Murtuza Hafiz Trust is valid and the said Trust
shall be administered in accordance with the terms of the Memorandum of Trust
Agreement dated 6 September 1994.
2.2 It is declared that the Trustee for the time being of the Goolam Murtuza Hafiz
Trust shall be Ahmed Zakir Hafiz (Identity no. 620928625089).
3. The first respondent, the fifth respondent and the sixth respondent together with
the Goolam Murtuza Hafiz Trust, are directed to pay the first and second
applicants’ costs in respect of the application and counter application in the court
a quo and the appeal costs, jointly and severally the one paying the other to be
absolved.’
The appellants are ordered to pay the first and second respondents’ costs
of appeal.
_________________
G G GOOSEN
JUDGE OF APPEAL
Appearances
For the appellants:
V I Gajoo SC
Instructed by:
Harkoo Brijlal & Reddy Inc, Durban
H Bekker Attorneys Inc, Bloemfontein
For the first and second respondents: F M Moola SC
Instructed by:
Larson Falconer Hassan Parsee Inc,
Umhlanga Rocks
Phatshoane Henney Inc, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
27 July 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Estate late Hafiz and Others v Hafiz and Others (804/2022) [2023] ZASCA 114 (27 July 2023)
The Supreme Court of Appeal (SCA) today dismissed an appeal against an order of the KwaZulu-Natal
Division of the High Court, Pietermaritzburg sitting as a court of appeal (the full court), which set aside
an order declaring that the Goolam Murtuza Hafiz Trust (the Hafiz Trust) had not been validly
established.
In 1991, Goolam Murtaza Hafiz (Goolam Hafiz), who was then the trustee and Imam of the Sherwood
Mosque, acquired a property adjacent to the mosque. It was purchased by way of loan finance and the
loan was repaid from donations received from the community served by the mosque. In 1994, Goolam
Hafeez entered into an agreement with his eldest son, Ahmed Hafiz, to establish the Hafiz Trust.
Goolam Hafiz named Ahmed Hafiz as first trustee of the Hafiz Trust. He donated the property to the
Hafiz Trust to be used for charitable purposes in accordance with the tenets of the Sunni Islamic faith.
Ahmed Hafiz accepted the obligations as trustee. The Hafeez Trust was registered by the Master of the
High Court (the Master) and letters of authority were issued to Ahmed Hafiz.
In 1996, a second property, also adjacent to the mosque, was acquired by Goolam Hafiz and donated
to the Trust. In 2004, the Trust Deed was amended to enable the Hafiz Trust to be registered as a non-
profit organisation. Two additional trustees were appointed in 2005.
In 2011, Goolam Hafiz sought to have his two younger sons appointed as trustees to the Hafiz Trust.
Letters of authority were initially issued by the Master. When still further trustees were sought to be
appointed, the Master took the view that the appointments of all of the trustees ought to be withdrawn.
The Master had formed the view that a clause in the original trust deed, which provided for the
succession of trustees only allowed for the appointment of trustees upon the death of the settlor.
In 2013, Goolam Hafeez brought an application before the KwaZulu-Natal Division of the High Court,
Pietermaritzburg (the high court) to declare that the Hafiz Trust had not been validly established. He
sought the transfer of the properties back into his name. A counter application was brought by two of
the trustees appointed in 2005. They sought an order declaring the Trust to have been validly
established and that it was to be administered in terms of the 2004 Deed of Amendment.
The matter came before the high court in February 2018 and on 23 August 2018, Balton J dismissed
the counter application. The high court found that the Hafiz Trust was not validly established. The high
court, however, found that a Trust was validly established by an amendment, recorded in a deed of
trust executed in December 2011 (the 2011 Deed of Trust).
The matter went on appeal to the full court on 27 January 2020. On 12 May 2020, the full court upheld
the appeal. The full court found that the Hafiz Trust had been validly established in 1994 and that the
trust deed had been amended by the deed of amendment in 2004. It declared that Ahmed Hafiz,
Akhmed Wahab and Sayed Mohammed were the trustees of the Hafiz Trust.
Special leave to appeal was granted by the SCA. The appeal was disposed of without oral argument in
terms of s 19(a) of the Superior Courts Act 10 of 2013.
The SCA held that the validity of a Trust is established by evidence and that the Trust Deed executed
in 1994, formed part of the evidentiary material upon which a determination of validity was to be made.
It held that the terms of the 1994 Trust Deed, properly interpreted, established a clear and unequivocal
intention on the part of the settlor to establish a Trust. It found that the named trustee, Ahmed Hafiz,
accepted the obligations imposed upon him by the Trust Deed. The donation of the property by the
settlor divested the settlor of control of the property, which passed to the trustee on behalf of the Hafiz
Trust.
The SCA found that the clause dealing with the succession of trustees, expressed an intention on the
part of the settlor that his descendants remain in control of the Hafiz Trust. It did not have the effect that
ownership of the trust property would only pass to the trustee upon the death of the settlor. The SCA
found, upon the evidence as a whole, that the Hafiz Trust had been validly constituted in 1994. The
SCA found that the full court did not have before it an application to vary clause 4.1 of the Trust Deed
in terms of s 13 of the Trust Property Control Act 57 of 1988. It was therefore not entitled to vary the
clause.
In relation to the amendment of the 1994 Trust Deed, it found that clause 7, which provided for
amendment or variation of the Deed, required agreement between the first, second and third trustees.
These were stated to be the sons of Goolam Hafiz, as settlor. At the time that the amendment was
agreed, the second and third trustees had not been issued with letters of authority by the Master. They
were therefore not entitled to act in the capacity as trustees. The 1994 Trust Deed had therefore not
validly been amended by the 2004 Deed of Amendment.
Insofar as the appointment of additional trustees was concerned, the SCA found that there had been
no challenge to the Master’s decision to withdraw the issuing of those letters of authority. It found that
the papers provided no factual basis upon which a court could, in the exercise of its discretion, appoint
the additional trustees. It could therefore only confirm the order appointing the named first trustee.
The required variation of the full court’s order did not alter the substantive determination on appeal.
Save for varying the full court’s order the SCA dismissed the appeal with costs.
--------ends--------
|
3957
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1303/2021
In the matter between:
CITY OF CAPE TOWN
APPELLANT
and
CHARNELL COMMANDO
FIRST RESPONDENT
GERALDINE STEPHANIE CUPIDO
SECOND RESPONDENT
NORMAN ANDREW CUPIDO
THIRD RESPONDENT
GICILLE VANESSA COMMANDO
FOURTH RESPONDENT
WILLEM NEL
FIFTH RESPONDENT
MEESHADE JACOBA NEL
SIXTH RESPONDENT
DAPHNE NEL
SEVENTH RESPONDENT
PRISCILLA NEL
EIGHTH RESPONDENT
DYLAN NEL
NINTH RESPONDENT
MA-AIDA ABELS
TENTH RESPONDENT
SULAIMAN GOLIATH
ELEVENTH RESPONDENT
FAIZA FISHER
TWELFTH RESPONDENT
GEORGE FARIA RODRIGUES
THIRTEENTH RESPONDENT
NASHIET ABELS
FOURTEENTH RESPONDENT
CHRASHANNA SMITH
FIFTEENTH RESPONDENT
DELIA SMITH
SIXTEENTH RESPONDENT
BRENDA SARAH SMITH
SEVENTEENTH RESPONDENT
MACHAL SMITH
EIGHTEENTH RESPONDENT
MEGAN SMITH
NINETEENTH RESPONDENT
ROSELINE SMITH
TWENTIETH RESPONDENT
CHESLYN SMITH
TWENTY-FIRST RESPONDENT
RASHIEDA SMITH
TWENTY-SECOND RESPONDENT
MARK NEIL SMITH
TWENTY-THIRD RESPONDENT
MOGAMAT TAURIQ SMITH
TWENTY-FOURTH RESPONDENT
GRAHAM BEUKES
TWENTY-FIFTH RESPONDENT
SOFIE MASILO
TWENTY-SIXTH RESPONDENT
WOODSTOCK HUB (PTY) LTD
TWENTY-SEVENTH RESPONDENT
Neutral citation: City of Cape Town v Commando and Others (1303/2021)
[2023] ZASCA 7 (6 February 2023)
Coram:
ZONDI, NICHOLLS and MABINDLA-BOQWANA JJA and
GOOSEN and SIWENDU AJJA
Heard:
14 November 2022
Delivered:
This judgment was handed down electronically by circulation to
the parties’ legal representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand-down is deemed
to be 11h00 on 6 February 2023.
Summary:
Constitutional law – right to emergency housing – constitutional
duty of municipality to provide temporary emergency housing – whether case made
out to find emergency housing programme and its implementation unconstitutional
– whether municipality has a duty to provide temporary emergency housing in a
specific location – consideration of a just and equitable order.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town (Sher J,
sitting as court of first instance): judgment reported sub nom Commando and Others
v Woodstock Hub (Pty) Ltd and Another [2021] ZAWCHC 179; [2021] 4 All SA
408 (WCC).
The appeal is upheld, with no order as to costs.
The high court’s order is set aside and replaced with the following:
‘1
The City of Cape Town must provide the occupiers and their
dependants with temporary emergency accommodation in a location as near
as possible to where they currently reside, erf 10626, Bromwell Street,
Woodstock (the property), on or before 30 May 2023, provided that they are
still resident at the property and have not voluntarily vacated it.
The date on which the occupiers are required to vacate the property is
extended to 30 June 2023.
There is no order as to costs.’
JUDGMENT
Mabindla-Boqwana JA (Zondi and Nicholls JJA and Goosen and Siwendu
AJJA concurring):
Introduction
[1] Access to adequate housing remains one of the major challenges in South
Africa. It is no secret that our major urban areas face a desperate shortage of adequate
housing, exacerbated by increasing urbanisation. Along with that, historical patterns
of settlement continue to persist. The disparities between ethnic communities are
particularly pronounced in Cape Town, due to highly skewed historical spatial
planning policies, which were based on racial discrimination and preference.1
Twenty-eight years into our constitutional democracy, poor households, mainly
black African and Coloured, continue to live in the outskirts of Cape Town, due to
high property prices and government rates and taxes. They are, thus, forced to
commute, in many instances for long distances, to their places of employment using
public transport. This phenomenon is not unique to Cape Town. It is a challenge
replicated in many South African cities.
[2] Each city has been shaped by particular dynamics of urban development. The
forced removal of black communities from inner city areas and the resultant
dislocation is one such dynamic. Despite these painful examples of historical social
control, some parts of the inner city areas remained places where poor communities
continued to live. Woodstock and Salt River, situated in the inner city of Cape Town,
are two adjacent areas where a number of Coloured households were able to resist
displacement. However, the gentrification2 and commercialisation of Cape Town
city centre has been highlighted as one of the threats to the communities still residing
in these areas.3
1 Residents of Joe Slovo Community, Western Cape v Thubelisha Homes and Others (Centre on Housing Rights and
Evictions and Another, Amici Curiae) [2009] ZACC 16; 2010 (3) SA 454 (CC); 2009 (9) BCLR 847 (CC) (Thubelisha)
para 264.
2 Urban renewal and redevelopment for commercial and business purposes.
3 For example, see The Guardian article ‘In the Cape Town enclave that survived apartheid, the new enemy is
gentrification’, https://www.theguardian.com/world/2018/aug/19/cape-town-bo-kaap-muslim-enclave-gentrification.
[3] The appellant, the City of Cape Town (the City), acknowledges that it must
‘transform its spatial and social legacy into a more integrated and compact city with
mixed-use zoning areas close to public transport nodes, which will bring residents
closer to their places of work and will offer opportunities to break down social
barriers’. This will require ‘significant additional capital investment, together with a
fundamental reconsideration of how to deliver more housing, more rapidly, in a more
integrated, manner.’ The City estimates that between 2012 and 2032 some 650 000
households in greater Cape Town would be in need of support from the government
in respect of housing. To this end, it has introduced a number of socio-economic
programmes.
[4] An immediate challenge is the need to provide housing for people facing
homelessness, due to crises such as natural disasters and evictions. The latter is the
issue in the present appeal. Eviction disputes feature in our courts on a daily basis,
particularly in these challenging economic times.
[5] As this Court held in City of Johannesburg Metropolitan Municipality v Blue
Moonlight Properties 39 (Pty) Ltd and Another,4 ‘[t]he right of access to adequate
housing cannot be seen in isolation. It has to be seen in the light of its close
relationship with other socio-economic rights, all read together in the setting of the
Constitution as a whole. It is irrefutable that the State is obliged to take positive
action to meet the needs of those living in extreme conditions of poverty,
homelessness or intolerably inadequate housing. What is in dispute in the present
case, as is frequently the case in disputes concerning housing, is the extent of the
4 City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another [2011]
ZASCA 47; 2011 (4) SA 337 (SCA); [2011] 3 All SA 471 (SCA) (Blue Moonlight Properties (SCA)) para 2.
State’s obligation in this regard. This usually telescopes into an enquiry concerning
the State’s resources to meet its constitutional obligations.’
[6] After the Constitutional Court’s decision in Government of the Republic of
South Africa and Others v Grootboom and Others,5 it became settled that the State
is constitutionally obliged ‘to provide relief for people who have no access to land,
no roof over their heads, and who are living in intolerable conditions or crisis
situations’.6 Accordingly, the provision of emergency accommodation by the
government forms part of the right of access to adequate housing entrenched in s 26
of the Constitution.
[7] The central issue in this appeal is whether that constitutional obligation
extends to making temporary emergency accommodation available at a specific
location. The Western Cape Division of the High Court, Cape Town (the high court)
made an order, inter alia, compelling the City to provide the first to twenty-sixth
respondents (the occupiers) and their dependents residing with them with temporary
emergency accommodation or ‘transitional housing’7 in Woodstock, Salt River or
the Inner-City Precinct. The order of the high court reads as follows:
5 Government of the Republic of South Africa and Others v Grootboom and Others [2000] ZACC 19; 2001 (1) SA 46
(CC); 2000 (11) BCLR 1169 (CC) (Grootboom).
6 Ibid para 99. See also City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd
and Another [2011] ZACC 33; 2012 (2) SA 104 (CC); 2012 (2) BCLR 150 (CC), which found that the government,
including municipalities, has a constitutional duty to provide emergency housing to persons in crisis situations and
that includes those who have been evicted from a property, whether instigated by a public or a private institution.
7 According to the Affordable Housing Prospectus for the Woodstock, Salt River and Inner-City Precinct, issued by
the City on 28 September 2017, ‘Transitional Housing’ refers to ‘accommodation for individuals or families who have
to be relocated as a result of eviction, or temporarily moved as a result of the upgrading of sites on which they lived.
This accommodation is an intermediate solution until such time as individuals or families can move into permanent
accommodation’. The CRU Feasibility for the Development of ‘Transitional’ Housing Project – Pickwick Site, Cape
Town, dated January 2017, envisaged that for some residents ‘transitional housing’ ‘will provide temporary housing
as they transition to more permanent options although it is recognised that, because of the shortage of the alternatives
for low income households, some households are likely to remain on a semi-permanent basis.’
‘1
It is declared that the [City’s] emergency housing programme and its implementation, in
relation to persons who may be rendered homeless pursuant to their eviction in the inner City and
its surrounds, and in Woodstock and Salt River in particular, is unconstitutional.
The [City] is directed to provide the [occupiers] and those of their dependents as may be
living with them at the time, with “temporary” emergency accommodation or “transitional”
housing in Woodstock, Salt River or the Inner-City Precinct (as defined in the Affordable Housing
Prospectus for the Woodstock, Salt River and Inner-City Precinct which was issued on 28
September 2017), in a location which is as near as feasibly possible to where the [occupiers] are
currently residing at erf 10626, Bromwell Street, Woodstock; within 12 months of the date of this
Order.
The [City] is directed to deliver a report to the Court, within 4 months of the date of this
Order, which is confirmed on affidavit, in which it details the emergency accommodation or
“transitional” housing that it will make available to the [occupiers], and the location thereof and
the date when it will be made available, and in which it deals with the proximity of such
accommodation or housing to 1) erf 10626, Bromwell Street, Woodstock and 2) to public and
private transport, and educational and medical and health facilities, and explains why the particular
location and form of accommodation/housing has been selected, and what steps were taken by it
to engage the [occupiers] regarding the provision of accommodation or housing in compliance
with this Order.
The [occupiers] may serve and file affidavits, if any, dealing with the contents of the report
referred to in the preceding paragraph, within 10 court days of the date of the service and filing of
the aforesaid report, whereafter the matter may be re-enrolled on a date to be determined by the
Registrar in consultation with the presiding Judge, for determination as to such further and/or
additional relief as may be necessary or appropriate.
Pending the final outcome of this matter, execution of the Order which was granted for the
eviction of the [occupiers] (as extended) shall be suspended.
The [City] shall be liable for the costs of this application, including the costs of two counsel
(insofar as two counsel may have been employed).’ (My emphasis.)
[8] The City contends that this order is inappropriate. Firstly, it offends the
doctrine of separation of powers by trespassing into the heartland of policy-laden
and polycentric matters of housing delivery. Secondly, its effect is overbroad.
According to the City, the courts have no knowledge of, or are they required to know,
the wide-ranging housing needs confronting the City, the socio-economic and other
competing conditions to be met by the City, the City’s budget devoted thereto, the
land available, the economies of scale and what informs allocation of resources to
these needs and for housing, and in which areas. The court cannot, thus, dictate to
the City in which location a particular housing programme is to be implemented.
[9] The City further contends that it had identified and adopted a policy that social
housing was the most appropriate form of housing for the inner city. Despite this,
the high court ordered it to make available alternative emergency housing in the
inner city for the occupiers. This amounted to the court instructing the City to
allocate and spend its housing budget differently. Yet, it is, exclusively, the
government’s executive function and domain to determine how public resources are
to be drawn upon and re-ordered.8
[10] The occupiers, on the other hand, view the order as an appropriate intervention
by the high court to protect their rights, which they say have been infringed by the
unreasonable and irrational conduct of the City. They fault the City for providing
temporary emergency accommodation in informal settlements and on the outskirts
of the city only.
8 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012 (6) SA
223 (CC); 2012 (11) BCLR 1148 (CC) para 67.
Litigation history
[11] The high court’s order was preceded by protracted litigation between the
occupiers and the twenty-seventh respondent, Woodstock Hub (Pty) Ltd
(Woodstock Hub). On 30 June 2014, Woodstock Hub gave notice to the occupiers
to vacate the premises it had bought from Messrs Reza Syms and Erefaan Syms (the
Syms brothers), situated at erf 10626, Bromwell Street, Salt River, Cape Town (the
property).
[12] The occupiers had rented units in the property from the Syms brothers for
amounts ranging from R300 to R2000 per month. Some of them had lived in the
property for many years. In July 2015, Woodstock Hub launched five separate
eviction applications in the high court against the occupiers in terms of s 4 of the
Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of
1998 (PIE). The applications were later consolidated.
[13] On 17 March 2016, Hlophe JP granted an eviction order by agreement
between Woodstock Hub and the occupiers. In terms of this order, the occupiers
would vacate the property on or before 31 July 2016, failing which an eviction would
be effected by the sheriff on 1 August 2016. Some of the occupiers vacated the
property. Those remaining in occupation, however, brought an application to vary
the terms of the order granted by Hlophe JP, by extending the date to vacate the
property to 31 November 2016. Weinkove AJ dismissed that application.
[14] On 15 August 2016, Woodstock Hub and the occupiers concluded a deed of
settlement, which was made an order of court by Weinkove AJ. In terms of this
order, the remaining occupiers agreed to vacate the property on or before
9 September 2016. The occupiers allege that the two eviction orders were granted
without the respective courts satisfying themselves that it was just and equitable to
do so after taking into account all the relevant factors as required by the PIE. It has
been held that even when parties consent to an eviction order, judicial officers have
a duty to conduct an enquiry in terms of the PIE, because of the risk of homelessness
that may result from eviction.9 There is, however, no appeal against these orders.
[15] While the City was cited in the proceedings between Woodstock Hub and the
occupiers, no order was sought against it to provide the occupiers with temporary
accommodation, should this be necessary, in the event of the occupiers’ eviction
from the property. The City, accordingly, did not participate in the proceedings or
discussions prior to the granting of the eviction orders. It is also not clear whether
the two eviction orders were served on the City.
[16] The remaining occupiers terminated the services of their erstwhile attorneys
and engaged their current attorneys, a non-profit organisation specialising in housing
litigation. In September 2016, the current attorneys initiated discussions with the
City concerning the imminent risk of homelessness faced by the occupiers. These
discussions did not result in an outcome acceptable to the occupiers. Consequently,
in September 2016, they launched an application which is the subject of this appeal.
[17] The notice of motion dated 20 September 2016 was framed in two parts. In
Part A, the occupiers sought an order suspending the execution of the eviction orders
pending the determination of the relief sought in Part B. This aspect was settled.
9 Occupiers of Erven 87 & 88 Berea v De Wet N O and Another [2017] ZACC 18; 2017 (5) SA 346 (CC); 2017 (8)
BCLR 1015 (CC) paras 39-57.
[18] In Part B the occupiers sought, inter alia, the following orders:
‘2.
It is declared that the [City] is under a constitutional duty to provide the [occupiers] and
their dependents residing with them with temporary emergency accommodation in a location as
near as possible to the property where the [occupiers] currently reside at erf 10626, Bromwell
Street, Cape Town (“the property”);
3.
The [City] is directed to make available the temporary emergency accommodation referred
to in paragraph 2 above to the [occupiers] within 3 (three) months of the date of this order;
4.
It is declared that the [occupiers] may remain in occupation of their existing homes on the
property pending compliance by the [City] with paragraph 3 of this order;
5.
The [City] is directed to deliver a report to this Court within 2 (two) months of the date of
this order, confirmed [on] affidavit, detailing the accommodation that it will make available to the
[occupiers], when such accommodation will be available, the nature and proximity of such
accommodation and explaining why the particular location and form of accommodation has been
selected. The report must also set out the steps taken by the [City] during the two months before
the report is filed to meaningfully engage with the [occupiers] and/or the [occupiers’] attorneys
regarding the provision of temporary emergency accommodation to the [occupiers].’
(My emphasis.)
[19] The relief to be provided accommodation at a location as near as possible to
the property in which the occupiers resided, is in line with the orders granted in
previous cases, such as in City of Johannesburg Metropolitan Municipality v Blue
Moonlight Properties 39 (Pty) Ltd and Another.10 The motivation behind those
orders is that ‘in deciding on the locality, the government must have regard to the
relationship between the location of residents and their places of employment,’11
schools and other amenities.
10 City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another [2011]
ZACC 33; 2012 (2) SA 104 (CC); 2012 (2) BCLR 150 (CC) para 104(e)(iv) (Blue Moonlight Properties (CC)).
11 Thubelisha fn 1 above para 254.
[20] The City states that it responded to the relief sought by assessing the
composition of various family units involved. It facilitated their applications for
social housing and considered them. It advised the occupiers’ attorneys that five
families would qualify for social and/or GAP12 housing and should apply
immediately. The City offered emergency housing at Wolwerivier, which is
approximately 30 km from the property, for the remaining family units. This
consisted of 26.5 m2 of prefabricated light gauge steel structures with corrugated
cladding and other basic amenities. Notably, the Wolwerivier structures were
accepted as suitable within the City’s available resources by the Constitutional Court
in Baron and Others v Claytile (Pty) Ltd and Another.13
[21] The occupiers objected to being accommodated at Wolwerivier because of the
distance from the property. They enquired about a list of properties in the inner city,
including the site at Pickwick Street in Salt River (Pickwick), which they said could
be considered for emergency housing. The City advised them that Pickwick had
already been allocated as a transitional area for housing of beneficiaries who needed
to be moved from an informal settlement in Pine Road, which was one of the sites
earmarked for social housing, while it was being developed. The City then offered
emergency housing to all of the families, despite the fact that several could
potentially qualify for home loans. The City also provided information regarding the
bus routes and prices.
12 Affordable housing to accommodate a gap in the market of those families earning between R3 501 and R15 000 per
month – a housing market not served by the private market or the State – 2016/2017 Review of Integrated Human
Settlements Five-Year Plan at 49.
13 Baron and Others v Claytile (Pty) Limited and Another [2017] ZACC 24; 2017 (5) SA 329 (CC); 2017 (10) BCLR
1225 (CC) para 50.
[22] During 2017, the City’s Mayoral Committee Member for Transport and Urban
Development (Mayoral Committee Member) made a public speech about the
planned social and affordable housing developments in the inner city. He mentioned
the City’s intention to achieve spatial transformation by providing those facing
emergencies with temporary housing as close as possible to their places of work or
at least transportation. He further mentioned two sites, namely, Pickwick and St
James Street in Salt River (St James), which were reserved for transitional housing
to accommodate residents moved from Pine Road and Salt River Market areas, and
were identified for social housing development respectively. In one of the media
statements, the Mayoral Committee Member remarked that ‘the development of the
Pickwick site represents a new approach in terms of how the City intends to tackle
the urgent demand for housing by those families who are displaced or evicted from
their homes due to rapid development, among others’.
[23] On 27 September 2017, the City issued the Affordable Housing Prospectus
for the Woodstock, Salt River and Inner-City Precinct (the Prospectus) in which it
identified Woodstock, Salt River and the surrounds as ideal locations for the
development of affordable housing, as they were well located, being close to public
transport and employment opportunities. For this purpose, five sites of the City’s
available land were identified.
[24] In December 2017, motivated by these developments, the occupiers applied
to amend their notice of motion in terms of rule 28 in the following terms:
‘1.
It is declared that the housing programme of the [City] and its implementation in terms of
the City of Cape Town Integrated Human Settlements: Five Year Plan is inconsistent with the
[City]’s constitutional and statutory obligations to the extent that:
1.1
it fails to provide the [occupiers] and people living in Woodstock and Salt River who are
at risk of homelessness and in a crisis situation due to eviction from their homes with access to
transitional housing or temporary emergency accommodation in the immediate City centre and
surrounds.
2.
It is declared that the [City] is under a constitutional duty to provide the [occupiers] and
their dependents residing with them with temporary emergency accommodation or transitional
housing:
2.1
in the Woodstock, Salt River and inner city precinct as identified in the Prospectus for
Affordable Housing in the Woodstock and Salt River Precinct issued by the [City] on 28
September 2017; and
2.2
in a location as near as possible to the property where the [occupiers] currently reside at
erf 10626, Bromwell Street, Cape Town (“the property”)
3.
The [City] is directed to make available temporary emergency accommodation or
transitional housing referred to in paragraph 2 above to the [occupiers] within 12 (twelve) months
of the date of this order.
4.
The [City] is ordered to comply with its constitutional obligations as declared in this order.
5.
The [City] is directed to deliver a report to this Court within 3 (three) months of the date
of this order, confirmed on affidavit, detailing the emergency accommodation or transitional
housing that it will make available to the [occupiers] in the Woodstock, Salt River and inner city
precinct, when such accommodation will be available, the proximity of such accommodation and
explaining why the particular location and form of accommodation has been selected. The report
must also set out the steps taken by the [City] during the three months before the report is filed to
meaningfully engage with the [occupiers] and/or the [occupiers’] attorneys regarding the provision
of temporary emergency accommodation or transitional housing to the [occupiers].’
(My emphasis.)
[25] It is evident from the envisaged amended notice of motion that the relief
sought had changed markedly. It introduced a direct constitutional challenge against
the City’s housing programme and its implementation, on the basis that it failed to
provide for temporary emergency housing in the inner city and the surrounds. In
addition, it sought a declarator that the City was under a constitutional duty to
provide temporary emergency accommodation to the occupiers in a specified area
of either, Woodstock, Salt River and Inner-City Precinct, and that it should be
directed to do so.
[26] The City had previously adopted an Integrated Human Settlements: Five Year
Plan (the Five-Year Plan), which was reviewed annually to ensure that it considered
a response to any significant changes in the micro- and macro-environments that
may affect delivery. The occupiers alleged that the City’s new approach to housing
delivery announced in 2017 constituted a volte-face and an admission that the Five-
Year Plan was ‘in need of change in order to address displacement of persons such
as the [occupiers] due [to] gentrification in the inner [c]ity areas of Woodstock and
Salt River’.
[27] The City objected to the amendment of the relief sought on a number of bases,
including that it introduced a completely new relief. It alleged that it had met the
relief initially sought by offering temporary emergency accommodation to the
occupiers in Wolwerivier. When the Wolwerivier offer was rejected, it identified
land in Maitland. This option was not pursued because of objections from the
community residing there.
[28] The City thereafter offered the occupiers land in Kampies, Philippi, which is
approximately 15 km from the property. In terms of this offer, each household would
receive one plot of 36 m2 with building materials for 18 m2 structures. According to
the City, the services will consist of running water and waterborne sanitation (ie
flushing toilets) of 1:5 used on a communal basis, with five families given a key to
a particular toilet for use by them. A portable flush toilet will be made available to
the single disabled person(s). Solid waste removal would be provided per household,
collected once a week from a communal container available on site. There will be
no electricity provided. The Kampies site will be upgraded six months from the date
of offer to 26 m2 concrete slab structures, electrified by Eskom and that access to
waterborne sanitation and a basin would be provided to each household. All three
categories of schools – pre-primary, primary and high schools – are within 3 km of
the site in Hanover Park.
[29] The hearing of the application for the amendment took place on 13 August
2018 before Sher J, who allowed the amendment. The amended notice of motion
was ‘effected’ on 13 September 2018.
The legal framework
[30] Section 26 of the Constitution 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.’
[31] In Grootboom, the Constitutional Court provided an in-depth analysis of what
the provisions in s 26 of the Constitution entail.14 Subsection (1) defines the right,
while subsection (2) imposes a positive obligation on the State to take reasonable
14 See also City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another
[2011] ZASCA 47; 2011 (4) SA 337 (SCA); [2011] 3 All SA 471 (SCA) paras 26-40 for a helpful analysis of
Grootboom and s 26 of the Constitution concerning the State’s constitutional duty.
legislative and other measures, within its available means, to achieve progressive
realisation of the right. In this regard, the Constitutional Court stated that:
‘It requires the state to devise a comprehensive and workable plan to meet its obligations in terms
of the subsection. However subsection (2) also makes it clear that the obligation imposed upon the
state is not an absolute or unqualified one. The extent of the state’s obligation is defined by three
key elements that are considered separately: (a) the obligation to “take reasonable legislative and
other measures”; (b) “to achieve the progressive realisation” of the right; and (c) “within available
resources.”’15
[32] To qualify as reasonable, a housing programme must clearly set out
responsibilities and tasks of the different spheres of government and make available
financial and human resources. The programme must be coherent and capable of
facilitating the realisation of the right.
‘In any challenge based on section 26 in which it is argued that the state has failed to meet the
positive obligations imposed upon it by section 26 (2), the question will be whether the legislative
and other measures taken by the state are reasonable. A court considering reasonableness will not
enquire whether other more desirable or favourable measures could have been adopted, or
whether public money could have been better spent. The question would be whether the measures
that have been adopted are reasonable. It is necessary to recognise that a wide range of possible
measures could be adopted by the state to meet its obligations. Many of these would meet the
requirement of reasonableness. Once it is shown that the measures do so, this requirement is
met.’16 (My emphasis.)
[33] Legislative measures only, are not sufficient. The executive must adopt
policies and programmes, which are reasonable in both their conception and
implementation.17 And ‘[a]n otherwise reasonable programme that is not
15 Grootboom fn 5 above para 38.
16 Ibid para 41.
17 Ibid para 42.
implemented reasonably will not constitute compliance with the state’s
obligations’.18
[34] The programme must be considered within its social, economic and historical
context and in light of the capacity of the institution implementing the programme.
It must be balanced and flexible and give attention to housing crises and to short,
medium and long term needs.19
[35] It must be recognised that the right may not be realised immediately, hence
the expression ‘progressive realisation’. Further, housing must be made accessible
to a wider range of people as time progresses.20 The State is not expected to do more
than is achievable within its available resources. Balance is required between the
goal of realising the right expeditiously and effectively within the means available
to do so. In this regard, the ‘availability of resources is an important factor in
determining what is reasonable’.21
[36] The Housing Act 107 of 1997 (Housing Act) gives effect to s 26 of the
Constitution as part of the legislative measures taken by the State. Section 9(1) of
the Housing Act requires that:
‘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 –
18 Ibid.
19 Ibid para 43.
20 Ibid para 45.
21 Ibid para 46.
(i)
the inhabitants of its area of jurisdiction have access to adequate housing on a
progressive basis;
(ii)
conditions not conducive to the health and safety of the inhabitants of its area of
jurisdiction are prevented or removed;
(iii)
services in respect of water, sanitation, electricity, roads, storm-water drainage and
transport are provided in a manner which is economically efficient;
(b)
set housing delivery goals in respect of its area of jurisdiction;
(c)
identify and designate land for housing development;
(d)
create and maintain a public environment conducive to housing development which is
financially and socially viable;
(e)
. . .
(f)
initiate, plan, co-ordinate, facilitate, promote and enable appropriate housing development
in its area of jurisdiction;
(g)
. . .
(h)
. . .’
[37] The National Housing Code, 2009 (Housing Code) was developed as
contemplated by s 4 of the Housing Act. The Housing Code makes provision for the
Emergency Housing Programme.22 This programme was designed ‘to address the
needs of households [which] for reasons beyond their control, find themselves in an
emergency housing situation such as the fact that their existing shelter has been
destroyed or damaged, their prevailing situation poses an immediate threat to their
life, health and safety, or they have been evicted, or face the threat of imminent
eviction’. Assistance is provided to municipalities in the form of grants to enable
them to respond rapidly to emergencies by means of the provision of land, shelter
and municipal engineering services. In appropriate cases, this may include the
possible relocation and resettlement of people on a voluntary and cooperative basis.
22 The Emergency Housing Programme is contained in Part 3 Volume 4 of the National Housing Code, 2009.
The City’s housing programme
[38] The City contends that the high court erred in not taking into account its entire
housing programme and treating the emergency housing programme in isolation. It
submits that it has an Integrated Human Settlements Framework (IHSF), which is
aligned to legislation and policies, including the Housing Act and the Housing Code.
In addition, it adopted the Five-Year Plan. In this regard, it has a number of housing
programmes, namely social housing, GAP housing, finance-linked individual
subsidy housing, institutional housing and emergency and transitional housing.
[39] It implements the National Emergency Housing Programme by creating
incremental development areas (IDAs) and temporary relocation areas (TRAs).
More recently, it has begun to develop emergency housing within existing
settlements. The IDAs are incrementally upgraded to provide for permanent housing.
Emergency housing ‘applies to various categories of persons including persons who
are evicted or threatened with imminent eviction from land’. It is intended to benefit
all affected persons who are not in a position to address their housing emergencies.
[40] The emergency housing projects exist in Mfuleni, Happy Valley,
Blikkiesdorp, Wolwerivier, Sir Lowry’s Pass and Bardale. The TRA units are
located at OR Tambo, Hangberg and Masonwabe in Gugulethu. As at March 2020,
the City started constructing housing within existing settlements at Kalkfontein in
Kuilsriver, Bosasa in Blue Downs, Wallacedene in Kraaifontein, Kampies in
Philippi and at other places. Applicants for emergency housing are required to place
their names on the housing database so as to be identified whether they could be
accommodated in other housing programmes, such as the social housing programme
and GAP housing.
[41] According to the City, the social housing programme is aimed at developing
affordable rental areas with bulk infrastructure. It consists of a high-density
subsidised housing project, which is implemented, managed and owned by
independent and accredited social housing institutions in designated restructuring
zones. It accommodates persons with income levels of between R1 500 and R7 500.
Social housing units include areas such as Steenberg, Brooklyn, Bothasig and
Scottsdene. Developments were also being planned for Salt River and Woodstock.
[42] GAP housing is aimed at persons earning in excess of R6 500, with those
earning in excess of R7 500 given preference. According to the City’s assessment,
some of the occupiers qualified for GAP and social housing programmes. The City
alleges that it attempted to assist the occupiers within its IHSF. As earlier stated, it
urged those who qualified for social and GAP housing to apply.
[43] Individual subsidy housing is finance-linked and secured by mortgage bonds.
Repayments are determined according to income. It is aimed at households earning
between R3 000 and R15 000 per month. In the institutional housing programme,
the beneficiaries are provided with a subsidy, which may be supplemented with their
own income to acquire a superior housing structure.
[44] The City concedes that it has no emergency housing developments in the
immediate city centre and surrounds. However, it contends that the reasons are
complex. They include: (a) the excessively high costs of developing an emergency
housing settlement in the inner city – the cost in this regard is said to be at least triple
what it would be in areas further afield; (b) the very high rates on properties in the
city centre; and (c) the scarcity of land in the immediate surrounds of the City and
the competing demands on such land.
[45] It submits, however, that there are areas within the immediate surrounds of
the City, such as Woodstock, which are targeted for affordable inner-city housing
and temporary housing projects. A range of projects are envisaged for these areas.
These include mixed land use development involving transportation, housing, social
and economic opportunities. These would provide for affordable housing, which
could bring lower-income people closer to work opportunities. Other projects aimed
at overcoming the legacy of apartheid spatial planning include the Two Rivers Urban
Park (TRUP) project, a joint project between the City and the Western Cape
Government.
[46] The occupiers submit that they identified 45 parcels of vacant state-owned
land within 5 km of the property which were suitable for development or at the very
least temporary emergency accommodation. In response, the City explained that the
said land parcels were too small for a housing development; and that it was not in
the position to provide individual tracts of land to beneficiaries, because it was
unaffordable and to do so would also create unfairness among different beneficiaries
of state-assisted housing. It would entrench the exclusion of black African residents,
who, owing to apartheid, were not allowed to reside in the inner city. Furthermore,
properties of individual occupiers in the inner city and the surrounds would derive
or attract better value than those outside the city centre. There is no dispute about
the existence of these programmes.
The finding of unconstitutionality
[47] It will be recalled that the high court declared that ‘the [City’s] emergency
housing programme and its implementation, in relation to persons who may be
rendered homeless pursuant to their eviction in the inner City and its surrounds, and
in Woodstock and Salt River in particular, is unconstitutional’. In terms of s 72(1)(a)
of the Constitution, ‘[w]hen deciding a constitutional matter within its power, a court
. . . must declare that any law or conduct that is inconsistent with the Constitution is
invalid to the extent of its inconsistency.’ The high court did not identify the extent
of invalidity for the City to rectify in its order. For this reason alone, its order of
unconstitutionality cannot stand.
[48] In addition, the high court’s order does not accord with the relief sought by
the occupiers in paragraph 2.1 of the amended notice of motion. It is not
substantiated by the papers which served before the court or by the court’s reasoning.
The occupiers had challenged the housing programme in terms of the Five-Year Plan
and sought an order that it be declared inconsistent with the City’s constitutional and
statutory obligations, to the extent that it failed to provide the occupiers and people
living in Woodstock and Salt River, who were at the risk of homelessness due to
eviction, with temporary emergency accommodation or transitional housing in the
immediate city centre and surrounds.
[49] The Five-Year Plan under attack was for the period of July 2012 to June 2017.
Apart from the fact that that document had expired, no affidavit was filed as the
foundation for the new notice of motion, nor any legal basis set out in support of this
constitutional attack anywhere in the papers. Neither were the impugned portions of
the Five-Year Plan identified, nor the relevant constitutional or statutory provisions
infringed.
[50] At the hearing of the appeal, counsel for the occupiers argued that the basis
for the relief was apparent from the City’s affidavit of November 2017, which he
submitted led to the amendment. When pressed on this issue, counsel referred to a
paragraph in the affidavit filed in support of the application for the amendment of
the notice of motion. All this paragraph contained was the following:
‘The [occupiers] seek to amend their relief in consequence of this 180 degree change by the City
and the new evidence underpinning it as disclosed in the pre and post hearing media statements by
the City and the City’s affidavit dated 1 November 2017. I respectfully submit that this new
evidence constitutes an admission by the City that the implementation of its Integrated Human
Settlements: Five Year Plan is in need of change in order to address displacement of persons such
as the [occupiers] due [to] gentrification in the inner City areas of Woodstock and Salt River.’
[51] As to the content of the impugned Five-Year Plan, there is no inconsistency
between it and the City’s alleged new approach. Even if there were, the City was
entitled to adapt its housing programme to address the effects of gentrification,
among other challenges. It did so by identifying Woodstock, Salt River and the
surrounds as areas to develop affordable social housing. It is not clear what could be
objectionable about the City seeking to build affordable houses in the inner city as
part of addressing the legacy of apartheid spatial planning. Indeed, the occupiers do
not take issue with the form of social housing. Instead, they criticise the City for not
having emergency housing in the inner city as part of the Five-Year Plan. That,
however, had been the position even before the amendment was sought. I am not
sure how the adaptation of the Five-Year Plan would affect the initial relief sought.
At no stage did the City undertake to provide emergency housing in the inner city.
In fact, it had stated that it only had emergency housing available in Wolwerivier. In
any case, the impugned Five-Year Plan had expired.
[52] In the occupiers’ heads of argument, the issue before this Court is identified
as ‘whether the City has demonstrated that its policies and programme regarding
emergency housing and the implementation thereof, are reasonable and consistent
with the Constitution’. It is then broadly stated that the formulation and
implementation of the City’s housing programme is deficient and inconsistent with
the positive duties imposed on the City by s 26 of the Constitution, in that the City’s
housing programme does not provide for access to emergency housing and
accommodation in the immediate inner city centre and surrounds, in order to meet
the urgent emergency housing needs of the occupiers and people living in
Woodstock and Salt River who are at risk of homelessness and in a crisis situation
due to eviction from their homes.
[53] For this contention to withstand scrutiny, a source of the duty had to be
identified. The legislative measures and programmes taken by the government
giving effect to s 26 of the Constitution do not impose a duty on it to provide
temporary emergency accommodation at a specific locality. Nor have the line of
cases since Grootboom interpreted the duties flowing from s 26 to oblige the
government to provide emergency housing at a specific location. In fact, the opposite
has been suggested. In Thubelisha, Ngcobo J observed that ‘the Constitution does
not guarantee a person a right to housing at government expense at the locality of
his or her choice. Locality is determined by a number of factors including the
availability of land. However, in deciding on the locality, the government must have
regard to the relationship between the location of residents and their places of
employment’.23
[54] The high court recognised that ‘to ascribe such a power to itself . . . would
place an impossible burden on the State, as it would result in it having to
accommodate evictees who are going to be rendered homeless, in virtually every
suburb or area in which they live. For obvious reasons this is untenable.’ The court,
however, went on to make the very order that it found it could not grant. It justified
its finding on the basis that this matter had to be decided ‘on the basis of whether it
is rational or reasonable for the [occupiers] to be told that they must take up
emergency housing either in a TRA or an IDA on the outskirts of the City, or
alternatively in an informal settlement, whilst other similarly-placed persons do not
face the same choice, because they may have the good fortune of being afforded
“transitional” housing or (as was promised by the City’s Mayoral Member for urban
development), “temporary” housing, in the inner City and its surrounds.’
[55] The occupiers do not impugn the City’s offer to relocate them (to Kampies in
Philippi, among other places) in relation to them per se. Rather, they impugn the
City’s plan or emergency housing programme and its implementation for not
providing emergency accommodation in the specific locality of the city centre and
surrounds. This is a broader attack.
[56] Having failed to identify the source of the constitutional duty in the
Constitution or the Housing Act, the occupiers resorted to relying on s 26 of the
Constitution in general terms. However, the principle of subsidiarity prohibits direct
23 Thubelisha fn 1 above para 254.
reliance on the Constitution where specific and detailed legislation giving effect to
a right sought to be enforced has been passed. In any event, as I have demonstrated,
none of the legal framework or programmes guarantees such a right or imposes the
suggested duty on the State.
Reasonableness of the City’s emergency housing programme
[57] In order to establish whether the measures taken by the City to address the
obligations in s 26 of the Constitution are reasonable, a balanced enquiry as outlined
in Grootboom would have to be taken into account. This, being mindful of the fact
that the courts are not at large to set aside a programme merely for the reason that
there may be other measures which it considers more favourable or desirable.24
[58] It was aptly put in Thubelisha thus:
‘It is for the government to decide how to allocate houses in the new area. If the government, in
its wisdom, decides to allocate some of the houses in the newly developed Joe Slovo to backyard
dwellers from Kwa-Langa, which is close to Joe Slovo, this cannot be faulted unless it is
unreasonable. . .
. . .
In considering reasonableness, the enquiry is not “whether other more desirable or favourable
measures could have been adopted, or whether public money could have been better spent.”
Rather, the enquiry should be confined to the question whether the measures that have been
adopted are reasonable, bearing in mind “that a wide range of possible measures could be adopted
by the State to meet its obligations.” Thus in determining whether the government has complied
with its obligations to provide access to adequate housing, courts must acknowledge that the
government must determine and set priorities but must ensure that, in setting those priorities, it has
regard to its constitutional obligations. In short, the obligation of government must not be
24 Blue Moonlight Properties (CC) fn 10 above para 88.
construed in a manner that ties its hands and makes it impossible to comply with its constitutional
obligations.
. . .
It is not for the courts to tell the government how to upgrade the area. This is a matter for the
government to decide. The fact that there may be other ways of upgrading the area without
relocating the residents does not show that the decision of the government to relocate the residents
is unreasonable. It is not for the courts to tell the government how best to comply with its
obligations. If, in the best judgment of the government it is necessary to relocate people, a court
should be slow to interfere with that decision, as long as it is reasonable in terms of s 26(2) of the
Constitution and just and equitable under PIE.
Some of the reasons advanced by the residents for refusing to relocate to the TRUs in Delft are a
lack of schools and other amenities and a lack of employment. What must be stressed here is that
relocation is necessary to develop Joe Slovo so that decent housing can be built there. This will
benefit the residents. Moreover, the Constitution does not guarantee a person a right to housing at
government expense at the locality of his or her choice. Locality is determined by a number of
factors including the availability of land. However, in deciding on the locality, the government
must have regard to the relationship between the location of residents and their places of
employment.
. . .
In the past we have stressed that the government faces an extremely difficult task in addressing the
injustices of the past. This is compounded by the limited availability of resources, including the
availability of land where decent houses can be built.’25
[59] The City has taken a policy decision to designate certain areas of the inner
city, including Woodstock and Salt River, for social housing. The high court
suggested that the implementation of the City’s housing programme in the inner city
was ‘to give undue preference to social housing, at the expense of the City’s
constitutional obligations in relation to the provision of emergency housing.’ The
25 Thubelisha fn 1 above paras 249, 252-254 and 256.
introduction of social housing in the inner city has not been challenged as being
unreasonable. The high court has not found this decision to be unreasonable either.
That being so, the issue is not before us.
[60] As to emergency housing, the City demonstrated unequivocally that its policy
provides for an emergency housing programme by way of IDAs, TRAs and
developments in existing informal settlements. These are considered mechanisms
created to meet emergency housing needs when they arise. The fact that no provision
is made for such emergency housing needs in the inner city, does not render the
choices made by the City irrational or unreasonable.
[61] One of the arguments advanced to suggest that the policy is unreasonable is
that the occupiers cannot afford social housing because they are unemployed. The
argument is flawed. It conflates temporary emergency housing, which by its nature
is provided by the State to meet emergency needs, with the progressive realisation
of the right to adequate permanent housing. The latter, as the discussion set out above
demonstrates, involves the provision of housing that is subsidised in various
respects, and may involve some amount paid by residents or fully or partially
subsidised by the government. As the Constitutional Court recognised, ‘[i]ndividuals
may have a range of incomes – some may be able to afford subsidised housing while
others may be completely destitute. . . . [Accordingly,] the Occupiers have a myriad
of personal circumstances to be taken into account in considering their eligibility for
housing’.26 Thus, differentiation in housing delivery by the City between emergency
housing needs and housing needs that do not constitute emergency might well be
reasonable in the circumstances.27
26 Blue Moonlight Properties (CC) fn 10 above para 92.
27 Ibid para 95.
[62] The distinction between permanent and emergency housing has been
recognised. This Court in City of Johannesburg v Dladla and Others,28 referred with
approval to the judgment of City of Cape Town v Hoosain N O,29 in which the
following was observed:
‘Once it is recognised that emergency accommodation by its very nature will invariably fall short
of the standards reasonably expected of permanent housing accommodation, it follows that those
who need to occupy such accommodation must accept less than what would ordinarily be
acceptable. The apparent harshness of an acceptance of this recognition has to be seen against the
realities imposed by the vast scale of the housing backlogs with which the state, in general, and
the City, in particular, are having to engage.’
[63] The high court concluded that ‘the City does not appear to have a
comprehensive, workable and coherent emergency housing plan or program, at least
not its own one, and appears to have adopted inconsistent and contradictory stances
and policies. And its implementation of its emergency housing program, such as it
is, in relation to such persons, appears to be inconsistent and arbitrary’. The high
court found this because the Mayoral Committee Member and the Prospectus had
mentioned a change in approach on the housing delivery programme. It hardly need
be stated that a political speech by a municipal politician does not constitute policy,
carefully considered and adopted by a policy-maker. What the high court was called
upon to consider was the rationality and reasonableness of the policy approach set
out by the City in its deliberations on the challenge. As to the new approach
articulated in the Prospectus, it made no undertaking to the occupiers to provide
28 City of Johannesburg v Dladla and Others [2016] ZASCA 66; 2016 (6) SA 377 (SCA) para 20.
29 City of Cape Town v Hoosain N O and Others [2011] ZAWCHC 391 (WCC) para 14.
emergency or ‘transitional’ housing in the inner city. It is also important to bear in
mind that a programme must be flexible and adaptive.
[64] The high court found that the overall housing delivery programme was not the
issue in the matter. It erred by disregarding the broad range of permanent housing
programmes that the City implements, since these are directly affected by the order
directing the City to make available emergency housing in the city centre and
surrounding areas. The City’s obligation is wide ranging and is not confined to the
provision of emergency housing accommodation.
[65] The housing delivery question is not an easy one to answer. Temporary
emergency accommodation has in many instances turned into semi-permanent or
permanent homes due to shortage of government housing. According to the City,
permanent housing is the ideal that the government is pursuing. It is, thus, imperative
to ensure that while occupiers of emergency accommodation wait for permanent
sites, a balance is achieved in ensuring that their settlements do not perpetuate
poverty and human indignity.
Differentiation and the irrationality issue
[66] The occupiers contend that they were treated differently from the residents of
Pine Road and Salt River Market by not being offered transitional housing. In this
regard, they allege that the City was arbitrarily implementing its housing delivery
programme in the same way as in Blue Moonlight Properties. This argument is
erroneous. Blue Moonlight Properties dealt with a completely different situation,
that of an emergency programme that excluded occupiers that were evicted by
private landowners from their properties. In other words, there was no programme
in place for those people evicted by private property owners as opposed to those who
were evicted by the State from its property. That kind of programme was clearly
discriminatory. In this case, conversely, there is an emergency housing programme,
which applies to all residents who are faced with housing crises and need immediate
help.
[67] The City’s solution of relocating people from informal settlements to
transitional housing with a view to developing the land they occupied does not
render the policy unreasonable or arbitrary. It is clear that those sites were reserved
for a specific purpose and not generally for those that were in a similar position as
the occupiers in Woodstock and Salt River.
[68] There is no evidence that any evictees in a position similar to the occupiers
were accommodated in the transitional housing sites within the inner city. It is worth
mentioning that transitional housing differs from the temporary emergency
accommodation, in that a rental fee would be charged in the earmarked transitional
housing sites. To the extent that the recipients were not able to pay the full rental,
the City would subsidise the shortfall in operating expenses of the social housing
company that would be developing the sites. The City explained that a formal policy
in respect of its transitional housing was yet to be developed. The City has alleged
that due to scarcity of land, and the cost of development, it is unlikely that any further
transitional housing units would be developed in the city centre.
[69] It was not disputed that the reason the City committed to transitional housing
was to ensure that vacant land could be obtained in order for social housing to be
developed. If transitional housing in Pickwick were to be used for the occupiers, it
will not be available for its intended purpose. That would mean that vacant
occupation in Pine Road would not be obtained and social housing development
would be impeded or would not proceed. The City alleges that it was possible for
the Pickwick housing to be made available more broadly in future, but as the issues
of relocation were still underway, it was premature to do so at this stage.
[70] An order directing the City to house the occupiers in the transitional
accommodation would mean the eviction of the informal dwellers from Pickwick
(who are not party to these proceedings). The high court acknowledged that ‘there
was no spare accommodation in the Pickwick “transitional” housing development
as all its rooms were occupied, and the St James development was still in progress’.
Another effect of the order would be to re-direct the City’s resources from the social
housing programme to temporary emergency housing within the inner city and the
surrounds, whereas, according to the City, there was presently no land available.
Those choices are not for the Court to make. The high court’s order, therefore, put
the City in an invidious position, by making an order without knowing, or being in
a position to know, if land would be found specifically in the inner city and
surrounds. In light of all the reasons above, the high court’s order must be set aside.
Appropriate relief
[71] While a case has not been made out for the declaration of unconstitutionality
of the City’s housing programme and its implementation as sought by the occupiers,
and for the provision of temporary emergency housing at a specific locality, the
Court still has to make a just and equitable order, so as not to render the occupiers
homeless. This is because of the extended eviction orders made which are yet to be
implemented and have not been appealed against.
[72] The City bears a duty to provide the occupiers with suitable temporary
emergency accommodation. It is appropriate that an order be made that such
accommodation be at a location as near as possible to the area where the property is
situated.30 The City’s counsel informed us that the offer to provide temporary
emergency accommodation at Kampies in Philippi still stands and it was rejected
primarily because of the COVID-19 pandemic and the likely exposure of the
vulnerable occupiers.
[73] The suitability of Kampies is not an issue squarely before us. It is, however,
imperative for the City to realise that it has the responsibility of ensuring that the
occupiers are treated with dignity and care when choosing an appropriate location.
In doing so, the City should take into account the occupier’s places of employment
and children’s schooling, hospitals, transportation and other important amenities that
their relocation may require. In this regard, the vulnerabilities of the occupiers must
be considered.
[74] To this end, it is essential that the City be provided with reasonable time to
find the temporary emergency accommodation. It follows that the date of eviction
stipulated in the eviction orders should also be extended to a reasonable date after
the City has to provide accommodation.
[75] As to costs, the Biowatch principle applies. In light of this, we are obliged to
replace the high court’s order with one of no order as to costs. Notwithstanding that
30 See Blue Moonlight Properties (CC) fn 10 above and Thubelisha fn 1 above.
the appeal succeeds, the costs of appeal should also land where it falls, in accordance
with the Biowatch principle.
[76] For these reasons, the following order is made:
The appeal is upheld, with no order as to costs.
The high court’s order is set aside and replaced with the following:
‘1
The City of Cape Town must provide the occupiers and their
dependants with temporary emergency accommodation in a location as near
as possible to where they currently reside, erf 10626, Bromwell Street,
Woodstock (the property), on or before 30 May 2023, provided that they are
still resident at the property and have not voluntarily vacated it.
The date on which the occupiers are required to vacate the property is
extended to 30 June 2023.
There is no order as to costs.’
__________________________
N P MABINDLA-BOQWANA
JUDGE OF APPEAL
Appearances
For the appellant:
K Pillay SC and A du Toit
Instructed by:
Fairbridges Wertheim Becker, Cape Town
McIntyre Van der Post, Bloemfontein
For the first to
twenty-sixth respondents:
S Magardie
Instructed by:
Ndifuna Ukwazi Law Centre, 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:
6 February 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form
part of the judgments of the Supreme Court of Appeal
City of Cape Town v Commando and Others (1303/2021) [2023] ZASCA 7 (6 February 2023)
Today, the Supreme Court of Appeal (SCA) upheld an appeal, with no order as to costs, brought by the
appellant, the City of Cape Town (the City), against the judgment of the Western Cape Division of the
High Court, Cape Town (the high court) in respect of the constitutional duty of a municipality to provide
temporary emergency housing.
The central issue in the appeal was whether that constitutional obligation extended to making temporary
emergency accommodation available at a specific location. The high court made an order, inter alia,
compelling the City to provide the first to twenty-sixth respondents (the occupiers) and their dependents
residing with them with temporary emergency accommodation or ‘transitional housing’ in Woodstock,
Salt River or the Inner-City Precinct.
The high court’s order was preceded by protracted litigation between the occupiers and the twenty-
seventh respondent, Woodstock Hub (Pty) Ltd (Woodstock Hub). On 30 June 2014, Woodstock Hub
gave notice to the occupiers to vacate the premises it had bought from Messrs Reza Syms and Erefaan
Syms (the Syms brothers), situated at erf 10626, Bromwell Street, Salt River, Cape Town (the property).
The occupiers had rented units in the property from the Syms brothers. In July 2015, Woodstock Hub
launched eviction applications in the high court against the occupiers. On 17 March 2016, an eviction
order was granted in the high court by agreement between Woodstock Hub and the occupiers. In terms
of this order, the occupiers agreed to vacate the property on 31 July 2016. The occupiers unsuccessfully
sought to vary the terms of this order. On 15 August 2016, Woodstock Hub and the occupiers concluded
a deed of settlement, which was made an order of court, in terms of which the occupiers would vacate
the property on 9 September 2016.
While the City was cited in the proceedings between Woodstock Hub and the occupiers, no order was
sought against it to provide the occupiers with temporary accommodation, should this have been
necessary. In September 2016, the occupiers’ attorneys initiated discussions with the City concerning
the imminent risk of homelessness faced by the occupiers. These discussions did not result in an
outcome acceptable to the occupiers. Consequently, in September 2016, they launched an application
which is the subject of this appeal. In essence, the relief sought was for the occupiers to be provided
accommodation at a location as near as possible to the property in which they resided.
In December 2017, the occupiers applied to amend their notice of motion, whereby the relief sought
changed markedly. It introduced a direct constitutional challenge against the City’s housing programme
and its implementation, on the basis that it failed to provide for temporary emergency housing in the
inner city and the surrounds. In addition, it sought a declarator that the City was under a constitutional
duty to provide temporary emergency accommodation to the occupiers in a specified area of either,
Woodstock, Salt River and Inner-City Precinct, and that it should be directed to do so. The high court
allowed the amendment, which amended notice of motion was ‘effected’ on 13 September 2018.
In respect of the issue of constitutionality, the SCA found the following. Firstly, the high court had not
identified the extent of invalidity for the City to rectify in its order. For this reason alone, the SCA found
that its order of unconstitutionality could not stand.
In addition, the SCA found that the high court’s order did not accord with the relief sought by the
occupiers. The SCA found that it was not substantiated by the papers which served before the court or
by the court’s reasoning. This was because the occupiers had challenged the housing programme in
terms of the City’s Integrated Human Settlements: Five-Year Plan for the period of July 2012 to June
2017 (the Five-Year Plan). In this regard, the SCA found that apart from the fact that that document had
expired, no affidavit was filed as the foundation for the new notice of motion, nor any legal basis set
out in support of this constitutional attack anywhere in the papers. Neither were the impugned portions
of the Five-Year Plan identified, nor the relevant constitutional or statutory provisions infringed. As to
the content of the impugned Five-Year Plan, the SCA found that there was no inconsistency between it
and the City’s alleged new approach. Even if there were, the City was entitled to adapt its housing
programme.
Further, the SCA found that the legislative measures and programmes taken by the government giving
effect to s 26 of the Constitution did not impose a duty on it to provide temporary emergency
accommodation at a specific locality. Nor have the line of cases since Government of the Republic of
South Africa and Others v Grootboom and Others [2000] ZACC 19; 2001 (1) SA 46 (CC); 2000 (11)
BCLR 1169 (CC). In fact, the opposite was suggested; for example, in Residents of Joe Slovo
Community, Western Cape v Thubelisha Homes and Others (Centre on Housing Rights and Evictions
and Another, Amici Curiae) [2009] ZACC 16; 2010 (3) SA 454 (CC); 2009 (9) BCLR 847 (CC).
In regard to the reasonableness of the City’s emergency housing programme, the SCA found that the
City demonstrated unequivocally that its policy provided for an emergency housing programme, and
the fact that no provision was made for such emergency housing needs in the inner city, did not render
the choices made by the City irrational or unreasonable.
In regard to the alleged differentiation of treatment of the occupiers by the City, the SCA found that
there was no evidence that any evictees in a position similar to the occupiers were accommodated in
the transitional housing sites within the inner city.
The SCA found further that the high court’s order put the City in an invidious position, by making an
order without knowing, or being in a position to know, if land would be found specifically in the inner
city and surrounds. An effect of the high court’s order was to re-direct the City’s resources, which
choices were not for the courts to make. In light of all the reasons above, the SCA held that the high
court’s order had to be set aside.
Lastly, the SCA found that it still had to make a just and equitable order, so as not to render the occupiers
homeless. In regard to the appropriate relief, the SCA found that the City bore a duty to provide the
occupiers with suitable temporary emergency accommodation, and it was appropriate that an order be
made that such accommodation be at a location as near as possible to the area where the property was
situated. To this end, it was essential that the City be provided with reasonable time to find the
temporary emergency accommodation. It followed that the date of eviction stipulated in the eviction
orders had to be extended to a reasonable date after the City was to provide accommodation.
Notably, the SCA remarked on the imperative for the City to realise that it had the responsibility of
ensuring that the occupiers were treated with dignity and care when choosing an appropriate location.
In doing so, the City had to take into account the occupier’s places of employment and children’s
schooling, hospitals, transportation and other important amenities that their relocation required. In this
regard, the vulnerabilities of the occupiers had to be considered.
As to costs, the SCA held that the Biowatch principle applied. Accordingly, no costs order was made in
the appeal, and the high court’s costs order was set aside.
~~~~ends~~~~
|
3747
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 434/2020
In the matter between:
RAPHOLO EDWIN MANYAKA APPLICANT/APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Rapholo Edwin Manyaka v The State (434/2020)
[2022] ZASCA 21 (23 February 2022)
Coram:
MOCUMIE, SCHIPPERS, CARELSE and MABINDLA-
BOQWANA JJA and PHATSHOANE AJA
Heard:
14 September 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 09h45 on 23 February 2022.
Summary: Criminal law and procedure – condonation – special leave to
appeal in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 – court
of appeal entitled to consider new evidence in exceptional cases where
circumstances have changed after conviction and sentence in terms of
s 316(5) of the Criminal Procedure Act 51 of 1977.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria
(Southwood J and Goodey AJ sitting as a court of appeal):
The application for condonation is granted.
The application for special leave to appeal is granted.
The application to lead further evidence is granted.
The appeal on sentence in respect of counts 1 and 2 is upheld.
5 The order of the Gauteng Division of the High Court, Pretoria is set
aside on counts 1 and 2.
6 The matter is remitted to the magistrate to impose sentence afresh, in
respect of those counts, after due compliance with the provisions of s
276A(1)(a) of the Criminal Procedure Act 51 of 1977.
7 A report of a probation officer and/or a correctional official, must be
obtained within six weeks of delivery of this judgment.
JUDGMENT
Carelse JA (Mocumie and Mabindla-Boqwana JJA concurring):
[1] This is an application for special leave to appeal that came before
this Court, some 15 years after the incident, some 13 years after the
applicant was convicted and sentenced by the Pretoria Magistrate’s Court,
and some 11 years after his appeal against sentence was heard by the
Gauteng Division of the High Court, Pretoria (full bench). This application
was referred for oral argument in terms of s 17(2)(d) of the Superior Courts
Act 10 of 2013 and, if granted, the determination of the appeal itself. A
party seeking special leave must show that special circumstances exist to
warrant a further appeal.
[2] There are two further applications before this Court – an application
for condonation for the long delay in bringing this application and an
application to lead further evidence on appeal in terms of s 316(5) of the
Criminal Procedure Act 51 of 1977 (CPA).1 The organs of the State
involved with this applicant have not filed any answering affidavits. There
are accordingly no disputes of fact.
[3] The incident giving rise to the criminal charges against the applicant
arise out of a motor vehicle collision that occurred on the night of 30 June
2006 on Garsfontein Road, Pretoria, when the motor vehicle driven by the
applicant, who was attempting to overtake a motor vehicle, collided with a
motor vehicle being driven in the opposite direction, killing its two
occupants. At the time of the collision and according to the post-mortem
report, the two occupants of the other motor vehicle involved in the
collision were both under the influence of alcohol. At his trial the applicant
faced three charges. Counts 1 and 2 were culpable homicide arising out of
the death of the two occupants of the other motor vehicle that was involved
in the collision. Count 3 was that of negligent or reckless driving in terms
1 Section 316(5) of the Criminal Procedure Act 51 of 1977 (CPA) provides:
‘(a) An application for leave to appeal under subsection (1) may be accompanied by an application to
adduce further evidence (hereafter in this section referred to as an application for further evidence)
relating to the prospective appeal.
(b) An application for further evidence must be supported by an affidavit stating that –
(i) further evidence which would presumably be accepted as true, is available;
(ii) if accepted the evidence could reasonably lead to a different verdict or sentence; and
(iii) there is a reasonably acceptable explanation for the failure to produce the evidence before the
close of the trial.
(c) The court granting an application for further evidence must –
(i) receive that evidence and further evidence rendered necessary thereby, including evidence in
rebuttal called by the prosecutor and evidence called by the court; and
(ii) record its findings or views with regard to that evidence, including the cogency and the sufficiency
of the evidence, and the demeanour and credibility of any witness.’
of s 63(1) of the National Road Traffic Act 99 of 1996 (the RTA) in that
the applicant had driven through a ‘red robot, overtook on solid line’. The
applicant was found guilty on counts 1 and 2. On count 3 the magistrate
found that the traffic light was red and that in ‘driving over a red robot (the
applicant) was reckless and he is found guilty of reckless driving’.
[4] The evidence on count 3 included that of Sergeant Bekker who was
on the scene. He said that the traffic light in question was 1.7 kilometres
from the accident scene. Jacobus van der Walt, who also gave evidence on
this issue, said that there was a set of traffic lights at the intersection of
Garsfontein Road and De Villebois Road. He was travelling from west to
east on Garsfontein Road. He was stationary at the traffic light which was
red for him. He saw the applicant’s vehicle turning right from De Villebois
Road into Garsfontein Road where he skipped the red robot just before the
light became green ‘for me to drive on’. From there he drove behind the
applicant from which vantage point he witnessed the accident some 80
metres further.
[5] Before sentencing the applicant, the magistrate was told of a letter
written by the applicant to the parents of the deceased, in which he had
expressed his remorse to them and in which he sought their forgiveness.
He repeated these sentiments in evidence. The magistrate also took into
account that the applicant was 20 years old when the accident happened
and that he was in the second year of his tertiary education and, at the time
of sentencing, the applicant had completed his tertiary education.
[6] On count 1, the applicant was sentenced to three years’
imprisonment in terms of s 276(1)(i) of the CPA.2 This meant that the
applicant had to serve a minimum of one sixth of the sentence imposed on
him before he could be considered for correctional supervision. On count
2, he was sentenced to three years’ imprisonment, wholly suspended for
five years on condition that he was not convicted of culpable homicide
involving the driving of a motor vehicle. On count 3, he was sentenced to
a fine of R20 000 – or eighteen months’ imprisonment, wholly suspended
for five years on condition he was not over the period, convicted of a
contravention of s 63(1) of the RTA. His license was suspended for five
years. And lastly, he was declared unfit to possess a firearm in terms of the
Firearms Control Act 60 of 2000.
[7] The magistrate granted the applicant leave to appeal on the sentence
he imposed. On 8 March 2010, the full bench, in the exercise of its powers
of review, set aside the conviction and sentence on count 3 on the ground
that ‘there is no evidence of any reckless or negligent driving. There is no
evidence that anybody’s life, or property were in danger, related to the
applicant ‘“skipping” the robot’. In other words, the applicant’s act did not
result in any dolus directus or dolus eventualis, meaning the skipping of
the red traffic light did not endanger anyone’s life or property. There was
no appeal by the State against this order, as questionable as it may be. On
counts 1 and 2 the full bench found that there was a misdirection in that the
two counts should have been taken as one for the purpose of sentence and
that there was only one incident that resulted in two deaths. In the result,
2 Section 276 (1)(i) of the CPA provides:
‘(1) 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, namely –
(i) imprisonment from which such a person may be placed under correctional supervision in the
discretion of the Commissioner or a parole board.’
the full bench set aside the two sentences and replaced them with a sentence
of four years’ imprisonment in terms of s 276(1)(b) of the CPA, of which
one year was suspended for five years on condition that during the period
of suspension the applicant was not convicted of culpable homicide
involving the driving of a motor vehicle. The net result of the appeal was
that, instead of the applicant serving a possible one sixth of his sentence in
prison, he would have to serve a three year period in prison, this being done
without notice to the applicant of the full bench’s intention to increase the
sentence imposed. From a reading of the whole judgment, it appears that
the increase in sentence was erroneous and not that which may have been
intended by the court.
[8] In his affidavit in support of his applications (for condonation, to
lead further evidence on appeal and special leave to appeal), the applicant
stated that after the full bench delivered its judgment on 8 March 2010, he
complied with a directive to hand himself over to the Voortrekker
Correctional Centre (the Correctional Centre) within 48 hours.
Accompanied by his brother in law, he presented himself at the
Correctional Centre and was informed by an official that they were not in
possession of his court records and could therefore not detain him. He was
told to go home and once they were in possession of his records, they would
arrange to have him transported to the correctional centre. The applicant
provided his home address to the officials in this regard. The applicant
stated that he remained at this address. In the six and a half years that
followed this encounter, the applicant got married and at the time of the
urgent application, his wife was expecting their third child. He is gainfully
employed. None of this evidence is disputed.
[9] On 7 September 2016, some six and a half years later, a warrant was
issued for the applicant’s arrest. The State, and the relevant organs it
controls has failed to explain this extraordinary delay. On 22 September
2016, having been served with the warrant, the applicant brought an urgent
application in the Gauteng Division of the High Court, Pretoria (the high
court) to stay the warrant pending an application to reconsider the sentence
imposed by the full bench. Neukircher AJ who heard the urgent
application, and on 27 September 2016 made the following order:
‘34.1 The applicant is to deliver his application for reconsideration of the appeal under
case number A576/2009 (or whatever process he be so advised) within 15 days of date
hereof to whoever person or court he is so advised.
34.2 Pending finalisation of the proceedings set out in 34.1 (supra) the warrant of arrest
issued by Magistrate Mncube on 7 September 2016 authorising the arrest of the
applicant is stayed.
34.3. Pending finalisation of the proceedings set out in 34.1 (supra) the respondents are
hereby interdicted and restrained from arresting the applicant and handing him over for
the purpose of serving his sentence.
34.4 Should the provisions of paragraph 34.1 (supra) not be carried out within 15 days
of date hereof; this order will lapse immediately.
34.5 Each party shall pay their own costs of this application.’ (Emphasis added.)
[10] Pursuant to this order the applicant brought an application to this
Court for special leave to appeal the judgment and order of the full bench.
The applicant did not comply with paragraph 34.1 of Neukircher AJ’s order
of 27 September 2016. It is unnecessary to detail the explanation
particularly because the State conceded that the applicant has good
prospects of success in his appeal against the order of the full bench based
on the irregularity committed by the full bench which was to increase the
sentence without giving notice. For these reasons the condonation
application ought to be granted.
[11] The reasons set out in paras 8 and 9 above, amount to exceptional
circumstances. Accordingly, the application to lead further evidence
should be granted, as well as the application for special leave to appeal to
this Court.
[12] It is not disputed that the full bench misdirected itself materially by
increasing the applicant’s prison sentence without notice to him. (See
S v Bogaards).3 As a result of that, the sentence in respect of counts 1 and
2 cannot stand. For different reasons set out below, the magistrate’s order
on sentence in respect of these counts cannot be reinstated, as was
submitted on behalf of the State.
[13] In Jaftha v S4 , this Court held:
‘. . . that new evidence ought to be admitted to show that the sentence imposed ten
years previously is now inappropriate. Ordinarily, of course, only facts known to the
court at the time of sentencing should be taken into account but the rule is not invariable.
Where there are exceptional or peculiar circumstances that occur after sentence is
imposed it is possible to take these factors and for a court on appeal to alter the sentence
imposed originally where this is justified.’5 (Footnotes omitted.)
3. In S v Bogaards [2012] ZACC 23; 2013 (1) SACR 1 (CC), Khampepe J acknowledged that a court of
appeal is empowered to set aside a sentence and impose a more severe one. She said that at common law
there was no formal requirement for an appeal court to give an accused person notice when that court
was considering an increased sentence on appeal. The Constitutional Court held that it was necessary to
develop the common law so as to require notice to an applicant where an increase in the sentence is being
contemplated by the court of its own accord. Khampepe J said the following at para 72:
‘It is worth emphasising that requiring the appellate court to give the accused person notice that it is
considering an increase in sentence or imposing a higher sentence upon conviction for a substituted
offence, does not fetter that court’s discretion to increase the sentence or to impose a substituted
conviction with a higher sentence. The court may clearly do so in terms of s 22(b) of the Supreme Court
Act and s 322 of the CPA. Elevating the notice practice to a requirement merely sets out the correct
procedure according to which the court must ultimately exercise that discretion. The notice requirement
is merely a prerequisite to the appellate court’s exercise of its discretion. After notice has been given and
the accused person has had an opportunity to give pointed submissions on the potential increase or the
imposition of a higher sentence upon conviction of another offence, the appellate court is entitled to
increase the sentence or impose a higher sentence if it determines that this is what justice requires.’
See also S v De Beer [2017] ZASCA 183; 2018 (1) SACR 229 (SCA).
4 Jaftha v S [2009] ZASCA 117; 2010 (1) SACR 136 (SCA) (Jaftha) para 15.
5 S v Karolia [2004] ZASCA 49; 2006 (2) SACR 75 (SCA) para 36.
The new evidence that the applicant requests this Court to consider is not
disputed.
[14] In what follows, I will have regard to the material facts known to
the trial court when sentence was imposed on 2 December 2008 and the
undisputed additional facts that the applicant has placed before this Court
some 13 years later. On 30 June 2006 when the applicant negligently
caused the deaths of the deceased, he was 20 years old, which is relatively
young. He had no previous convictions and was in his second year of his
tertiary education. Prior to him being sentenced, he had written to the
families of the deceased to express his remorse and to seek their
forgiveness for what had happened.
[15] The applicant is not the cause of the inordinate delay that followed
since the collision on the night of 30 June 2006. Over the intervening 15
years, the applicant who is now a 35 year old adult, has married. In
September 2016 his wife was expecting their third child. He is currently
gainfully employed. There is nothing to rebut the fact that over the 15 years
the applicant has led a socially responsible and crime free life. As a
licensed driver there is nothing to suggest that some 15 years on in his life,
his driver’s license should be suspended. However, this remains a serious
offence. It is without doubt that the applicant cannot go unpunished. I agree
with the magistrate that direct imprisonment was the appropriate sentence
at the time, but due to the special circumstances of this case, which I have
outlined above, I am of the view that correctional supervision will be most
appropriate.
[16] Correctional supervision takes into account the seriousness of the
offence committed, the interests of society, particularly those of the two
families as part of society at large. It incorporates principles of restorative
justice which are based on the rehabilitation of an offender outside of
prison. This is to ameliorate the harshness of direct imprisonment in
circumstances presented to this Court, after a very long delay in
implementing the order of committal. The delay cannot be attributed to the
conduct of the applicant but to the relevant government department
officials. It takes into account the personal circumstances of the applicant
which came into existence after this long delay.
[17] It has been stated over and over again in a number of cases6 that
sentences of correctional supervision in terms of s 276(1)(h) of the CPA7
are not foreign to the offence of culpable homicide committed while
driving a motor vehicle, that led to devastating consequences. S v Naicker8,
a case of culpable homicide involved a 30 year old appellant who was a
first offender and in regular employment at the time of the commission of
the offence, and whose parents depended on him for support; in this case it
was found that the circumstances were appropriate for a fresh sentence of
correctional supervision to be considered. Referring to the decision of R v
Swanepoel,9 the Court held:
6 S v Naicker [1996] ZASCA 138; [1997] 1 All SA 5 (A); S v Omar 1993(2) SACR 5 (C). R v Swanepoel
1945 AD 444 at 448. S v R 1993 (1) SA 476 (A) at 480F-J. See also S v Kruger 1995 (1) SACR 27 (A)
at 31b-f.
7 Section 276(1) of the Criminal Procedure Act 51 of 1977 provides that: (1) Subject to the provisions of
this Act and any other law and of the common law, the following sentences may be passed on a person
convicted of an offence namely
(a) . . .
. . .
(h) correctional supervision;
(i) imprisonment from which such a person may be placed under correctional supervision in the discretion
of the Commissioner or a parole board.’
8 Footnote 7 paras 3 -14.
9 Footnote 7 para 15.
‘In reaching the conclusion that the appellant’s conduct did not warrant a sentence of
imprisonment I have not overlooked the fact that a death and serious injury resulted
from the appellant’s negligence.’
[18] In the present case it is the changed circumstances that warrant a
reconsideration of the sentence imposed. Reference to case law is simply
to illustrate a point that the imposition of correctional supervision has been
considered in cases of culpable homicide, where appropriate. The
advantages of correctional supervision have been mentioned in a number
of cases, in particular S v R10 where the court stated:
‘. . . As to the suitability of a sentence of correctional supervision: Professor Louis P
Carney (Adjunct Professor of Sociology, Chapman College, Orange County,
California) writes as follows:
“No one can dispute the need for strict justice, nor can anyone with a modicum of reason
challenge the premise the society must show its disapproval of criminal behaviour by criminal
sanction. But when punishment is taken to an inflexible extreme, or when a reconstructive
purpose is denied because of the punishment philosophy, then criticism is warranted. Criminal
justice thinking has been distressingly preoccupied with the belief that treatment and
punishment are polar opposites, and never the twain shall meet. They are, on the contrary,
inseparable. The necessity of punishment equally affirms the necessity of redemption. We
punish for several different reasons, but essentially to impel an offender towards a more
appropriate norm of behaviour. Inflexibly brutal punishment is not consonant with restoration
of the individual. A balanced correctional philosophy recognises that some criminal behaviour
is so outrageous or so persistent as to be beyond positive influence at a given time. Protracted
incarceration of this type of offender may be in order. But most offenders should be quickly
decarcerated to offset the inimical prison experience and dealt with in the community”.’
[19] Correctional supervision can be imposed with appropriate
conditions to constitute a suitably severe sentence.11 It allows a person to
serve a non-custodial sentence, promotes the integration of a person back
10 Footnote 7.
11 S v Ingram 1995 (1) SACR 1 (A) at 9E-F.
into the community and has rehabilitative benefits.12 The exceptional
circumstances of this case and the favourable personable circumstances of
the applicant would render correctional supervision appropriate, if the
applicant is found to be a suitable candidate. And albeit distinguishable
from Jaftha, it falls within that category of exceptional circumstances
envisaged in s 316(5) of the CPA and in a long line of cases that followed
Jaftha, namely that new circumstances that were presented long after the
imposition of sentence, were considered by this Court and a different
sentence to that imposed by the court of first instance, and the full court
was imposed.
[20] Section 276(1)(i) of the CPA13 is also an alternative sentencing
option which must also be weighed. A sentence of direct imprisonment
under s 276(1)(i) of the CPA (in the discretion of the Commissioner of
Correctional Services) may have been appropriate 13 years ago when the
applicant was initially sentenced. A sentence of direct imprisonment under
s 276(1)(i) (in the discretion of the Commissioner of Correctional Services)
would mean that the applicant would have to serve a term of direct
imprisonment when other appropriate sentences are available for his
peculiar circumstances. Suffice to state that to imprison the applicant at
this stage, even for a sixth of the three years’ imprisonment, as Schippers
JA proposes, will not (after this long delay) be in the interests of justice.
[21] The long delay in bringing finality to the matter and not knowing
when the officials would come has hung like a sword over the applicant’s
head. Imprisonment at this time would result only in retribution, which is
12 Section 50(1)(a) of the Correctional Services Act 111 of 1998.
13 Footnote 8.
not in the interests of justice. In reaching this conclusion, I have not
overlooked the fact that two young men have died as a result of the
applicant’s conduct; it is unfortunate that intervening circumstances which
cannot be ignored have arisen in this case, through no fault of the applicant.
[22] In conclusion, the Department of Correctional Services, which is
responsible for implementing correctional supervision, did not file a report
as required under s 276(1)(h) of the CPA which, in my view, is the most
appropriate sentence. Without a report from a probation officer or a
correctional official, this Court would not be in a position to impose a
sentence under section 276(1)(h) of the CPA. However, in line with the
approach adopted in S v Ningi14 as well as the exceptional circumstances
in this case, it is appropriate to remit the matter to the magistrate to obtain
a pre-sentence report and consider imposing a sentence afresh, under s
276(1)(h) of the CPA.
[23] This approach was recently reaffirmed by this Court in S v Botha15
as follows:
‘In S v Samuels the following was stated: ‘Sentencing courts must differentiate between
those offenders who ought to be removed from society and those who, although
deserving of punishment, should not be removed. With appropriate conditions,
correctional supervision can be made a suitably severe punishment, even for persons
convicted of serious offences’. The appellant certainly does not fall within the category
of persons who need to be removed from society. . . . I am of the view, in all the
circumstances, that consideration should be given to the imposition of a sentence under
s 276(1)(h). Since the provisions of s 276A(1)(a) of the CPA must be complied with
14 S v Ningi 2000 (2) SACR 511 (A) para 9.
15 Botha v S (901/2016) [2017] ZASCA 148 para 46.
before consideration of such a sentence can take place, it is necessary to remit the matter
to the court a quo to comply with these provisions and to consider the sentence afresh.’
[24] In the result the following order issues:
The application for condonation is granted.
The application for special leave to appeal is granted.
The application to lead further evidence is granted.
The appeal on sentence in respect of counts 1and 2 is upheld.
The order of the Gauteng Division of the High Court, Pretoria is set
aside on counts 1 and 2.
6 The matter is remitted to the magistrate to impose sentence afresh,
in respect of those counts, after due compliance with the provisions
of s 276A(1)(a) of the Criminal Procedure Act 51 of 1977.
A report of a probation officer and/or a correctional official, must be
obtained within six weeks of delivery of this judgment.
____________________
JUDGE OF APPEAL
Z CARELSE
Schippers JA (Phatshoane AJA concurring)
[25] I have had the benefit of reading the majority judgment by my
colleague, Carelse JA. I am in respectful disagreement with the conclusions
reached and the order issued, for the reasons that follow. There are
essentially two issues in this application for leave to appeal against
sentence only, referred for oral argument before us in terms of s 17(2)(d)
of the Superior Courts Act 10 of 2013. The first is whether the applicant
has demonstrated the existence of exceptional circumstances justifying the
admission in evidence of facts which arose after his conviction and
sentence on two counts of culpable homicide. The second is whether the
sentence for these crimes imposed by the North Gauteng Division of the
High Court, Pretoria (the high court), namely four years’ imprisonment of
which one year was conditionally suspended for five years, is appropriate
in the circumstances.
[26] The facts are uncontroversial. The applicant was tried in the Pretoria
Magistrate’s Court on two counts of culpable homicide and one count of
reckless driving, arising from a collision which occurred on 30 June 2006
in Garsfontein Road, Pretoria. Two State witnesses, Mr and Mrs van der
Walt, who were in a vehicle travelling behind a blue Polo vehicle (driven
by the applicant) testified that even before the collision occurred, the Polo
was being driven recklessly. It had jumped a red traffic light. Mr van der
Walt reduced his speed so as to maintain a safe distance behind the Polo.
Shortly thereafter the Polo overtook a vehicle in its path, causing a collision
with an oncoming Opel Corsa vehicle in the lane in which the Corsa had
been travelling. The Corsa landed on its roof, off the road in a veld and its
occupants were flung from the vehicle. Both died as a result of the
collision.
[27] The applicant’s version throughout was that he was not responsible
for the collision and that it had occurred in his lane of travel when the driver
of the Corsa had overtaken a vehicle in the Corsa’s path. This, despite the
fact that the applicant had informed a police officer who attended the scene
that he had overtaken a vehicle when the collision occurred. The magistrate
rejected the applicant’s version as ‘a blatant lie’. The applicant protested
his innocence till the very end – even after his conviction and during the
sentencing phase of the trial.
[28] Ms Vanessa Naidoo, a probation officer called as a witness by the
defence, testified about the applicant’s refusal to accept responsibility for
the collision, and his lack of empathy and remorse. She said:
‘Despite the Court’s rulings that the accused was found guilty of reckless driving, he
continues to dispute this by affirming his innocence. It is difficult therefore to accept
that he is truly remorseful for his actions. In the past two years it is shocking that he has
not even offered his condolences to the two families. After the accident, he stood aside
from the scene with his passenger, and did not even render assistance for his later
victims. This again is an indication of his lack of empathy, and compassion. In the last
two years he has not even confided in his family about the fatal incident, and this
remains an area of concern in the case of the accused. Had he shown remorse and
repentance, his family would have been aware of his present circumstances. His family
would have undoubtedly supported the deceased’s family during their bereavement.
The offence of reckless driving is an extremely serious offence, and is even more
serious than negligent driving although being a licensed driver his lack of remorse in
the present case makes him a further danger on the roads as he has limited insight into
the severity of his actions.’
[29] On 2 December 2008 the applicant was sentenced on the first count
of culpable homicide to three years’ imprisonment in terms of s 276(1)(i)
of the Criminal Procedure Act 51 of 1977;16 and on the second, to three
years’ imprisonment wholly suspended for a period of five years, on certain
conditions. He was also convicted of reckless driving and sentenced to fine
of R20 000 or 18 months’ imprisonment, conditionally suspended for a
16 Section 276(1)(i) of the Criminal Procedure Act 51 of 1977 provides that the following sentence may
be imposed on a person convicted of an offence, namely ‘imprisonment from which such a person may
be placed under correctional supervision in the discretion of the Commissioner or a parole board’.
period of five years. He was granted leave to appeal against conviction and
sentence.
[30] On 8 March 2010 the high court (Southwood J and Goodey AJ) set
aside the conviction and sentence on the charge of reckless driving,
purportedly in the exercise of its review powers: the judgment erroneously
states that what was before it was an appeal against sentence only. Nothing
however turns on this, as only the sentence is before us in this application
for leave to appeal. The convictions of culpable homicide were taken
together for the purpose of sentence and the high court sentenced the
applicant to four years’ imprisonment of which one year was suspended
for a period of five years on condition that he was not convicted of culpable
homicide involving the driving of a motor vehicle. The high court
increased the sentence without giving notice to the applicant of its intention
to do so.
[31] The applicant did not appeal the sentence imposed by the high court.
On 10 March 2010 he reported to the Department of Correctional Services
(the Department) to serve his sentence. Officials of the Department
however informed the applicant that they were not in possession of the
documents relating to his sentence and therefore could not detain him.
Instead of immediately making the necessary enquiries and taking steps to
obtain the documents, they inexplicably told the appellant to return home
and advised him that officials of the Department would fetch him when
they were in possession of the necessary documents.
[32] What happened next between March 2010 and September 2016 can
only be described as a major blunder by the Department. For more than six
years it made no attempt to ensure that the sentence imposed on the
applicant was carried out. Worse, there was no explanation by the
Department or any government official for the delay. This, despite the fact
that the Minister of Justice and Correctional Services as well as the Head
of Correctional Services were joined as parties in the proceedings in the
high court before Neukircher AJ.
[33] On 7 September 2016 the applicant was instructed to report to the
Voortrekker Correctional Centre to serve his sentence. On 27 September
2016 he obtained an order from the high court (Neukircher AJ) staying the
warrant issued for his arrest and directing him to ‘deliver his application
for reconsideration of the appeal’ within 15 days of the date of the order,
failing which the order would lapse immediately. The applicant failed to
take any steps to lodge an application for special leave to appeal and the
order lapsed.
[34] Thereafter, the conduct of the applicant and his attorney in launching
the application for special leave was characterised by slackness and
sloppiness. It is unnecessary to outline the entire chronology. Suffice it to
say that there were long periods of delay that were not explained
adequately, or at all. It is trite that an applicant must give a full and
reasonable explanation for the delay which must cover the entire period of
delay.17 In his heads of argument the applicant submitted that after the
judgment by Neukircher AJ he had immediately set in motion an
application for special leave to appeal to this Court.
[35] That is not so. It had taken the applicant from 27 September 2016 to
30 May 2018 – a year and eight months – to prepare an application for
17 Van Wyk v Unitas Hospital and Another (Open Democratic Advice Centre as Amicus Curiae) [2007]
ZACC 24; 2008 (2) SA 472 (CC) para 22.
leave to appeal. The explanation for this long delay was hopelessly
inadequate. Even then, the application was defective and was eventually
filed on 6 May 2019 – a year later, with no application for condonation for
the late filing of the application for leave to appeal, and no explanation for
the further delay. On 3 June 2019 the registrar of this Court had to inform
the applicant’s attorney to file a condonation application. In effect then, it
had taken the applicant from 27 September 2016 to 6 May 2019 – nearly
two years and eight months – to file his application for leave to appeal. An
application for the late filing of his heads of argument was brought only on
25 January 2021. His application to adduce further evidence on appeal was
brought in August 2021.
[36] What all of this shows is that the applicant and his attorneys are
solely responsible for any delay after the granting of the order by
Neukircher AJ on 27 September 2016 and August 2021 – almost five years.
I have no doubt that but for the gross irregularity in increasing the
applicant’s sentence without notice to him,18 condonation of the late filing
of the application for leave to appeal would have been inappropriate.
[37] The evidence concerning events after the imposition of sentence
which the applicant seeks to admit on appeal, which he says, constitute
exceptional circumstances, is essentially the following. A period of 11
years has passed since the imposition of his sentence by the high court. In
that time, the applicant got married in May 2012. He has two children aged
11 and 8 respectively, and in September 2016 his wife was expecting their
third child. He is gainfully employed. The applicant contends that sending
him to prison would have no effect on his rehabilitation because the facts
18 Footnote 3.
show that he has ‘rehabilitated himself’ and has become a useful member
of society. He is not responsible for the six-year delay in not serving his
sentence.
[38] Whether facts coming into existence after the conclusion of a trial
should be admitted in evidence is governed by principle. In S v Verster19 it
was held that when deciding an appeal, a court determines whether the
judgment appealed is right or wrong according to the facts in existence at
the time it is delivered, and not according to new circumstances which
came into existence afterwards. This principle has consistently been
followed by this Court.20 It is however not inflexible: in exceptional
circumstances a court will take into account facts which have arisen after
the trial to ensure that justice is done.21
[39] The courts have been reluctant to lay down a general definition of
the phrase ‘exceptional circumstances’ as each case must be decided on its
own facts. What is clear from the cases however is that what is typically
contemplated by the words ‘exceptional circumstances’ is something out
of the ordinary, markedly unusual, rare or different, and to which the
general rule does not apply.22
[40] Applied to the present case, there is nothing extraordinary or
markedly unusual about the appellant’s personal circumstances. Had he,
for example, been called upon to serve his sentence after one or two years
of reporting to the Department instead of six years, he could hardly have
19 S v Verster at 236A-D.
20 Footnote 6. See in this regard Karolia and the authorities cited in para 49.
21 Ibid paras 50-51, followed in Jaftha.
22 MV Ais Mamas Seatrans Maritime v Owners MV Ais Mamas and Another 2002 (6) SA 150 (C) at
156I-157C, affirmed by this Court in Avnit v First Rand Bank Ltd [2014] ZASCA 132 para 2 and by the
Constitutional Court in S v Liesching and Others [2018] ZACC 25; 2019 (1) SACR 178 (CC) para 133.
argued that he should not be sent to prison because in the interim he got
married, had children and was gainfully employed. These personal
circumstances, which came into existence after he was sentenced, on the
facts of this case, are irrelevant – they cannot become relevant by the
effluxion of time.
[41] What remains is the long period of delay of some 13 years between
the date of the imposition of sentence – December 2008 – and the hearing
of the application for special leave to appeal. As already stated, the entire
period of delay cannot be laid at the door of the Department. As indicated
above, the applicant and his attorneys are solely responsible for any delay
after the granting of the order by Neukircher AJ in September 2016 and the
date of his application for leave to adduce further evidence on appeal in
August 2021 – almost five years.
[42] Concerning the delay by the Department in calling upon the
applicant to serve his sentence, in my opinion Malgas v S,23 decided by this
Court, provides a complete answer. The appellants were found guilty of
theft and housebreaking with intent to steal and theft in the regional court,
Beaufort West. In March 2003 they were sentenced to lengthy terms of
imprisonment. All of them had been granted bail pending the hearing of
their appeals against conviction and sentence in the Western Cape High
Court, Cape Town (the Cape High Court). The appeals were heard more
than eight years later in June 2011. All the appellants’ appeals against
conviction were dismissed and certain of the appeals against sentence
succeeded. Subsequently, they were granted leave to appeal to this Court
only against sentence.
23 Malgas v S [2013] ZASCA 90, 2013 (2) SACR 343 (SCA).
[43] It was common cause that there was only one ground to be
considered on appeal by this Court: whether the eight-year delay from the
imposition of sentence by the magistrate to the hearing of the appeal in the
Cape High Court, in and of itself justified a lighter sentence.24
[44] I can do no better than quote this Court’s conclusions:
‘There can be no automatic alleviation of sentence merely because of the long interval
of time between the imposition of sentence and the hearing of the appeal for those
persons fortunate enough to have been granted bail pending the appeal. . . . Although
from time to time the long delay between the passing of a custodial sentence and the
hearing of an appeal may justify interference with that sentence, it is only in truly
exceptional circumstances that this should occur. Each case must be decided on its own
facts.
The appellants have adopted a supine attitude to the hearing of their appeal. Their
attitude to this case throughout has been to adopt the attitude of a nightjar in the veld:
do as little as possible, hope that nobody will notice and expect that the problem will
go away. Fortunately for the administration of justice, the appellants do not enjoy a
nightjar’s camouflage. They may have been hidden but they have not been invisible.
It will be hard on the appellants and their families that, ten years after their sentencing
by the magistrate, they should now have to report to jail to commence serving their
sentences. We have anxiously reflected upon the needs of justice in this case, including
the requirement that this court should show mercy to and compassion for our fellow
human beings. Having done so, the conclusion remains inescapable that, if this court
were to regard this case as yet another “exception”, it would undermine the
administration of justice. The appellants are to blame for the long delay in bringing this
matter to finality. The predicament in which the appellants find themselves is largely
of their own making.’25
24 Ibid para 17.
25 Ibid paras 20-22.
[45] The applicant’s position is no different. While the Department is to
be blamed for its conduct in the matter, the mere passage of time between
the imposition of sentence, the notice to him to start serving his sentence
and the hearing of this application – for which the Department and the
applicant are both responsible – does not, and cannot, automatically lighten
his sentence. Neither does it constitute an exceptional circumstance. At all
times the applicant knew that he had been convicted of two counts of
culpable homicide and that he had to serve his sentence. He adopted an
indifferent and a supine attitude to his conviction and sentence: he did
nothing after reporting to serve his sentence for some six years, made no
enquiry about it, carried on with his life as if he had never been sentenced,
and hoped that the problem would go away.
[46] What is worse, unlike the appellants in Malgas whose crimes
involved the violation of rights to property, the applicant’s crimes had
devastating impacts on two families and changed their lives forever. In this
regard the evidence before the trial court was the following:
‘The deceased, Jakobus Johannes Opperman was the oldest sibling of two younger
brothers. He was 24 years old at the time of his death. According to the family, he was
completing his internship with a separate company, and was about to enter into a
business partnership as financial director of “Danross Highlands”, . . . their family
business. He, and his friend, Mr Bezuidenhout [were] travelling to a braaivleis when
the fatal accident took place. Attempts to reach the Bezuidenhout family have been
unsuccessful. It is believed that the mother of the deceased is very ill at this stage, and
is a pensioner . . . This is Mrs Opperman’s version of her experience.
“She has been on medication since the offence to assist her [to] cope and continues to
receive weekly therapy from her counsellor. She has been unable to fulfil her role as
educator effectively due to her emotional state, and was booked off for [12] months in
the past two years. … She is visibly disturbed by the offence, . . . and she maintains that
the hardest part for her to deal with is to face the accused in Court each time for the past
two years”.’
[47] In this regard, the conclusion by the Constitutional Court in
Mthembu26 is apposite:
‘A delay in the execution of the sentence not only affects the accused, but also affects
the victims of crimes and undermines the credibility of the criminal justice system. It is
imperative that once a sentence is imposed it must be executed as soon as reasonably
possible and the court order must be complied with promptly.’
[48] The applicant is not unintelligent. At the time of the trial, he was 22
years old and in his final year of university studies. It is beyond question
that had he made enquiries or taken any steps to carry out his sentence,
there would have been no delay and he would not be in the position in
which he now finds himself. It is this apathetic and supine attitude by the
applicant that distinguishes his case from Jaftha. There, the appellant’s
explanation for a ten-year period of delay between conviction and sentence
and the lodging of his appeal, was that he had moved from his place of
residence and had not heard from his attorney after the appeal had been
lodged. He assumed that the appeal had succeeded and that he was a free
man.27
[49] It is clear from Mthembu that the applicant was under a duty to make
enquiries at the Department in order to serve his sentence after he had been
sent home and told that the Department would contact him. Mr Mthembu
was sentenced to 15 years’ imprisonment for armed robbery and illegal
possession of fire arms and ammunition. Whilst out on bail in 2003, he
petitioned this Court for leave to appeal against his conviction and
sentence. It was refused. He was then required to report to the clerk of the
court in Vereeniging to serve his sentence. He failed to do so. He was
26 Mthembu v S [2010] ZACC 8; 2010 (1) SACR 619 (CC) para 8.
27 Footnote 4 para 17.
apprehended at his home six years later in 2009 and only then started
serving his sentence. Mr Mthembu applied for leave to appeal to the
Constitutional Court, alleging that his arrest after more than six years
infringed his right to freedom and security of the person under the
Constitution. He contended that he could not at the age of 60 be expected
to serve his sentence and that he should receive a wholly suspended or non-
custodial sentence.
[50] The Constitutional Court rejected this contention. It refused leave to
appeal and said:
‘Convicted persons out on bail pending appeal or application for leave to appeal are
under an obligation to ascertain the outcome of the appeal processes and to present
themselves to serve their sentences if the appeal processes fail. This obligation in fact
formed part of the applicant’s bail conditions. The applicant was legally represented
throughout those processes. He is an educated person who held a senior position as a
director of a prominent football club. His allegation that for six years he was unaware
of the outcome of the application for leave to appeal, despite repeated efforts to
ascertain the outcome cannot be accepted.’28
[51] For these reasons, the applicant has simply not made out a case of
exceptional circumstances for the admission of the further evidence on
appeal. It is not in the interests of justice that it be admitted.
[52] I come now to the sentence. The applicant was not given an
opportunity to make submissions concerning the increase of his sentence
and the high court’s order must be set aside. Before us, counsel on both
sides agreed that the matter should not be remitted to the high court and
that this Court should determine an appropriate sentence.
28 Footnote 27 para 4.
[53] Senior counsel representing the applicant made the following
submissions. The finding by Neukircher AJ that the delay in the applicant
serving his sentence was not as a result of his actions but those of the State,
‘should receive this Court’s imprimatur’. The constitutional right to a fair
trial which includes the right to have a trial begin and conclude without
unreasonable delay, should be interpreted as encompassing a right ‘that the
applicant serves his sentence as soon as possible’. A sentence of
incarceration is inappropriate because the applicant has rehabilitated
himself and become a useful member of society.
[54] These submissions can be dealt with shortly. They have no merit. To
uphold the finding by Neukircher AJ would be inconsistent with the
principles laid down in Mthembu and Malgas. The right to a fair trial
enshrined in s 35(3)(d) of the Constitution does not include any right that
an accused person must serve his sentence as soon as possible.29 If the
applicant truly has become a useful or responsible member of society, he
would have taken steps to serve his sentence.
[55] The truth, as Ms Naidoo testified at the trial, is that the applicant has
not accepted responsibility for the collision. He has shown no remorse. He
lacks empathy and compassion, and has limited insight into the severity of
his actions. On the facts, the inference is inescapable that this attitude on
the part of the applicant has not changed. His focus is solely on himself,
his family and his future: the interests of society and the plight of his
victims do not matter. It is disturbing that in all his affidavits filed in this
Court, there is not a single reference to the nature and seriousness of the
29 Section 35(3)(d) of the Constitution provides:
‘Every accused person has a right to a fair trial, which includes the right –
. . .
(d) to have their trial begin and conclude without unreasonable delay.’
crimes of which he has been convicted, let alone an appreciation by the
applicant of their gravity. Likewise, there is nothing in the affidavits
showing that he has accepted responsibility for his crimes, and no hint of
any acknowledgment by the applicant of the trauma and pain caused to the
families of the victims. He addressed a letter of apology to them only two
years after the incident, and then during the sentencing phase of the
proceedings.
[56] In these circumstances the submission that the applicant has
rehabilitated himself, rings hollow. The cases make it clear that an accused
must take the court fully into his confidence in order for the court to assess
the sincerity of his penitence and remorse.30 Genuine contrition comes only
from an appreciation and acknowledgement of the extent of one’s error.31
[57] It is trite that sentencing is pre-eminently a matter for the discretion
of the trial court and that an appellate court should only alter a sentence if
that discretion has not been judicially and properly exercised, namely
where the sentence is vitiated by irregularity, misdirection or is
disturbingly inappropriate.32
[58] As this Court said in S v Holder,33 an appropriate sentence is one
based on a balanced consideration of the factors which a court is required
to take into account in the imposition of sentence. A sentence which is too
light is as wrong as one that is too severe.34 The balancing exercise carried
out by the trial court in relation to the seriousness of the crime, the interests
30 S v Seegers 1970 (2) SA 506 (A) at 512G-H; S v Morris 1972 (2) SA 617 (A) at 620H-621A.
31 S v Matyityi [2010] ZASCA 127; 2011 (1) SACR 40 (SCA) para 13.
32 S v Rabie 1975 (4) SA 855 (A) at 857 D-E; Moswathupa v S [2011] ZASCA 172; 2012 (1) SACR 259
(SCA) para 4.
33 S v Holder 1979 (2) SA 70 (A) at 75A.
34 Ibid 32 at 80D-E.
of society and the applicant’s personal circumstances, as well as its
consideration of various sentencing options, cannot be faulted.
[59] In the light of the above I would make the following order:
The application for condonation is granted.
The application for special leave to appeal is granted.
The application to adduce further evidence on appeal is dismissed.
The order of the Gauteng Division of the High Court, Pretoria, is set
aside and replaced by the following:
‘1
The appeal is dismissed.
The registrar of this Court is directed to forward a copy of this
judgment to the Head of the Department of Justice and the Head of
the Department of Correctional Services, Pretoria, for their
investigation as to why it took six years for an instruction to be given
to the appellant to report to the relevant authority in order to serve
his sentence.’
___________________
A SCHIPPERS
JUDGE OF APPEAL
Mocumie JA (Mabindla-Boqwana JA concurring)
[60] I have read both judgments of my colleagues Carelse and Schippers
JJA. There are a few aspects which need clarification if not amplification.
In para 36 of Schippers JA’s judgment he notes that: ‘[w]hat all of this
shows is that the applicant and his attorneys are solely responsible for any
delay after the granting of the order by Neukircher AJ on 27 September
2016 and August 2021 – almost five years.’ This is factually incorrect. As
the record reflects, there was a long delay in trying to acquire the judgment
of the full bench - those facts are in the file. That is why, before this Court,
the State accepted that the applicant filed an application for rescission
against the full bench’s judgment and order some 16 days later, instead of
15 days. Thus, in truth, as the State correctly accepted, the applicant was
late by one day.
[61] Under para 42 Schippers JA notes furthermore that ‘[c]oncerning the
delay by the Department in calling upon the applicant to serve his sentence,
in my opinion Malgas v S, decided by this Court, provides a complete
answer…’ This judgment although correct in principle is not the answer to
the issue before this Court but an answer to the general principle on
sentencing. In Malgas as Schippers JA correctly summarises, it is clear that
those facts were based on a totally different offence but serious on its own
ie breaking into a police station. On those facts, a concession was made by
the defence that the accused adopted a supine attitude to prosecute the
appeal. The accused was a police officer. There was no application to
adduce further evidence. The only submission made in respect of a lighter
sentence in Malgas was the long delay. On the other hand, in the present
matter, there were substantial facts. The fact that for the past fifteen years
the applicant committed no other offence, is pivotal. That he was a young
university student who caused an accident by his negligent driving is also
a factor to be considered.
[62] In para 47 Schippers JA makes reference to S v Mthembu. The facts
between that case and the present one are also not the same. As he correctly
notes, the offences committed in Mthembu were armed robbery and illegal
possession of firearms. There, the applicant was convicted and out on bail
pending appeal; he was under an obligation to ascertain the outcome of the
appeal. The facts before this Court are different. The applicant presented
himself to the correctional centre immediately after the order of the full
bench. In that sense, he complied with the court order. The State, namely
the National Prosecuting Authority and Correctional Services, have
provided no explanation for this ‘blunder’. A blunder by government
officials without any attempt to investigate such and to then accuse the
applicant of deliberately trying to avoid prison is clearly unfair.
[63] In para 48 Schippers JA states that ‘[i]t is this apathetic and supine
attitude by the applicant that distinguishes his case from Jaftha. There, the
applicant’s explanation for a ten-year period of delay between conviction
and sentence and the lodging of his appeal, was that he had moved from
his place of residence and had not heard from his attorney after the appeal
had been lodged. He assumed that the appeal had succeeded and that he
was a free man.’ As it is clear from the facts before this Court, the applicant
did not move houses. He stayed in the same house with the same address
he had provided to the officials at the correctional centre. That must count
in his favour. It cannot be described, with the wisdom of hindsight as
exhibiting a ‘supine attitude.’ The worst description can be that he trusted
that government officials will do as they undertook to do.
[64] In para 51 Schippers JA comes to the conclusion that ‘the applicant
has simply not made out a case of exceptional circumstances for the
admission of the further evidence on appeal. It is not in the interests of
justice that it be admitted’. However, immediately thereafter the very
evidence that is found wanting is considered. In my view, the approach is
erroneous. Once the conclusion is reached that the evidence does not
amount to exceptional circumstances, as a matter of principle that should
be the end of the enquiry. The application for leave to appeal should and
ought to be dismissed on that basis.
[65] There is no doubt that there is a need to reflect on the concerns of
the community about the rate of fatal collisions on the roads, including
undue leniency in punishing drivers who are negligent or reckless in
whatever sentence a court deems appropriate, particularly in aggravating
circumstances. In S v Nyathi35 this Court emphasised that, before a court
can find an accused has been guilty of such a high degree of negligence as
to merit imprisonment, it must first carefully assess the evidence and arrive
at an accurate conclusion as to what occurred. Coopers Motor Law:
Hoctor, Juta36 states that, for an accused to be under the influence of
intoxicating liquor at the time of the collision is regarded by the courts as
an aggravating circumstance. However, there must be proof of impairment
before intoxication is regarded as a factor causing death. On the facts
before us, there was no such evidence.
[66] On the gravity of the problem of death arising out of serious
misconduct on the roads, this Court, in Nyathi after careful discussion of
the case law, provided a useful indication of the pertinent sentencing
factors which apply to the situation before us and similar cases. It held that
although a court imposing sentence in cases of culpable homicide must
emphasise the sanctity of human life, it must remember that the magnitude
of the tragedy resulting from negligence should never be allowed to
obscure the true nature of the accused’s crime or culpability.
35 S v Nyathi 2005 (2) SACR 273 (SCA) paras 14-22.
36 Coopers Motor Law: Hoctor, Juta at C1-12.
[67] The sentence of correctional supervision in terms of s 276(1)(h) of
the CPA is the most appropriate in the prevailing circumstances. As
Carelse JA holds, to imprison the applicant at this stage even for a sixth of
the three years’ imprisonment which Schippers JA proposes will not (after
this long delay) be in the interest of justice, given the peculiar
circumstances of this case. This is so because, despite the probation officer,
Ms Naidoo’s reservations about the applicant’s rehabilitation chances and
the applicant’s refusal to accept his guilt at pre-trial proceedings, she states
in her report referred to by Schippers JA, that ‘direct imprisonment is
viewed as too punitive and it will be as overemphasizing the needs of
society and the nature of the offence at the expense of the accused’s
personal circumstances.’
[68] She said ‘restorative justice framework encompasses all the
elements of correctional supervision: rehabilitation, prevention, retribution
and deterrence.’ She accepted that the applicant was sorry for what he had
done. This is contrary to her final view that he showed no remorse and was
(without any substantiation) manipulative. She also accepted that he was a
first offender, at a tertiary institution, about to complete his degree and as
a young person at that stage, correctional supervision may serve the desired
effect as it is punitive. This, notwithstanding Ms Naidoo’s perception that
the applicant did not accept responsibility for his actions, and that the
parents of the deceased wanted him to go to prison for what he had done.
Her report is contradicted by the gesture shown by the applicant when he
wrote letters to the families of the deceased that Carelse JA referred to in
her judgment. It must also be remembered that the report was compiled
prior to sentencing by the trial court some 13 years ago and does not
contain the prevailing circumstances that necessitated the special
application for leave to appeal. The value given to it must be seen in that
context.
[69] In conclusion, the Constitutional Court re-affirmed the suitability of
correctional supervision as an appropriate sentencing option in S v M37 as
follows:
‘Correctional supervision is a multifaceted approach to sentencing comprising elements
of rehabilitation, reparation and restorative justice. The South African Law
Commission (SALC) has underlined the importance of correctional supervision,
observing:
“There is increasing recognition that community sentences, of which reparation and
service to others are prominent components, form part of an African tradition
[(‘Ubuntu’)] and can be invoked in a unique modern form to deal with many crimes
that are currently sanctioned by expensive and unproductive terms of imprisonment.”’
(Footnotes omitted.)
This unique modern form is encompassed in restorative justice which is
premised on correctional supervision.
[70] For these additional reasons, I would agree with the order proposed
by Carelse JA.
___________________
BC MOCUMIE
JUDGE OF APPEAL
37 S v M [2007] ZACC 18; 2008 (3) SA 232 (CC) para 59.
APPEARANCES
For applicant:
J Engelbrecht SC
Fakude Ehlers Inc., Pretoria
Symington de Kok Attorneys,
Bloemfontein
For respondent:
A Coetzee
The Director of Public Prosecutions, Pretoria
The Director of Public Prosecutions,
Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
23 February 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
Rapholo Edwin Manyaka v The State (434/2020) [2022] ZASCA 21 (23 February 2022)
Today the Supreme Court of Appeal (SCA) upheld the appeal by the applicant and set aside the order
of the Gauteng Division of the High Court, Pretoria (high court) and referred the matter back to the
Pretoria Magistrate’s Court (magistrate’s court) to impose sentence afresh and consider the imposition
of correctional supervision in terms of s 276(1)(h) of the Criminal Procedure Act 51 of 1977 (CPA).
The applicant was involved in a motor vehicle collision which resulted in the death of two persons,
following from this, the magistrate’s court sentenced the applicant to a period of imprisonment. On
appeal to the high court, the magistrate’s court’s sentence was replaced with a period of imprisonment
of four years, one year of which was suspended for five years. However, upon reporting to prison to
serve his sentence, the applicant was informed that his imprisonment could not commence as the prison
authorities were not in possession of his documentation. The prison officials informed the applicant that
they would collect him from his home to serve his sentence when all administrative affairs were in order.
Six and a half years later a warrant of arrest was issued which culminated in an urgent application to
reconsider the sentence. The issue before the SCA was centred on the application for reconsideration
of the sentence.
The SCA determined that the applicant was not the cause for the inordinate delay in serving out the
sentence. Direct imprisonment was indeed appropriate, but due to the prevailing special circumstances,
incarceration should rather be replaced with a sentence of correctional supervision in terms of s
276(1)(h) of the CPA, as this would have been in the interests of justice. Accordingly, the SCA upheld
the appeal and set the order of the high court aside. The SCA referred the matter back to the
magistrate’s court to consider sentence afresh and to contemplate whether correctional supervision
was a suitable sentence in the circumstances.
In a separate dissent, the SCA would have dismissed the appeal as the special circumstances at hand
did not exist at the time of sentencing and should not have been taken into consideration in this present
appeal. In addition, a copy of this judgment ought to be sent to the Department of Correctional
Supervision to investigate why it took six years to order the applicant to report to the relevant authority
to serve his sentence.
--------oOo--------
|
2615
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 726/13
Reportable / Not Reportable
In the matter between:
ECCLESIA DE LANGE
APPELLANT
and
THE PRESIDING BISHOP OF THE METHODIST CHURCH
OF SOUTHERN AFRICA FOR THE TIME BEING
FIRST RESPONDENT
THE EXECUTIVE SECRETARY FOR THE TIME BEING
OF THE METHODIST CHURCH OF SOUTHERN AFRICA
SECOND RESPONDENT
Neutral citation:
Ecclesia De Lange v The Presiding Bishop of the Methodist
Church of Southern Africa (726/13) [2014] ZASCA 151 (29 September 2014)
Bench:
Ponnan, Wallis, Pillay JJA and Fourie and Mathopo AJJA
Heard:
26 August 2014
Delivered:
29 September 2014
Summary: Voluntary association – internal disciplinary proceedings – arbitration
prescribed by laws and discipline of the Church – whether good cause shown in terms
of s 3(2) of the Arbitration Act 42 of 1965 for avoiding the arbitration – doctrine of
entanglement.
____________________________________________________________________
ORDER
____________________________________________________________________
On appeal from: Western Cape High Court, Cape Town (Veldhuizen J sitting as court
of first instance):
The appeal is dismissed.
____________________________________________________________________
JUDGMENT
____________________________________________________________________
Ponnan JA (Wallis, Pillay JJA and Fourie and Mathopo AJJA concurring):
[1] ‘People, as Kant said somewhere, are ungregariously gregarious. They may associate
for some purpose and then may quarrel. The group, its majority or those in power, may want
to expel the troublemaker; and he, in his turn, may complain of unfair treatment. Both sides
may have their points, though an impartial observer may think the quarrel not worth the ado,
nor the offence perhaps worth expulsion. But the observer may feel reluctant to take sides,
where the dispute is between one and many. The many may seem too hasty or severe, but
then they also represent, if anyone represents, the group's collective wish or purpose . . . .’1
This is an appeal against the judgment and order of the Western Cape High Court (per
Veldhuizen J) dismissing with costs an application by the Reverend Ecclesia de Lange
(the appellant) against the Methodist Church of Southern Africa (the Church),
1S Stoljar „The Internal Affairs of Associations‟ in Legal Personality and Political Pluralism (1958) at 66-
67 cited in Lakeside Colony of Hutterian Brethren v. Hofer [1992] 3 S.C.R. 165 and Coombes v.
National Phoenix 1984 Firearms Information and Communication Association 2009 ABQB 566.
represented by its Presiding Bishop, as the first respondent, and its Executive
Secretary, as the second respondent,2 in which the following relief was sought:
„1.
Setting aside the arbitration agreement between the parties in terms of the First and
Second Respondent‟s Laws and Disciplines, alternatively an order that such arbitration
agreement shall cease to have effect with reference to any dispute as set out herein;
2.
A declaratory order that the decision by the Methodist Church of Southern Africa to
discontinue the Applicant as a minister of the Methodist Church of Southern Africa is
unconstitutional and unfair discrimination based on sexual orientation;
3.
Reviewing and setting aside the decision whereby the First Respondent‟s Cape of
Good Hope District Disciplinary Committee‟s decision dated 12 January 2010, whereby the
Applicant was suspended as a minister, which was confirmed by the First Respondent‟s
Connectional Disciplinary Committee, whereby the Applicant was discontinued as minister,
dated 17 February 2010, and which discontinuation was sanctioned by the Presiding Bishop
on 20 February 2010 as a minister of the Methodist Church of Southern Africa;
4.
Reinstating the Applicant as a minister of the Methodist Church of Southern Africa with
retrospective effect, which includes that the First and Second Respondents are ordered to pay
to the Applicant all station and emoluments to which the Applicant would have been entitled
had she not been suspended and discontinued;
5.
Costs as follows:
5.1
of the application including the costs of two counsel.
5.2
declaring the costs of the arbitration and the assistance of Applicant‟s attorney as
necessary costs preceding this application.‟
[2] According to the appellant:
„13.2
During my late teens I came to the conclusion that I am a lesbian. I realised that this
discovery would not be acceptable to my family or Church and so I concealed it, totally
2 In terms of the rules and discipline of the Church all legal proceedings by or against the Church shall
be instituted in the name of the Presiding Bishop and the Executive Secretary.
oblivious as to my human identity and rights. I tried to fit in by being in heterosexual
relationships, appearing to be normal and acceptable to the community.
13.3
However, my ability to pretend to be heterosexual did not last and it wasn‟t long before
others found out about my sexual orientation. I was told in no uncertain terms that I cannot be
Christian and lesbian. My family relationships and support system were shattered. The
Church‟s stance on homosexuality sent a clear message of rejection to me which forced me to
leave the Church. The pain and loss was immense.
13.4
Several years later I had an encounter with God that made me return to the Church. I
knew that God loved and accepted me and I renewed my commitment. I then set out to find a
Church. It did not take me long to discover the “hidden or unspoken approach” of the Church
was unchanged on same sex relationships. At the time the only way for me to be included in
the community was either to deny my sexual orientation and live a life of secrecy or live a life
of celibacy, contrary to my true and natural orientation.‟
[3] Having decided to return to the fold and feeling called to the ordained ministry,
the appellant commenced her training to become a Minister of the Church. On 15 June
2006 she acquired a Masters of Social Sciences degree in Religious Studies from the
University of Cape Town. She was ordained as a Minister and received into the full
Connexion of the Church during August 2006. With effect from 1 January 2007 the
appellant served as a Minister of both the Brackenfell and Windsor Park Methodist
Churches. During April 2004 the appellant commenced what she described as a love
relationship with her then partner. During 2008, according to the appellant, she and
her then partner first discussed the possibility of getting married and by the next year
they had become firm in their resolve to do so. The date for the wedding having been
fixed, the appellant decided to inform her congregants of her impending nuptials.
Accordingly on Sunday 6 December 2009 she read the following letter to both
congregations served by her at a combined church service:
„Dear friends,
You have given me much joy in sharing your life with me and this morning is my turn to share
some very exciting news with you. I am getting married on 15th Dec.
Some of you have met and know Amanda. We have a wonderful relationship of love respect
and companionship. I would love for you to celebrate with me. However, I do understand that
this might be controversial to you. What I do ask is that you respect our decision.
I have encountered many struggles to get to this place. I invite you to read and familiarize
yourself with this, by taking a copy, which I have prepared for you. It will give you some insight
into aspects of my journey. (There will be copies available at the door as you leave.)
By making this announcement we are moving into uncharted water in the life of our church.
The Methodist Church of SA (MCSA) has not yet had to deal with the nature of these
circumstances before. This leaves me extremely vulnerable and uncertain about my future in
the MCSA.
I will keep you abreast of what is happening. It is likely that a pastoral commission will be set
up to investigate my position and then make a recommendation.
My desire is to be a minister in the MCSA, to be true to God, to be true to myself and to be
faithful to God and my calling as well as to be accepted for who I am. My hope is that I would
continue as your minister.
I will give you some time to absorb my story and if you would like to connect with me (after
you‟ve gained some insight into my journey), I would make myself available. I thank you for
your love and care for me and the church.‟
[4] That same afternoon the appellant was informed by her Superintendent
Minister that he had contacted the District Bishop of the Church to enquire as to how
they should proceed after the announcement of her intended marriage. The next day
according to the appellant:
„I met with the District Bishop . . . in Rondebosch and gave him copies of a letter entitled “My
Story”, which expressed the attitude of the Church to be a community of love rather than
rejection. The idea of the letter was to explain to the Church via my version of the events why I
did not see any problem with my announcement to the congregations of my intended
marriage.‟
The response of the District Bishop was that he first wanted to peruse the information
before he made his views known. On 8 December 2009 the appellant was informed by
her Superintendent Minister that a charge had been laid against her. Two days later
the appellant was suspended from the Ministry pending the outcome of a disciplinary
hearing.
[5] The appellant was thereafter informed by e-mail that her disciplinary hearing
was scheduled for 22 December. The e-mail continued:
„I am sure everyone understands that this will not include any discussion on the merits or
otherwise of same-sex unions, but purely the application of the current MCSA policy to this
charge.‟
Prior to the disciplinary hearing and as foreshadowed in the letter to her congregation,
the appellant and her partner married each other on 15 December 2009.
[6] The charge levelled against her in terms of the Laws and Discipline of the
Church (the L&D) was:
„That you have acted in breach of paragraphs 4.82 and 11.3 in that contrary to Laws and
Discipline and/or Policies, Decisions, Practices and Usages of the Methodist [Church] of
Southern Africa. You have announced to the Brackenfell and Windsor Park societies your
intention to enter into a same sex civil union on the 15th December 2009, it being the
Churches‟ policy, practice and usage to recognise only heterosexual marriages.‟
[7] Rules 4.82 and 11.3 of the L&D provide:
„Ministers shall observe and implement the provisions of Laws and Discipline and all other
policies, decisions, practices and usages of the Church.
. . .
Ministers who have an accusation against them in respect of character, doctrinal beliefs,
fitness for the work of the ministry, or observance of Methodist Laws and Discipline may have
a complaint laid against them by another Member with the DDR.‟
[8] The disciplinary hearing proceeded as scheduled before the District Disciplinary
Committee (DDC). The appellant appeared before the DDC together with her
representative, the Reverend Tim Attwell. The DDC concluded:
„Verdict:
The Committee finds Rev de Lange guilty of failing to observe the provisions of the Laws &
Disciplines and all other policies, decisions, practices and usages of the Church (L&D11th
Edition 4.82 & 11.3) by announcing her intention to enter into a same-sex civil union, and
especially by doing this without consultation with her Superintendent and the Bishop.
Sentence:
Time already served under suspension.
Recommendation:
As Rev. de Lange has subsequently entered into the civil union while the MCSA has
specifically instructed that such action should not happen while the debate in the Church
continues (Yearbook 2008 2.5.1 (vi)), the Committee recommends that she continue under
suspension until such time as the MCSA makes a binding decision on ministers in same-sex
unions. Out of consideration for the needs of Circuit and Societies, this suspension should be
without station or emoluments.‟
[9] On 18 January 2010 the appellant filed a notice of appeal against the decision
of the DDC to the Connexional Disciplinary Committee (CDC). She contended:
„1.2.
. . . the verdict fails to take account of the fact that the church has not formulated any
policy regarding same-sex civil unions. I therefore believe it is deeply unfair, and misdirected,
for the DDC to have made a finding against me in that regard. As may be seen within the
Record of the hearing, much of the debate centred on differing interpretations of various
Conference discussions and debates. This serves to illustrate the lack of definitive policy or
decision by the MCSA. Indeed the MCSA has previously decided not to make any decision, or
enact any policy, regarding the rules and protocols regarding such unions.‟
In respect of the recommendation by the DDC following upon its verdict, the appellant
asserted:
„2.
. . . I would like to strenuously argue that the L&D does not grant the DDC any powers
to make such recommendations. L&D 11.21 clearly delineates the responsibilities, powers and
duty of the DDC regarding sentencing. I contend that the DDC has exceeded its powers and
therefore request that the Recommendation be stricken from the Record.
Furthermore, the Recommendation would have the effect of imposing a sentence that is not
only beyond the DDC‟s verdict, but which is open-ended until such time as Conference may,
or may not, decide to formulate policy in this regard. . . .‟
[10] On 17 February 2010 the CDC confirmed the verdict of the DDC and in respect
of the sentence it ordered that the appellant „be discontinued from the ministry of the
Methodist Church of Southern Africa‟. The effect of the appellant‟s discontinuation was
that she remains an ordained Minister but is precluded from exercising any ministerial
functions, holding any station or receiving any emoluments.
[11] In terms of Rule 5.11 of the L&D if the appellant wished to challenge the
decision of the CDC she was required to have that dispute referred to arbitration. Rule
5.11 provides:
‘No legal proceedings shall be instituted by any formal or informal structure or grouping of the
church or any minister or any member of the church, acting in their personal or official
capacity, against the church or any formal or informal structure or grouping of the Church,
Minister or member thereof for any matter which in any way arises from or relates to the
mission work, activities or governance of the church. The mediation and arbitration processes
and forums prescribed and provided for by the church for conflict dispute resolution (Appendix
14) must be used by all Ministers and members of the church. If a matter is referred to
arbitration, the finding of the Arbitrator shall be final and binding on all Minsters and members
of the church. . . .‟
[12] On 31 March 2010 the appellant filed a formal request with the Convener of the
Connexional Arbitration Panel of the Church (the convener) for the dispute to be
referred to arbitration. The convener responded to her request thus:
„2
As I need to finalise an arbitration agreement that needs to be signed in terms of the
paragraph 2.2 (ii) of appendix 14 of the L&D I attach a draft agreement containing the usual
clauses that I insert in such agreements. In terms of the same paragraph I also need to
“determine and clarify what the issues are from the party/ies”, which I shall then set out in the
agreement (paragraph 3).
3.
The terms of your referral in your notice are very broad and the nature of the relief you
wish to seek is not clear to me. I need to know specifically what aspects of the charges and
the disciplinary process you wish to challenge, and what outcome you wish to achieve. At this
stage I do not even know what you were charged with or on what grounds you were found
guilty and sentenced. I am not requesting you to compile a full statement of claim at this stage,
but I do need some more detail about your specific complaints. I shall be happy to have a
telephonic discussion with you and/or your attorney if that would help to clarify any of the
issues that I have raised.‟
[13] On 19 August 2010 the convener wrote in response to a letter from the
appellant‟s attorney informing him that Advocate Gerald Bloem SC of the
Grahamstown Bar had been appointed arbitrator. And in an attempt to address certain
concerns that had been raised on behalf of the appellant, the convener‟s letter
continued:
„2.3.1 Clearly if the arbitrator acts unlawfully or improperly in any manner the Complainant
will have the right to take the decision on review. In any event it is recorded in paragraph 6
that the Complainant‟s right to object to any constitutional principles is reserved.
2.3.2 The manner of how the arbitration is to be conducted must be left to the arbitrator
without being prescribed to in this agreement. He may wish to conduct a pre-arbitration
meeting to determine the rules of the arbitration, but I shall leave that to his discretion. Should
the arbitration be conducted unfairly or improperly in any way it shall of course be open to the
Complainant to take the matter on review in an appropriate court.‟
[14] However, there were difficulties in proceeding to arbitration immediately
because of a difference of opinion on various issues between the parties. On 5
February 2011 the parties attended a preliminary meeting under the auspices of the
arbitrator. After much negotiation as to the terms of the arbitration agreement,
eventually in June 2011 the convener, acting in terms of Rule 5.11 read with Appendix
14 of the L&D, signed an agreement on behalf of the appellant, which fleshed out the
terms of, and the process that would govern, the arbitration. The arbitrator then
requested dates for the hearing and suggested that it take place during September
2011.
[15] According to the appellant „[i]t was at that point in time that I decided to take
legal action‟. The legal action in question was instituted some ten months later during
June 2012. The high court concluded that the appellant‟s „application is premature and
that she should first submit to arbitration‟. It accordingly dismissed the application with
costs, but granted leave to the appellant to appeal to this court.
[16] In support of the relief sought the appellant stated in her founding affidavit:
„33.
„Thereafter followed a series of correspondence, the contents which are self explanatory and
dealt herein in chronological order. Through all of this I made my position clear, namely a valid
arbitration agreement existed and the parties should thus proceed with the arbitration.‟
Later she added:
„34.
34.1 I submit that in view of the history of this matter good cause exists why the arbitration
proceedings should not proceed on the basis of the revised arbitration agreement. Even if my
view that a valid arbitration agreement came into being is not correct, I have lost all confidence
in the arbitration proceedings and the Arbitrator. I am also of the view that the arbitration
agreement forces me to wave my fundamental rights as protected in the Constitution and is
therefore contra bonis morae.‟
[17] In the answering affidavit filed on behalf of the Church, the Presiding Bishop
stated:
„In the present case, there was considerable delay in finalising an arbitration agreement
between the parties . . . Suffice to state that the applicant and the Convener . . . disagreed on
three issues:
45.1. First, they disagreed on the characterisation of the dispute between the parties. The
applicant has consistently sought to contend that she was discontinued on the basis of her
sexual orientation and the issue for determination was thus whether the Church was entitled to
expel her for being gay. As I have made clear above, the Church discontinued the applicant
for contravening the policies, decisions, practices and usages of the Church, by taking positive
steps to enter into a union when the Church had determined to recognise only heterosexual
marriages pending the outcome of an internal engagement process.
45.2. Second, the applicant sought to create a right of appeal to court in the event that she
did not succeed in the arbitration proceedings. But clause 5.11 of the L&D provides that an
arbitrator‟s decision is final and binding, subject to only judicial review to this Court in
appropriate circumstances. The Convener was accordingly not entitled to agree to a term that
created a right of appeal.
45.3. Third, the applicant has sought to include a term in the arbitration agreement that she
be entitled to legal representation in the arbitration – notwithstanding clause 2.2(vii) of
Appendix 14, which provides that legal representation is not generally allowed in arbitration.‟
[18] The appellant‟s response in her replying affidavit was:
„4.
I accept for the purposes of this application that the Church is entitled to make a law forbidding
members of the Church to enter into same sex marriages. I understand that freedom of
religion and freedom of association are also basic human rights guaranteed in our constitution
as is the right not to be discriminated against based on one`s sexual orientation. However
what the Church cannot do is not have a clear and pre-announced law forbidding people to
enter into same sex marriages and after the fact then try to create the impression that such a
law exists.
. . .
6.
The Church has not determined that same sex partners should not take positive steps to enter
into civil union. This is a slant put on the decision taken by the Executive Committee by the
First Respondent. If regard is had to the context in which the decision was taken it is clear that
the decision meant to indicate that the Church are not taking any positive steps in deciding the
issue whether they should recognise same sex marriages or not. There is simply no room for
the interpretation given by the First Respondent when the rule is considered.
. . .
8.2
The fact that the Church does not recognise same sex marriages or civil unions does
not necessarily mean that they do not allow same and if one enters into a same sex
marriage that you are now suddenly contravening the Laws and Discipline of the
Church.
10.
I deny that my actions were in direct contravention of the Churches` policies and decisions on
same sex unions. I have also never said that I was unaware that I contravened the Churches`
policies and decisions in relation to same sex unions. All I said and I reiterate was that if the
Rule is read within the context that it was made there is simply no law forbidding a Minister to
enter into a same sex union. I did not pre-empt the decision of the conference and accept the
Churches` constitutional right to practice religion in association with others and in conformity
with the dictates precepts and ethical standards and moral discipline that the faith exacts and
to which the Church adheres. I simply argue that the Church is also bound by their own Rules
and cannot fabricate Rules after the fact for their own purpose.
11.
I submit that in terms of the Doctrinal Prescript as described above the policy and the practice
of the Church there is de facto and de iure no impediment to same sex unions. The decision
taken by the First Respondent is not based on non-compliance with the policies and practices
of the Church but based on his personal view of my sexual orientation which is not excluded
by the Laws and Disciplines nor the Doctrine of the Church.‟
[19] Despite having sought a declaratory order to the effect that the decision by the
Church to discontinue her as a minister constituted „unconstitutional and unfair
discrimination based on sexual orientation‟, the appellant in her replying affidavit
tellingly stated:
„I am not seeking to advance a claim of unfair discrimination based on sexual orientation. I am
advancing a case based on the administrative common law namely that I am entitled to fair
administrative action and that the decision by the First Respondent does not comply with the
common law prescripts in this regard.‟
That notwithstanding, in her heads of argument and from the bar in this court, counsel
for the appellant sought to advance a case that the Church‟s „decision to discontinue
the appellant as minister of the church was unconstitutional and unfair discrimination
based upon the Appellant‟s sexual orientation‟. The fundamental problem with that is
twofold: First, such a case lacks any factual foundation. And, as held in Transnet Ltd v
Rubenstein 2006 (1) SA 591 (SCA) para 28, in motion proceedings the affidavits
constitute both the pleadings and the evidence. Second, as emerges from her replying
affidavit, the appellant had unequivocally disavowed „a claim of unfair discrimination
based on sexual orientation‟. What is worse is that this case, which it seems was not
pursued before the high court, is sought to be advanced for the first time before this
court on appeal (Minister of Land Affairs and Agriculture v D & F Wevell Trust 2008 (2)
SA 184 (SCA) para 43). However much the appellant may believe that the church‟s
failure to recognise same-sex marriages is a product of discriminatory attitudes she
deliberately chose, with legal advice, not to pursue this case on that ground. We
cannot therefore decide it on a basis that she disavowed.
[20] I proceed to decide the case on the basis it was presented in which a claim
based on discrimination on grounds of sexual orientation was disavowed. This means
that it is unnecessary to engage with the collision between the rights to freedom of
association and religious freedom on the one hand, and the right to equality on the
other, or to enter into the very enlightening and thought-provoking debate on that
score.3 We can thus avoid what de Freitas describes as the „journey between the
shoals of strongly held religious beliefs and the affirmation of otherness whose
marginalisation has been justified by those very beliefs‟.4
[21] In arriving at its conclusion that the appellant had to submit to arbitration, the
high court found it unnecessary to engage with the merits of the review. Despite the
fact that the high court had refrained from entering into the merits of the review,
counsel for the appellant made so bold as to suggest that we should do so. We were
thus invited to determine on the papers as they stood whether there was indeed a rule
in place as contended by the Church. According to the Church, the testimonies of
painful experiences of exclusion by some of its members and ministers have „given it
pause to consider whether its attitudes and practices towards homosexual people
have been consistent with the message of Christ, and whether its use of Scripture in
this matter has been faithful to the biblical witness as a whole‟. But, marriage, the
Church maintains, is an institution of central importance to it. Historically, the Church
has only recognised marriage as between one man and one woman. That is still its
policy and practice. And, because it has a number of gay members and ministers,
none of whom, it says, are excluded on the basis of their sexual orientation, the
recognition of same-sex unions has become an issue of importance within the Church.
3 For the scope of this debate see inter alia D Bilchitz „Why Courts should not sanction Unfair
Discrimination in the Private Sphere: A Reply‟ (2012) 28 SAJHR 296; S de Freitas „Freedom of
Association as a foundational right: Religious associations and Strydom v Nederduitse Gereformeerde
Gemeente, Moreleta Park‟ (2012) SAJHR 258 at 262; P Lenta „In defence of the right of religious
associations to discriminate: A reply to Bilchitz and De Freitas‟ (2013) SAJHR 429.
4 De Freitas at 271.
It has therefore been facilitating debate and engagement around the issue, which it
asserts is a deeply divisive one, with factions of members and ministers holding starkly
divergent doctrinal views. It has thus sought to avoid conflict and schism within the
Church in its approach to the issue.
[22] According to the Presiding Bishop:
„At the 2007 Conference, the issue of same-sex unions remained fraught. In response to the
heated debate it triggered, the Conference issued the following statement and resolution:
“. . . Conference recognises that any decision and subsequent action on the issue of civil
unions between same-sex partners must await the outcome of the ongoing process of
engagement as specified by Conference 2005 (Yearbook 2006, 8.3, p.75) and, in the interim,
expects Methodist ministers to continue to offer pastoral care to homosexual individuals.”
. . .
By 2010, it was clear that the recognition of same-sex unions generated passionately and
sincerely held but divergent views among both ministers and members of the Connexion. The
Church determined not to permit these differing viewpoints to divide its congregation and
adopted an approach that sought to accommodate the opposing doctrinal views of its
members. At the 2010 Conference, the Church again called on its members to engage with
the complexities and emotions around homosexual relationships and, in the interim, to “allow
this divergence of conviction to be held without the freedom for such divergence of conviction
to be exercised”. Simply put, the Church continued to embrace its gay members and did not
interfere with their relationships, but did not recognise or allow same-sex marriage.‟
That notwithstanding, it was submitted that any such dispute as may have existed in
relation to whether or not there was a rule in existence, could be resolved by this court
in the appellant‟s favour on the papers as they stood. To determine a profoundly
important doctrinal issue, in line with the well-settled approach to be adopted in
matters where final relief is sought on application (as to which see Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A)), is wholly
undesirable. It would thus be imprudent to accede to counsel‟s invitation.
[23] The high court ruled that the dispute between the parties was subject to
arbitration. That a court has a discretion whether to enforce an arbitration agreement
is evident from s 3(2) of the Arbitration Act 42 of 1965 which provides that:
„(2) The court may at any time on the application of any party to an arbitration agreement, on
good cause shown-
(a) set aside the arbitration agreement; or
(b) order that any particular dispute referred to in the arbitration agreement shall not be
referred to arbitration; or
(c) order that the arbitration agreement shall cease to have effect with reference to any
dispute referred.‟
The question therefore is whether the appellant has shown good cause within the
meaning of the subsection for avoiding arbitration. Such an onus is not easily
discharged (per Colman J in Metallurgical and Commercial Consultants (Pty) Ltd v
Metal Sales Co (Pty) Ltd 1971 (2) SA 388 (W) at 391E-F). It has been said that the
discretion of the court is to be exercised judicially, and only when a very strong case
has been made out (Universitiet van Stellenbosch v JA Louw 1983 (4) SA 321 (AD) at
334A). As Nugent JA pointed out (South African Forestry Co Ltd v York Timbers Ltd
2003 (1) SA 331 (SCA) para 14) „good cause‟ is a phrase of wide import that requires
a court to consider each case on its merits in order to achieve a just and equitable
result in the particular circumstances.
[24] I shall endeavour to consider with such brevity as will suffice for the purposes of
this judgment the various reasons advanced by the appellant for wanting to avoid the
arbitration: First, she contends that there is no valid arbitration agreement. In that she
is not entirely consistent having initially maintained in her founding affidavit that there
was in place a valid agreement and that she was intent on arbitration. We do not have
to enter upon the question whether the relationship between the church and its
ministers is contractual as would be the case with a member of a voluntary
association, because it was agreed that the agreement signed by the Presiding Bishop
on behalf of the Church and the convener on behalf of Ms de Lange brought the
matter within the ambit of the Arbitration Act.5 That, the convener was entitled to do in
terms of Rule 5.11 read with Appendix 14. The relevant portion of Appendix 14 reads:
[T]he Convener shall determine and clarify what the issues are from the party/ies. The
Convener shall hereafter decide what the correct forum or process is for the matter. The
Convener`s decision in this regard shall be binding on all members of the church.
. . . If arbitration is the correct forum, the Convener shall finalise a written arbitration
agreement which both parties shall sign. If either party refuses to sign the said agreement, the
Convener shall have the power to sign on their behalf. If the Convener is [not] to be the
arbitrator in the particular matter, the said Convener shall designate another arbitrator to this
responsibility.‟
The appellant accepts that the convener was entitled to sign on her behalf, thereby
bringing a binding agreement into force. It follows that a valid arbitration agreement
was concluded between the parties and that the appellant should be bound by its
terms.
[25] Second, the appellant complains of the delay in concluding the arbitration
agreement. The delay for the most part is explicable. There were significant disputes
between the appellant and the convener as to the proper delineation of the issues for
5 See Yiba v African Gospel Church 1999 (2) SA 949 (C).
referral. The appellant sought to have issues referred that were not encompassed by
the charge or the findings against her. She also sought to create a right of appeal to
the high court and a right to legal representation while the convener considered that
the L&D did not provide for those rights. The delay is explained on the papers and is
attributable, at least in part, to the appellant and her attorney – the latter having
adopted an increasingly emotive and argumentative stance in the exchange of
correspondence. In the event different versions of a written agreement came to be
signed by each of the parties. The matter was then wrongly referred to the appointed
arbitrator without an agreement having been concluded and signed by the parties.
Absent an agreement the arbitrator correctly declined to assume jurisdiction in respect
of the dispute. Following the abortive pre-arbitration meeting and at the arbitrator‟s
suggestion, the parties were offered a further opportunity to conclude an agreement.
The appellant then refused to engage further with the convener and did not make any
further representations. The convener thereupon formulated an agreement that
defined the issues with regard to the charges and the findings of the DDC and CDC,
which was then signed by the Presiding Bishop and by the convener on behalf of the
appellant.
[26] Third, the appellant complains that the arbitration agreement signed on her
behalf by the convener is weighted heavily against her inasmuch as it: (a) requires her
to waive her constitutional rights; (b) ousts the power of the courts; and (c) denies her
the right to legal representation. As to (a): Not only can the appellant not be taken to
have waived her constitutional rights, but the agreement specifically preserves her
rights by providing:
„The parties, by signing this agreement, do not waive any legal rights they may have to raise
any objections in the statement of claim or other pleading allowed, or at the arbitration
hearing, in relation to the proceedings or any actions taken or omitted in the disciplinary or
appeal proceedings of the Claimant, be it on merits or procedural in nature. . . . ‟
As to (b): Clause 7.2 of the agreement permits „an application to a competent court to
review the findings of the arbitrator‟. In any event the Church has always accepted that
the arbitrator‟s decision may be amenable to review on the grounds of legality. This
the Presiding Bishop made plain in the answering affidavit in these terms:
„The applicant contends that the arbitration provisions of the L&D contain an unenforceable
ouster of the Court`s jurisdiction. I deny that contention. The Church has always accepted that
the arbitrator`s decision may be amenable to review on grounds of legality – as the decisions
of all domestic tribunals are. It is neither unconstitutional nor unlawful for a body like the
Church to require its members to resolve disputes primarily through internal processes,
including arbitration.‟
As to (c): The agreement is silent on the right to legal representation, having left that to
the discretion of the arbitrator. In the exercise of that discretion, the arbitrator made
the following ruling:
„I have thought of when this matter came up, I thought hard about whether I should allow legal
representation in these proceedings. I am not convinced that I have heard any reasons why I
should deviate from the L&D and I in the absence of such reasons I, the ruling that I make, in
these procedures – no legal representation would be allowed for either Rev de Lange or the
church. Both parties I find or rule would be represented by lay representatives. That is the
question of legal representation being dealt with.‟
In any event our courts have consistently denied any entitlement to legal
representation as of right in fora other than courts of law (Commission for Conciliation,
Mediation and Arbitration v Law Society of the Northern Provinces 2014 (2) SA 321
(SCA) para 19; Hamata v Chairperson, Peninsula Technikon Internal Disciplinary
Committee 2002 (5) SA 449 (SCA) para 5).
[27] Fourth, the appellant complains that the arbitrator, as a member of the Church,
acts at the behest of the Church and is thus biased or is reasonably perceived to be
biased. The Church‟s appointment of members to its arbitration panel from which
arbitrators are appointed is entirely understandable. It is to ensure that only those
persons who are familiar with the rules, procedures and practices are appointed to the
rather sensitive task of adjudicating disciplinary disputes. In Lakeside Colony of
Hutterian Brethren v Hofer it was stated:
„There is no doubt that an unbiased tribunal is one of the central requirements of natural
justice. However, given the close relationship amongst members of voluntary associations, it
seems rather likely that members of the relevant tribunal will have had some previous contact
with the issue in question, and given the structure of a voluntary association, it is almost
inevitable that the decision makers will have at least an indirect interest in the question.
Furthermore, the procedures set out in the rules of the association may often require that
certain persons make certain kinds of decisions without allowing for an alternate procedure in
the case of bias.‟
There is nothing objectionable in private associations seeking to exclude outsiders
from disciplinary processes and to ensure that those proceedings are kept „within the
family‟ (Hamata v Chairperson, Peninsula Technikon Internal Disciplinary Committee
paras 18 and 20). To ensure that the arbitrator is conversant with both the Church‟s
doctrine and processes and the legal requirements of a fair process, the Church only
appoints senior counsel to preside at arbitrations. The arbitrator in this case is a senior
counsel at the Grahamstown Bar. It must be assumed, in the absence of evidence to
the contrary, that he can disabuse his mind of irrelevant personal beliefs and
predispositions. Importantly, one finds no support for the complaint of bias in the
papers. Quite the contrary, when the arbitrator expressed his willingness to step down
if the appellant was not comfortable with him acting as arbitrator, she responded:
„Secondly, I deny the negative assumptions that you have read into my email concerning your
competence as an arbitrator. Your impression with respect, is a creation of your own –
nowhere in any correspondence have I created any impression whatsoever of that nature in
the least. Really, this is totally a silly argument and [with] respect to you, such an assumption
is totally ridiculous. I did not mention a single word about your competence. To the contrary I
would not have signed the agreement document if I had any doubts about you being the
appointed arbitrator for the case. In particular now that you have been appointed as judge, I
have even got more faith and confidence that you will deal with my arbitration in a fair and
even handed manner. My complaint concerns the delay of the arbitration and not in the
least in your competence.‟
The appellant reiterated her confidence in the arbitrator towards the end of the
abortive preliminary meeting held on 5 February 2011, when she stated:
„I have said it more than once in my correspondence to you – I am more than happy for you to
be the arbitrator in this case. I have full confidence in you, in your ability and I think you are
the right person to be the arbitrator in this case and if I have offended you with what I have
written then I apologise and then I ask you to forgive me.‟
[28] Fifth, the appellant contends that she should not be required to submit to the
arbitration because it would be a futile process. As she puts it:
„[t]he arbitration proceedings will in any event be pointless in view of the fact that the Arbitrator
has already expressed his attitude namely that he cannot interfere with the merits of the
decision taken but only look at the processes that were applied‟.
That claim is similarly unfounded. At the heart of this matter is the question whether
the Church had adopted a rule that precluded the appellant from announcing her
intention to marry her partner from the pulpit. The Church contends that such a rule
was in place, while the appellant contends that it was not. That is a factual dispute
which can be determined in arbitration proceedings. It goes to the question of whether
the DDC and the CDC misdirected themselves in finding the appellant guilty of
breaching the Church`s policies, decisions, practices and usages. The written
agreement delineates the issues between the parties to accommodate that very
dispute. It identifies one of the issues for determination as whether the DDC and the
CDC “have the jurisdictional authority to deal with the charges that were laid against
the Complainant”. Put differently, the arbitrator is called upon to determine whether the
CDC and the DDC acted correctly in finding that the appellant had breached the
Church`s policies, decisions, practices and usages.
[29] In the result none of the grounds advanced by the appellant for seeking to
avoid the arbitration pass muster.
[30] Moreover, in addition to certain advantages, such as expedition, finality and
cost-effectiveness which a party to an arbitration is likely to enjoy over one who has to
pursue their rights in the courts, the nature of the dispute is important. That dispute,
according to the Church, is quintessentially the kind of dispute that a secular court
should avoid becoming entangled in, because as the Presiding Bishop sought to
emphasise:
„The issues in dispute in these proceedings go to sensitive matters of Church doctrine and
governance. I am advised that these are issues that the Church should be left to determine
domestically, as far as is possible, without interference from the Court. The Court should only
become involved in the dispute where it is strictly necessary to do so. Even then, I am advised
and submit that it will refrain from determining doctrinal issues, in order to avoid religious
entanglement.
. . .
. . .
As I have already explained, marriage is a sacrosanct institution within the Church.
The question of who can enter into marriage and when marriages will be solemnized and
recognised by the Church are issues of religious doctrine, and are at the heart of ecclesiastical
concern.
As I have described above, the question of whether the Church should recognise same-sex
unions is an intensely contested issue within the Church. Both those in favour of, and those
against, the recognition of same-sex marriage believe that their position is doctrinally correct
and justified by the scriptures. Because of the importance of the issue and its potential to
create divisions within the Church, the Conference has called for a process of engagement
whereby the Church and its adherents seek to determine this doctrinal issue together, through
discussion. That process is designed to accommodate diversity, insofar as possible within the
constraints of the Church‟s doctrine and its need for proper governance. I refer to what I have
stated above.
. . .
It is also inappropriate for this Court to require the Church to recognise same-sex
unions as religiously ordained – particularly when the Church is itself involved in a complex
and lengthy process to determine that doctrinal issue itself. To do so would be to prescribe
religious tenets to the members and ministers of the Church, in violation of the rights to
freedom of religion and religious association. Indeed, the doctrine of entanglement militates
strongly against the Court becoming involved in religious doctrinal disputes.‟
[31] It is so that our Constitution protects an individual‟s rights to practise his or her
religion as well as the rights of members of a particular religion to practise that religion
in association with others and in conformity with the dictates, precepts, ethical
standards and moral discipline which that faith exacts.6 Protecting the autonomy of
religious associations is considered a central aspect of protecting religious rights.
Indeed such protection has been described as „vital to a conscience-honouring social
order‟.7 As the Constitutional Court held in Minister of Home Affairs v Fourie (Doctors
for Life International & others, amici curiae); Lesbian and Gay Equality Project v
Minister of Home Affairs 2006 (1) SA 524 (CC) para 94:
„In the open and democratic society contemplated by the Constitution there must be mutually
respectful co-existence between the secular and the sacred. The function of the Court is to
recognise the sphere which each inhabits, not to force the one into the sphere of the other.‟
[32] Witte states that:
[A]ctive religious rights require that individuals be allowed to exercise their religious beliefs
privately and groups be allowed to engage in private worship assembly. More fully conceived,
active religious rights embrace an individual's ability to engage in religious assembly, religious
speech, religious worship, observance of religious laws and ritual, payment of religious taxes,
and the like. They also embrace a religious institution's power to promulgate and enforce
internal religious laws of order, organisation, and orthodoxy, to train, select, and discipline
religious officials, to establish and maintain institutions of worship, charity, and education, to
acquire, use, and dispose of property and literature used in worship and rituals, to
communicate with co-believers and proselytes, and many other affirmative acts in
manifestation of the beliefs of the institution.' 8
Furthermore, the determination of who is morally and religiously fit to conduct pastoral
duties or who should be excluded for non-conformity with the dictates of the religion,
fall within the core of religious functions. For, as Gerhard van der Schyff puts it:
6 See sections 15 and 31 of the Constitution. Taylor v Kurstag NO 2005 (1) SA 362 (W) para 37.
7 De Freitas above at 262. For a narrower reading of the right see Lenta above.
8 J Witte 'The South African Experiment in Religious Human Rights' (1993) Journal for Juridical Science
1 at 24-25.
'The right to admit members and clergy would also imply the right to discipline such people in
order to enforce conformity and encourage conduct in harmony with religious precepts and
teaching.'9
[33] Prior to the coming into force of the Constitution, the court refused to
„adjudicate upon a doctrinal dispute between two schisms of a sect unless some
proprietary or other legally recognised right was involved' (Allen & others NNO v Gibbs
& others 1977 (3) SA 212 (SE) at 218A-B). Subsequently, Farlam J observed in
Ryland v Edros 1997 (2) SA 690 (C) at 703E: „It seemed to me that s 14 of the
[Interim] Constitution might well have changed the position and that the doctrine of
doctrinal entanglement may now be part of our law‟. This doctrine entails a reluctance
of the courts to become involved in doctrinal disputes of a religious character (Taylor v
Kurstag para 39). The reason underlying the rule has been expressed by Woolman
and Zeffert as follows:
„[I]n a radically heterogeneous society governed by a Constitution committed to pluralism and
private ordering, a polity in which both the state and members of a variety of religious
communities must constantly negotiate between the sacred and the profane, courts ought to
avoid enmeshment in internecine quarrels within communities regarding the content or the
truth of particular beliefs.‟10
This approach is consistent with that taken in comparative foreign jurisdictions.
[34] In the United States the establishment clause prevents courts from determining
doctrinal disputes. As it was put in United States v Ballard 322 US 78 (1944):
9 G van der Schyff The Right to Freedom of Religion in South Africa (2001) Dissertation Rand Afrikaans
University at 102.
10 S Woolman & D Zeffertt „Judging Jews: Court interrogation of rule-making and decision-taking by
Jewish ecclesiastical bodies‟(2012) SAJHR 196 at 205.
„The law knows no heresy, and is committed to the support of no dogma, the establishment of
no sect . . . The First Amendment has a dual aspect. It not only “forestalls compulsion by law
of the acceptance of any creed or the practice of any form of worship” but also “safeguards the
free exercise of the chosen form of religion.‟
As a result, American courts will not entertain religious disputes at all. Decisions of
religious tribunals are subject only to such appeals as the religious body itself allows.
In Presbyterian Church v Hull Church 393 US 440 (1969) it was stated:
„But it would be a vain consent and would lead to the total subversion of such religious bodies,
if any one aggrieved by one of their decisions could appeal to the secular courts and have
them [sic] reversed. It is of the essence of these religious unions, and of their right to establish
tribunals for the decision of questions arising among themselves, that those decisions should
be binding in all cases of ecclesiastical cognizance, subject only to such appeals as the
organism itself provides for.‟
[35] Further, the United States Supreme Court has cautioned against reviews that
challenge the rationality of an ecclesiastical body‟s decision. The approach was
expressed thus in Serbian Orthodox Diocese v Milivojevich 426 US 696 (1976):
„The fallacy fatal to the judgement of the Illinois Supreme Court is that it rests upon an
impermissible rejection of the decisions of the highest ecclesiastical tribunals of this
hierarchical church upon the issues in dispute, and impermissibly substitutes its own inquiry
into church polity and resolutions based thereon of those disputes. Consistently with the First
and Fourteenth Amendments “civil courts do not inquire whether the relevant [hierarchical]
church governing body has power under religious law [to decide such disputes] . . . .
Such a determination . . . frequently necessitates the interpretation of ambiguous religious law
and usage . . . To permit civil courts to probe deeply enough into the allocation of power within
a [hierarchical] church so as to decide . . . religious law [governing church polity] . . . would
violate the First Amendment in much the same manner as civil determination of religious
doctrine . . . For where resolution of the disputes cannot be made without extensive inquiry by
civil courts into religious law and polity, the First and Fourteenth Amendments mandate that
civil courts shall not disturb the decisions of the highest ecclesiastical tribunal within a church
of hierarchical polity, but must accept such decisions as binding on them, in their application to
the religious issues of doctrine or polity before them.
. . .
For civil courts to analyze whether the ecclesiastical actions of a church judicatory are in that
sense “arbitrary” must inherently entail inquiry into the procedures that cannon or
ecclesiastical law supposedly requires the church judicatory to follow, or else into the
substantive criteria by which they are supposedly to decide the ecclesiastical question. But
this is exactly the inquiry that the First Amendment prohibits; recognition of such an exception
would undermine the general rule that religious controversies are not the proper subject of civil
court inquiry, and that a civil court must accept the ecclesiastical decisions of church tribunals
as it finds them.‟
[36] Similarly, in the United Kingdom the decisions of ecclesiastical courts are
generally not amenable to correction or challenge in the secular courts. That rule, as R
v St Edmundsbury and Ipswich Diocese (Chancellor): Ex parte White and Another
[1946] 2 All ER 604 at 605 emphasises in the following excerpt, is of long standing:
„I think that the reason is to be found in this. There has always been in England more than one
system of law. I will not say that the canon and civil law is as old as the common law, but it is,
at any rate, of antiquity approaching the common law, and was very vigorous and had great
effect in the days of the Plantagenets. The common law existed side by side with the civil law,
and there were the two sets of courts, the courts spiritual and the common law courts.‟
Thus in R v Chief Rabbi of the United Hebrew Congregations of Great Britain and the
Commonwealth, ex parte Wachmann [1993] 2 All ER 249 at 255 the court held:
„That consideration apart, the court is hardly in a position to regulate what is essentially a
religious function – the determination whether someone is morally and religiously fit to carry
out the spiritual and pastoral duties of his office. The court must inevitably be wary of entering
so self-evidently sensitive an area, straying across the well-recognised divide between church
and state.
One cannot, therefore, escape the conclusion that, if judicial review lies here then one way or
another this secular court must inevitably be drawn into adjudicating upon matters intimate to
a religious community.‟
More recently Shergill v Khaira [2014] UKSC 33 para 45 held:
„This distinction between a religious belief or practice and its civil consequences underlies the
way that the English and Scottish courts have always, until recently, approached issues
arising out of disputes within a religious community or with a religious basis. In both
jurisdictions the courts do not adjudicate on the truth of religious beliefs or on the validity of
particular rites. But where a claimant asks the court to enforce private rights and obligations
which depend on religious issues, the judge may have to determine such religious issues as
are capable of objective ascertainment. The court addresses questions of religious belief and
practice where its jurisdiction is invoked either to enforce the contractual rights of members of
a community against other members or its governing body or to ensure that property held on
trust is used for the purposes of the trust.‟
[37] Australian law also prohibits courts from determining questions of religious
doctrine, practice or procedure. In Attorney-General (NSW) v Grant [1976] HCA 38 it
was put thus:
„Many of the appellant`s submissions would require this Court to inquire into and decide
controversial questions of doctrine (or departure from doctrine) or practice or procedure in
ecclesiastical government. In my opinion, however forceful these arguments appear to be,
they are outside the judicial sphere.‟
[38] Canadian Courts are generally reluctant to interfere in the internal management
of voluntary associations, because, as it has been put, they have no interest in the
day-to-day activities of those associations. However, as was noted in Lakeside Colony
of Hutterian Brethren v Hofer and Street v. B.C. School Sports, 2005 BCSC 958 para
45, there are certain basic principles that govern relationships between people, which
all people are bound by, and which cannot be contracted out of. The courts have
always retained the jurisdiction to govern those basic principles, and so long as the
jurisdiction remains restricted and limited to those rarest of cases, the courts have
jealously guarded it. The courts have thus traditionally maintained a real and important
interest in the processes by which those organizations govern themselves. In Lakeside
Colony of Hutterian Brethren v Hofer, Gonthier J said of the complex issues involved
in reviewing the decisions of a religious tribunal in Canadian law:
'It is not incumbent on the court to review the merits of the decision to expel. It is, however,
called upon to determine whether the purported expulsion was carried out according to the
applicable rules, with regard to the principles of natural justice, and without mala fides. This
standard goes back at least to this statement by Stirling J. in Baird v. Wells (1890), 44 Ch.D at
p. 670:
''The only questions which this Court can entertain are: first, whether the rules of the club have
been observed; secondly, whether anything has been done contrary to natural justice; and,
thirdly, whether the decision complained of has been come to bona fide. ''
. . . The content of the principles of natural justice is flexible and depends on the
circumstances in which the question arises. However, the most basic requirements are that of
notice, opportunity to make representations, and an unbiased tribunal.
. . .
Hence the root-dilemma of legal intervention: on the one hand, you do not wish to intervene
because you cannot specify, often cannot understand, the parties' respective merits; on the
other hand, the courts are open to everyone, and can thus be called upon to intervene, which
means they must either grant or deny the ''right'' of expulsion. But whether the courts
recognize or resist that right, their task is difficult and delicate. For theirs is not a political task
of shielding the ''greatest number'' or of protecting one's right to be different. The legal task is
to formulate rules which will be neutral and equal in relation to all parties.'
[39] As the main dispute in the instant matter concerns the internal rules adopted by
the Church, such a dispute, as far as is possible, should be left to the Church to be
determined domestically and without interference from a court. A court should only
become involved in a dispute of this kind where it is strictly necessary for it to do so.
Even then it should refrain from determining doctrinal issues in order to avoid
entanglement. It would thus seem that a proper respect for freedom of religion
precludes our courts from pronouncing on matters of religious doctrine, which fall
within the exclusive realm of the Church.
[40] High court judgments such as Taylor v Kurtstag and Wittmann v Deutsche
Schulverein, Pretoria 1998 (4) SA 423 (T) appear to accept that individuals who
voluntarily commit themselves to a religious association‟s rules and decision-making
bodies should be prepared to accept the outcome of fair hearings conducted by those
bodies. Here, on discovering that the CDC had found against her, the appellant
invoked the arbitration provision of the L&D and referred the matter to the convener so
that he could take the necessary steps to convene the arbitration. The appellant has
never challenged the relevant provisions of the L&D. What is more is that, having
initiated the arbitration process and having participated in it for almost a year, the
appellant thereafter seeks to avoid the arbitration by having the matter determined by
a court.
[41] All things considered I am not persuaded that the appellant has discharged the
onus of establishing good cause within the meaning of s 3(2) of the Arbitration Act. I
therefore conclude that the dispute between the parties is best determined by
arbitration. It follows that the appeal must fail. The Church commendably agreed to
forego the costs of the appeal.
[42] In the result the appeal is dismissed.
______________
V PONNAN
JUDGE OF APPEAL
Wallis JA (Fourie AJA concurring)
[43] I have had the privilege of reading the judgment prepared by Ponnan JA. I
agree with him that in view of Ms de Lange‟s express disavowal of any contention that
she was discriminated against on the grounds of her sexual orientation, we do not
have to explore the relationship between her equality rights and the rights of freedom
of religion enjoyed by the church and all people in this country. The case is therefore
about an alleged arbitration agreement and whether it should be set aside or avoided.
The case both here and below was argued on the footing that there was a binding
arbitration agreement concluded by the parties. That is accepted in Ponnan JA‟s
judgment and he proceeds to hold that the application by Ms de Lange to set aside or
avoid that agreement was ill-founded. On that footing I agree with him and the
conclusion he reaches. I write separately because I have considerable reservations
about the correctness of the proposition that there is a binding arbitration agreement
between the parties that can be the subject of the order sought by the appellant, Ms
de Lange. If my doubts were justified, they would not affect the outcome of the appeal.
It would still fall to be dismissed but for different reasons. But my areas of concern
relate to fundamental questions relating to the nature of the relationship between a
minister ordained in the Methodist Church of Southern Africa and the church, as well
as to the application of the Arbitration Act 42 of 1965 (the Act) in this case. In those
circumstances I think it appropriate to deal with them.
[44] The Act deals with arbitration agreements. These are defined in s 1 as
meaning:
„a written agreement providing for the reference to arbitration of any existing dispute or any
future dispute relating to a matter specified in the agreement, whether an arbitrator is named
or designated therein or not; …‟
Section 2 provides that a reference to arbitration is not permissible in respect of any
dispute over any matrimonial cause or any matter incidental to such a cause or any
matter relating to status. Apart from those restrictions any dispute can be the subject
of arbitration, but there must be a dispute not a mere expression of dissatisfaction over
the conduct of the other party. The dispute must be capable of formulation in a
manner where opposing contentions are or can be advanced so that the arbitrator
may make a decision on those contentions.11
[45] My first and lesser concern is whether the present dispute relating to the
decision by the church to discontinue Ms de Lange as an ordained minister is a
dispute over her status and therefore one that it is impermissible to subject to
arbitration. The answer to that depends on the meaning to be given to the word
„status‟ in the context of s 2(b) of the Act. It does not appear that this has ever been
the subject of judicial decision in this country. Plainly it includes questions of a
11 Telecall (Pty) Ltd v Logan 2000 (2) SA 782 (SCA) paras 10-12.
person‟s matrimonial status; whether they are a minor or have been tacitly
emancipated; whether they have for any reason, such as physical or mental disability,
become incapable of managing their affairs; their domicile and similar matters.12 But it
is conceivable that the right of persons to hold an office, which could include a person
in the position of a minister of religion ordained to serve within a particular faith or
denomination, is also a matter of status that cannot be the subject of an arbitration
agreement.13 If that is the case, and I mention it only as a possibility, the deprivation of
the right to perform the duties of that office (in the case of a minister of religion the
rites and rituals of that faith) would affect their status and thus preclude resolution by
way of arbitration. However, my second concern is more important and I deal with it
without further ado.
[46] The requirement that an arbitration agreement be in writing does not mean that
it has to be signed or otherwise executed by both parties to the arbitration. All that is
required is that the parties have agreed that the dispute in question, or all disputes of
a particular character, be submitted to arbitration and that agreement has been
reduced to writing. Thus it matters not that the agreement is concluded orally, provided
that a written memorial thereof is produced.14 The important requirement is, however,
that there has been an agreement to arbitrate the dispute that is in issue between the
parties. That agreement arises contractually.15 In the absence of such an agreement
the Act has no purchase. It does not apply in relation to other dispute resolution
procedures, however closely they may resemble arbitration under an arbitration
agreement. An oral agreement to arbitrate not reduced to writing is therefore not
subject to the provisions of the Act and nor are other forms of dispute resolution
proceeding, however similar they may appear to be in the manner in which they are
conducted to an arbitration agreement in terms of the Act.
12 See Ampthill Peerage Case [1976] 2 All ER 411 (HL) at 424 per Lord Simon of Glaisdale: „Status
means the condition of belonging to a class in society to which the law ascribes peculiar rights and
duties, capacities and incapacities.‟
13 In the United Kingdom, until recently, a priest in the Church of England held an office. See Preston v
President of the Methodist Conference [2013] UKSC 29; [2013] 4 All ER 477 (SC) para 4.
14 Mervis Brothers v Interior Acoustics and Another 1999 (3) SA 607 (W) at 610
15 D W Butler (original text by C Smith) Joubert „Arbitration‟ in Joubert LAWSA (Vol 1, 2 ed) para 555.
This is no longer the position in English law as a result of s 6(1) of the Arbitration Act 1996 (c 23).
[47] The point is relevant because the application brought by Ms de Lange is one in
terms of s 3(2) of the Act. She sought an order that an arbitration agreement between
her and the Presiding Bishop of the Methodist Church be set aside, or alternatively
declaring that the arbitration agreement between them cease to have effect to any
dispute between them. In order for that relief to be granted it was essential that there
was in existence an arbitration agreement as defined in the Act. Ms de Lange claimed
that there was such an agreement in the form of a document that she signed and
made available to the convener of the arbitration panel on 1 November 2010, which
she was led to believe had been signed on behalf of the Presiding Bishop on 9
November 2010. The Presiding Bishop for his part contended that the agreement is in
the form of a document signed on behalf of Ms de Lange by the convener in June
2011. Her response to this document was that she had no role in it and that it
excluded her voice from the process. Notwithstanding this difference of views that
emerges from the affidavits the parties have proceeded as if there is an arbitration
agreement in place and addressed their arguments on that assumption. In case Ms de
Lange chooses to pursue further her grievances in relation to the church‟s treatment of
her, it is as well that the problems in regard to that assumption be identified.
[48] Counsel for the church advanced the following argument. Paragraph 5.11 in the
Laws & Development (L & D) of the church provides:
„No legal proceedings shall be instituted by any formal or informal structure or grouping of the
church or any minister or any member of the church, acting in their personal or official
capacity, against the church or any formal or informal structure or grouping of the Church,
Minister or member thereof for any matter which in any way arises from or relates to the
mission work, activities or governance of the church. The mediation and arbitration processes
and forums prescribed and provided for by the church for conflict dispute resolution (Appendix
14) must be used by all Ministers and members of the church. If a matter is referred to
arbitration, the finding of the Arbitrator shall be final and binding on all Minsters and members
of the church. . . .‟
They contended that this paragraph obliged Ms de Lange to raise her grievances
about the disciplinary processes to which she had been subjected by way of
arbitration under Appendix 14 of the L & D. The further elements of the arbitration
agreement, so the argument proceeded, were to be found in the application of the
procedures laid down in Appendix 14.
[49] Appendix 14 provides for an aggrieved party to refer the dispute to the
convener of the connexional arbitration panel. In dealing with the role and functions of
the convener the material portion of Appendix 14 reads as follows:
„[T]he Convener shall determine and clarify what the issues are from the party/ies. The
Convener shall hereafter decide what the correct forum or process is for the matter. The
Convener`s decision in this regard shall be binding on all members of the church.
… If arbitration is the correct forum, the Convener shall finalise a written arbitration agreement
which both parties shall sign. If either party refuses to sign the said agreement, the Convener
shall have the power to sign on their behalf. If the Convener is [not] to be the arbitrator in the
particular matter, the said Convener shall designate another arbitrator to this responsibility.‟
[50] There is an immediate oddity about this provision. Whilst paragraph 5.11
suggests that there is an obligation to arbitrate disputes rather than resort to secular
courts, Appendix 14 suggests that it is for the convener to determine whether the
dispute in question should be resolved by arbitration. That interposes the convener
between the aggrieved church member, structure or institution and the other party,
who may be, as here, the Presiding Bishop, representing the church (bearing in mind
that paragraph 5.11 does not bind the Presiding Bishop when acting in his or her
official capacity in the interests of the church). It is the convener who decides whether
arbitration will occur in relation to any dispute and the convener‟s decision is final.
Whilst I have no doubt that the convener for the time being, as did the convener in this
case, would discharge their functions openly and with integrity, if the convener has the
power to determine whether or not an arbitration will take place at all, it is hard to see
on what basis it can be said that paragraph 5.11 creates a binding arbitration
agreement. Put simply a reference to the convener made under it may not result in an
arbitration governed by the Act.
[51] The argument that clause 5.11 imposes an obligation to arbitrate disputes is
dependent upon the proposition that it, and indeed the entire contents of the L & D of
the church, constitutes a contract between church and member and church and
minister. It is here that the principal difficulty arises. In order to understand that
difficulty it is necessary to examine the structure of the church and the L & D in
somewhat greater detail.
[52] The church consists of members who become such after a profession of faith at
a public service, also called Confirmation, which is described as a „solemn service of
recognition, commitment, prayer and blessing‟ in which the member accepts
responsibility as a member of the church to live in accordance with the Methodist Rule
of Life.16 The L & D is adopted by the Conference, which clause 5.1 identifies as the
governing authority of the church. Its function is to provide direction and inspiration for
the Church and it is the sole legislative body of the church. It is also the sole and final
authority in respect of the doctrines of the church and their interpretation. Unlike a
club, the church‟s members and clergy do not become such by subscribing to a
constitution and the Conference is not established by democratic election among the
membership. The Conference draws its membership from the different organisations
of the church. Neither the ordinary members nor the body of ministers have any right
to attend or vote in its deliberations or any direct role to play in the formulation or
contents of the L & D. That serves to distinguish the church from clubs and other
similar voluntary associations, where membership affords a right of participation in all
the affairs of the organisation, or a company, where the articles of association define
the voting rights of all members. The constitutions of voluntary associations and the
articles of association of a company are commonly seen to give rise to contractual
relationships between the member and the association or company.17 As the reported
decisions show there are churches and other religious organisations that have
constitutions adopted and approved by members but the Methodist Church of
Southern Africa is not one of them. The L & D is not the same as the constitution of a
voluntary association and fulfils a different purpose.
[53] That purpose emerges from the foreword to the 11th edition written by the then
Presiding Bishop. He expressed the desire that it would be „ a useful mission tool‟ in
the task of proclaiming „the gospel of Jesus Christ for healing and transformation‟. He
16 Chapter 3 of L & D.
17 As to voluntary associations see the authorities in Jacobs v Old Apostolic Church of Africa and
Another 1992 (4) SA 172 (Tk GD) at 173B-F and Yiba and Others v African gospel Church 1999 (2) SA
949 (C) at 960-1.. As to companies see De Villiers v Jacobsdal Saltworks (Michaelis and de Villiers)
(Pty) Ltd 1959 (3) SA 873 (O) at 876-7; Gohlke & Schneider and Another v Westies Minerale (Edms)
Bpk and Another 1970 (2) SA 685 (A) at 692F-G; Trinity Asset Management (Pty) Ltd and Others v
Investec Bank Ltd and Others 2009 (4) SA 89 (SCA) para 22. The authors of Henochsberg on the
Companies Act 71 of 2008 Vol 1, 74 (looseleaf, Issue 8) express the view that this situation has not
been altered by the 2008 Companies Act.
said that its purpose is to facilitate the work of the church. Chapter 1 describes the
nature of the church and the role of Methodism within the church universal. Its objects
and purposes are exclusively in the religious realm. The primary vocation and
responsibility of every member of the church is to declare „the universality of the grace
of God by preaching the gospel‟. To that end it reaffirms the „New Testament truth of
the universal priesthood of believers‟. Chapter 1 proceeds to explain the origins of
Methodism, to describe the sacraments of baptism and the Lord‟s Supper and their
administration, and to set out the basic doctrines of the church. It suffices for my
purposes to say that it reflects the faith and beliefs of Methodists and the Methodist
church in South Africa.
[54] Chapter 1 sets out the basic principles that govern ministers of the church such
as Ms de Lange. The following clauses in the L & D are relevant to this:
„1.19
Christ‟s ministers in the Church are stewards in the household of God, and shepherds
of His flock. Some are called and ordained to this sole occupation, and have a principal and
directing part in these great duties.
1.20
It is the universal conviction of the Methodist people that the office of the Christian
Ministry depends upon the call of God, who bestows the gifts of the Spirit, the grace and the
fruit of which indicate those whom God has chosen.
1.21
Those whom the Church recognises as called of God, and therefore receives into its
Ministry, shall be ordained by the imposition of hands with prayer to the Holy Spirit for
authority for the office and work of a Minister in the Church of Christ, thus expressing the
Church‟s recognition of the Minister‟s personal call.‟
On this basis the Ministers of the church „are set apart by ordination to the Ministry of
the Word and Sacraments‟.18
[55] Chapter 4 of the L & D deals with the process by which a person can become
an ordained minister in the church. It encourages „those who are called of God and
who have the qualities of Christian character, evangelical zeal and preaching ability to
offer for the Ministry‟ identifying the primary qualifications as being „the sense of a
divine call, spiritual and intellectual gifts, the graces of Christian character, and the
fruits of Christian service‟.19 It spells out the training that the candidate for the ministry
18 Clauses 1.22 and 1.23.5
19 Clause 4.2 of L & D.
must undergo leading eventually to ordination „by the solemn imposition of hands‟.20
The minister is then received into full connexion, which includes the authority to
perform the work of a minister and to administer the sacraments.21
[56] It is difficult to discern in this any intention to create a contractual relationship
between the minister and the church, anymore than it is possible to discern an
intention by a member or the church to enter into contractual relations when the
member is confirmed. The nature of the process, its origin in the ordinand‟s sense of
divine call, the manner in which ordination occurs and the description of the task
undertaken by the minister once admitted to full connexion, is wholly inconsistent with
the minister and the church, at the point of ordination, separately having an intention
to enter into a contractual relationship (the animus contrahendi). It is no surprise
therefore to find that such a relationship is expressly disavowed in clause 4.3 which
provides that:
„The Church recognises its pastoral responsibility to care for the welfare of its
Ministers. Nevertheless, notwithstanding any provision contained in the Laws and
Discipline or the decisions of Conference or of the Connexional Executive which seem
to indicate the contrary, no legally enforceable contract shall exist at any time between
the Church or any of its circuits on one hand and a Minister on the other hand, in
respect of the payment of stipends, allowances or any other material benefit, in cash
or kind, the provision of a station or any benefit of any kind which may have at any
stage accrued to a minister.‟
[57] Apart from her ordination Ms de Lange did not point to any other occasion upon
which the provisions of the L & D could have become the record of a contractual
relationship between her and the church. Her approach was simply that as a minister
of the church she was bound by the L & D. Whilst it is true that this is accepted by all
ministers in the Methodist church, that does not mean that they have concluded a
contract to that effect. It seems more likely that their acceptance of the L & D is an
obligation and discipline flowing from their calling to be a minister and the acceptance
of that call by going through the process of ordination.
20 Clause 4.49 of L & D.
21 Clause 4.48 of L & D.
[58] Apart from her ordination Ms de Lange did not point to any other occasion on
which the provisions of clause 5.11, read with Appendix 14, of the L & D were
accepted by her, acting with the intention to bring about a contractual relationship at
least in regard to arbitration. Indeed in her replying affidavit she expressly said that
she was not bound by clause 5.11. Had she signed the arbitration agreement
prepared by the convener, that document would then have reflected a binding
arbitration agreement, but she declined to do so and it was signed on her behalf by
the convener. His authority to do that was derived from clause 5.11, read with clause
2.2.ii of Appendix 14, and, if that lacked contractual status, then he lacked the
necessary authority to bind Ms de Lange.
[59] These issues are not novel. They have arisen in various denominations within
the broad Christian community when disciplinary steps have been taken against
ministers and they have sought to invoke the jurisdiction of tribunals set up to resolve
disputes arising in the field of employment. On three occasions the question has come
before the Labour Court in this country.22 The first case dealt with a minister of the
Dutch Reformed Church who had been given a letter of appointment by a particular
congregation of the church setting out his duties and salary and other benefits that
would be due to him in return for the performance of those duties. That was held to
constitute a contract of employment. By contrast the second case dealt with the
dismissal of an Anglican priest who sought to challenge his dismissal before the
CCMA. The priest had been ordained in accordance with the rites and canons of the
Anglican Church, which were similar in nature and effect to those in the L & D, and
said that this gave rise to a contract of employment. The Labour Court rejected this
contention holding that there was no intention to enter into a contractually binding
relationship. The basis of the entire process was religious. Similarly in the third case it
was held that officers in the Salvation Army did not enter into a contract of
employment with the Salvation Army, because their position flowed from their
understanding that they were called of God to a spiritual ministry and the relationship
between them and the Army was a spiritual one governed by religious conscience.23
22 Schreuder v Nederduitse Gereformeerde Kerk, Wilgespruit (1999) 20 ILJ 1936 (LC); Church of the
Province of Southern Africa Diocese of Cape Town v Commission for Conciliation, Mediation and
Arbitration and others (2001) 22 ILJ 2274 (LC) and Salvation Army (South African Territory) v Minister
of Labour (2005) 26 ILJ 126 (LC).
23 See also Rogers v Booth [1937] 2 All ER 751.
[60] Similar conclusions have been reached in cases elsewhere. Waglay J in
Church of the Province, supra,24 referred to judgments in Australia and New Zealand
to the same effect. Most of these cases in turn refer to judgments in the United
Kingdom where there is a fairly substantial body of case law on the topic. It is helpful
to refer to the most important of these. Their effect, which is I believe equally
applicable in this country, is that in each case one must examine the rules and
practices of the particular church and any special arrangements that have been made
with the minister or priest to determine whether their actions were intended in any
respect to give rise to contractual rights and obligations. In making that assessment
one cannot disregard either the religious background to the relationship or the fact that
for doctrinal reasons the church and the minister do not regard contractual
arrangements as necessary and organise their relationship accordingly.
[61] In President of the Methodist Conference v Parfitt,25 a Methodist minister was
dismissed by the governing body of the church in England and sought to challenge his
dismissal in the industrial tribunal. The church contended that he fell outside the
jurisdiction of the tribunal because there was no contract of employment between him
and the church. This contention was upheld and Dillon LJ said:26
„… [I]n my judgment, the spiritual nature of the functions of the minister, the spiritual nature of
the act of ordination by the imposition of hands and the doctrinal standards of the Methodist
Church which are so fundamental to that Church and to the position of every minister in it
make it impossible to conclude that any contract, let alone a contract of service, came into
being between the newly ordained minister and the Methodist Church when the minister was
received into full connection. The nature of the stipend supports this view. In the spiritual
sense, the minister sets out to serve God as his master; I do not think that it is right to say that
in the legal sense he is at the point of ordination undertaking by contract to serve the Church
or the Conference as his master throughout the years of his ministry.‟
[62] That judgment was followed in Davies v Presbyterian Church of Wales.27 Again
the case involved a minister dismissed from his pastorate and seeking relief before the
24 Paras 22 and 23.
25 President of the Methodist Conference v Parfitt [1983] 3 All ER 747 (CA).
26 At 751j-752b.
27 Davies v Presbyterian Church of Wales [1986] 1 All ER 705 (HL).
industrial tribunal. In rejecting the claim on behalf of the House, Lord Templeman
said:28
„My Lords, it is possible for a man to be employed as a servant or as an independent
contractor to carry out duties which are exclusively spiritual. But in the present case the pastor
of the Church cannot point to any contract between himself and the Church. The book of rules
does not contain terms of employment capable of being offered and accepted in the course of
a religious ceremony. The duties owed by the pastor to the Church are not contractual or
enforceable. A pastor is called and accepts the call. He does not devote his working life but
his whole life to the Church and his religion. His duties are defined and his activities are
dictated not by contract but by conscience. He is the servant of God. If his manner of serving
God is not acceptable to the Church, then his pastorate can be brought to an end by the
Church in accordance with the rules. The law will ensure that a pastor is not deprived of his
salaried pastorate save in accordance with the provisions of the book of rules but an industrial
tribunal cannot determine whether a reasonable Church would sever the link between minister
and congregation.‟
[63] The subsequent decision of the House of Lords in Percy v Board of National
Mission of the Church of Scotland29 suggested that some of this reasoning might be
questionable. Percy involved a minister who resigned in the face of disciplinary
proceedings and then sought to challenge her treatment by the church on the grounds
of sex discrimination. She accepted that she was not employed under a contract of
employment, but claimed that the circumstances in which she had been offered and
had taken up her appointment amounted to a contract to execute work and she
therefore fell within the definition of an employee in the relevant legislation.
[64] That contention was upheld. It appeared that the post had been advertised and
applications invited on the basis that the successful candidate would be appointed on
certain terms and conditions relating to the duties attaching to the post, stipend,
accommodation, leave and the like. When the post was offered to Ms Percy these
conditions were set out in full and she accepted them. In those circumstances the
majority speech by Lord Nicholls of Birkenhead rejected the proposition that the
holding of an office is inconsistent with a contractual relationship and concluded in
28 At 709g-j.
29 Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73; [2006] 4 All ER 1354
(HL).
regard to the question of an intention to give rise to a legally-binding relationship
that:30
„… [T]his principle should not be carried too far. It cannot be carried into arrangements which
on their face are to be expected to give rise to legally-binding obligations. The offer and
acceptance of a church post for a specific period, with specific provision for the appointee‟s
duties and remuneration and travelling expenses and holidays and accommodation, seems to
me to fall firmly within this latter category.
… Further, in this regard there seems to be no cogent reason today to draw a distinction
between a post whose duties are primarily religious and a post within the church where this is
not so. In President of the Methodist Conference v Parfitt … Dillon LJ noted that a binding
contract of service can be made between a minister and his church. This was echoed by Lord
Templeman in your Lordships‟ House in Davies v Presbyterian Church of Wales …
Lord Templeman said it is possible for a man to be employed as a servant or as an
independent contractor to carry out duties which are exclusively spiritual.‟
[65] Percy was decided on the footing that although Ms Percy‟s ordination did not
create a contract between her and the church, the circumstances of her appointment
to the particular charge were such as to give rise to a contract under which she
performed her duties, albeit not a contract of employment.31 It did not invalidate the
earlier decisions that held that the nature of a minister‟s relationship with the church
flowing from ordination was not intended by the parties to be of a contractual nature.
This is clear from the summary of the legal position in the majority judgment of Lord
Sumption in the recent decision in Preston v President of the Methodist Conference,32
where he said:
„It is clear from the judgments of the majority in Percy‟s case that the question whether a
minister of religion serves under a contract of employment can no longer be answered simply
by classifying the minister‟s occupation by type: office or employment, spiritual or secular. Nor,
in the generality of cases, can it be answered by reference to any presumption against the
contractual character of the service of ministers of religion generally … The primary
considerations are the manner in which the minister was engaged, and the character of the
rules or terms governing his or her service. But, as with all exercises in contractual
construction, these documents and any other admissible evidence on the parties‟ intentions
30 Paras 24 and 25.
31 See also in this regard Lord Hope of Craighead paras 112-115.
32 Preston v President of the Methodist Conference [2013] UKSC 29; [2013] 4 All ER 477 (SC) para 10.
fall to be construed against their factual background. Part of that background is the
fundamentally spiritual purpose of the functions of a minister of religion.‟
[66] That case was also one in which a minister who had been dismissed sought to
challenge her dismissal before an employment tribunal because she claimed her
dismissal was unfair. Lord Sumption reviewed the structure of the Methodist Church in
the United Kingdom, which shares many of the features of its sister church in this
country, and concluded:33
„If the arrangements governing the ministry described in the Deed of Union and the standing
orders are a contract between the minister in that capacity and the Methodist Church, then it
seems to me inevitable that they must be classified as a contract of employment. But that only
increases the difficulty of regarding them as a contract at all. Three points seem to me to be
cumulatively decisive. First, the manner in which a minister is engaged is incapable of being
analysed in terms of contractual formation. Neither the admission of a minister to full
connexion nor his or her ordination are themselves contracts. Thereafter, the minister‟s duties
are not consensual. They depend on the unilateral decisions of the Conference. Secondly, the
stipend and the manse are due to the minister by virtue only of his or her admission into full
connexion and ordination. While he or she remains in full connexion and in the active life,
these benefits continue even in the event of sickness or injury, unless he or she is given leave
of absence or retires. In addition to the stipend and the manse, the minister has certain
procedural rights derived from the disciplinary scheme of the Deed of Union and the standing
orders, which determine the manner in which he or she may be suspended or removed from
ministerial duties. But the disciplinary scheme is the same for all members of the Church
whether they are ministers or ordinary lay members. Third, the relationship between the
minister and the Church is not terminable except by the decision of the Conference or its
stationing committee or a disciplinary committee. There is no unilateral right to resign, even on
notice. I conclude that the ministry described in these instruments is a vocation, by which
candidates submit themselves to the discipline of the Church for life. Unless some special
arrangement is made with a particular minister, the rights and duties of ministers arise, as it
seems to me, entirely from their status in the constitution of the Church and not from any
contract.‟
One difference between that description and the position in the Methodist church in
South Africa is that a minister may resign, but, beyond that, the considerations
mentioned by Lord Sumption are equally applicable to Ms de Lange‟s situation. For
33 Paragraph 20.
the same reasons it seems to me that her relationship with the church is not a
contractual relationship but an expression of her vocation to ministry exercised under
the discipline of the church.
[67] I appreciate that the cases I have been discussing are cases where the issue
has been whether ordination in accordance with the prescripts of a particular church
gives rise to a contract of employment between the minister and the church. But if on
her ordination there was no intention by Ms de Lange and the church to enter into a
contract in relation to her employment in terms of the L & D, there was likewise no
intention to enter into any other contract embodied in that document. And if that is so
then in this case there is no arbitration agreement between the parties and no
agreement that can be the subject of an application under s 3(2) of the Act. As I have
mentioned there would have been a valid arbitration agreement had Ms de Lange and
the Presiding Bishop been able to agree upon the terms of such an agreement, but
they did not.
[68] For those reasons I have the reservations I have mentioned about the basis
upon which the application was argued before us. On the face of matters it was
misconceived. If I am correct in that view then the appeal was in any event doomed to
fail, but I have expressed these views as they may influence the course of events
hereafter. I add, as did Baroness Hale in Percy, that I hope that the parties will now
seek to settle their differences outside the secular courts, as is clearly the intention of
clause 5.11 of the L & D, an intention that I understand to have scriptural support.34
_________________
M J D WALLIS
JUDGE OF APPEAL
34 1 Corinthians 6 vs 1-6. It is the practice and preference of both Islam and Judaism, and may well be
the practice of other faiths, to prefer that religious, and even commercial, disputes between members of
the faith be resolved internally and not by the secular courts.
APPEARANCES:
For Appellant:
A de Vos SC (with her A F Schmidt)
Instructed by:
Pieter van R. Coetzee Attorneys
Centurion
Webbers Attorneys
Bloemfontein
For Respondents:
W Trengove SC (with him I Goodman)
Instructed by:
Malherbe Rigg & Ranwell Inc
Boksburg
Symington & De Kok
Bloemfontein
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
29 September 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.
Ecclesia De Lange v The Presiding Bishop of the Methodist Church of
Southern Africa (726/13) [2014] ZASCA 151 (29 September 2014)
The Supreme Court of Appeal handed down judgment today in an appeal from the Western
Cape High Court, Cape Town. The appellant, the Reverend Ecclesia De Lange, had sought an
order against the respondents, the Presiding Bishop and Executive Secretary of the Methodist
Church of Southern Africa (the Church) setting aside an arbitration agreement between her
and the Church, which had been concluded pursuant to the Laws and Discipline of the
Church (the L&D). The dispute between the parties has its genesis in the decision of the
Church to suspend the appellant.
The Church’s decision to suspend and later discontinue the appellant as a minister arose as a
result of her announcement to her congregation of her intention to marry her same-sex
partner, and the later marriage itself. She was charged with contravening the L&D, and a
disciplinary hearing before the Church’s District Disciplinary Committee (DDC) ensued at
which it was recommended that she be suspended as a minister until such time as the debate
within the Church on the permissibility of same-sex marriages is resolved. On appeal by the
appellant to the Connexional Disciplinary Committee the decision of the DDC was
confirmed, and the sentence amended to the effect that she be discontinued from the Church’s
ministry. The effect of the appellant’s discontinuation was that she remains an ordained
Minister but is precluded from exercising any ministerial functions, holding any station or
receiving any emoluments.
With the appellant having referred the dispute to arbitration pursuant to the L&D, the
Convener of the Connexional Arbitration Panel of the Church signed an agreement on behalf
of the appellant which fleshed out the terms of, and the process that would govern, the
arbitration. The Convener was empowered to do so by the L&D. The appellant then decided
to institute an application against the Church for the relief outlined above. She asked the court
to exercise its discretion, accorded by s 3(2) of the Arbitration Act 42 of 1965, not to enforce
the arbitration agreement. In doing so, she was required to persuade the court that there is
good cause for avoiding arbitration in the circumstances of the matter.
The high court concluded that the appellant’s ‘application is premature and that she should
first submit to arbitration’. It accordingly dismissed the application with costs, but granted
leave to the appellant to appeal to this court.
Before this court, it was noted that ‘good cause’ is a phrase of wide import that requires a
court to consider each case on its merits in order to achieve a just and equitable result in the
particular circumstances. The court approached the appellant’s various grounds thus:
Regarding her contention that there is no valid arbitration agreement, it was noted that the
appellant accepted that the convener was entitled to sign on her behalf, thereby bringing a
binding agreement into force. It follows that a valid arbitration agreement was concluded
between the parties and that the appellant should be bound by its terms. Regarding her
contention that the delay in concluding the arbitration agreement constitutes good cause for
the court to order that the arbitration can be avoided, it was held that the delay was for the
most part explicable, and is in addition attributable, at least in part, to the appellant herself.
Regarding the appellant’s argument that the arbitration agreement signed on her behalf by the
convener is weighted heavily against her for various reasons, this court held that no such
reasons are valid. As regards her contention that the arbitrator, as a member of the Church,
acts at the behest of the Church and is thus biased or is reasonably perceived to be biased
against her, the court noted that there is nothing objectionable in private associations seeking
to exclude outsiders from disciplinary processes, and thus the appointment of the arbitrator in
the instant matter was valid, and in any event no such argument is made out on the papers.
Finally, the appellant contended that she should not be required to submit to the arbitration
because it would be a futile process, which argument this court held to be unfounded as a
clear factual dispute exists between the parties which can necessarily be determined in
arbitration proceedings. In the result none of the grounds advanced by the appellant for
seeking to avoid the arbitration were held to pass muster.
Finally, the court noted that the clear advantages of arbitration as compared to court
processes (including expedition, finality and cost-effectiveness) are compounded when one
considers the nature of the particular dispute. Invoking the ‘doctrine of entanglement’, in
terms of which the courts are reluctant to become entangled in disputes of a religious nature,
becomes appropriate, particularly where the determination called for falls within the core of
religious functions, such as in the instant matter. Such a dispute, as far as is possible, should
be left to the Church to be determined domestically and without interference from a court. A
court should only become involved in a dispute of this kind where it is strictly necessary for it
to do so.
The appeal was accordingly dismissed. In arriving at that conclusion this court emphasised
that the appellant had unequivocally disavowed ‘a claim of unfair discrimination based on
sexual orientation’ and that it therefore could not decide the case on a basis that she
disavowed.
|
4018
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 273/2022
In the matter between:
TWK AGRICULTURE HOLDINGS (PTY) LTD
APPELLANT
and
HOOGVELD BOERDERYBELEGGINGS
(PTY) LTD
FIRST RESPONDENT
CHRISTIAN ARNOLD HIESTERMANN
SECOND RESPONDENT
ARNOLD CHRISTIAN HIESTERMANN
THIRD RESPONDENT
LEON LOUIS HIESTERMANN
FOURTH RESPONDENT
CONRAD HEINRICH HIESTERMANN
FIFTH RESPONDENT
JOHAN CONRAD HIESTERMANN
SIXTH RESPONDENT
ECKARD WERNER HIESTERMANN
SEVENTH RESPONDENT
GUNTER AUGUST REINSTORF
EIGHTH RESPONDENT
GUNTER AUGUST REINSTORF N O
NINTH RESPONDENT
(In their capacity as trustee of the GA
Reinstorf Trust, IT No. 2149/96)
YVONNE ELFRIEDE REINSTORF N O
TENTH RESPONDENT
(In their capacity as trustee of the GA
Reinstorf Trust, IT No. 2149/96)
Neutral citation: TWK
Agriculture
Holdings
(Pty)
Ltd
v
Hoogveld
Boerderybeleggings (Pty) Ltd and Others (273/2022) [2023]
ZASCA 63 (5 May 2023)
Coram:
PONNAN
ADP,
MEYER
and
WEINER
JJA
and
NHLANGULELA and UNTERHALTER AJJA
Heard:
15 March 2023
Delivered:
5 May 2023
Summary:
Appealability – dismissal of an exception – doctrine of finality –
interests of justice – precedent.
ORDER
On appeal from: Mpumalanga Division of the High Court, Middelburg (Mphahlele
DJP and Langa and Vukeya JJ, sitting as the court of appeal):
The appeal is struck from the roll.
JUDGMENT
Unterhalter AJA (Ponnan ADP, Meyer and Weiner JJA and Nhlangulela AJA
concurring):
Introduction
[1] The respondents instituted an action against the appellant in the Mpumalanga
Division of the High Court, Middelburg (the high court). I will refer to the parties as
they are cited in the action. The plaintiffs (the respondents in this appeal) are
shareholders of the defendant (the appellant). The plaintiffs made the following
averments (salient for our purposes) in their particulars of claim:
(i) On or about 7 January 2019, the defendant gave notice to its shareholders of an
annual general meeting;
(ii) Notice was given of proposed special resolutions to amend the original
Memorandum of Incorporation (MOI);
(iii) On 5 February 2019, the defendant adopted the resolutions to amend the MOI;
(iv) As a result, the plaintiffs became related parties in terms of the amended MOI;
(v) This materially and adversely affected the preferences, rights, limitations, and
other terms of the plaintiffs’ shares;
(vi) After complying with the formalities required by s 164 of the Companies Act
71 of 2008 (the Companies Act), the plaintiffs demanded that the defendant pay the
fair value of the plaintiffs’ shares in the defendant, being the fair value as at the date
immediately prior to the adoption of the amended MOI;
(vii) The defendant declined to do so;
(viii) The plaintiffs sought payment from the defendant of R120.00 per share held
by the plaintiffs, alternatively, a determination of the fair value of the plaintiffs’
shares and payment of the value so determined.
[2] The plaintiffs’ cause of action is based on appraisal rights, a remedy
introduced into our company law in terms of s 164 read with s 37(8) of the
Companies Act. I refer to this cause of action as ‘the appraisal remedy’.
[3] The defendant gave notice to the plaintiffs to remove its cause of complaint
concerning the plaintiffs’ cause of action. The plaintiffs amended their particulars of
claim in response to the defendant’s notice. The defendant was not content. It then
excepted to the plaintiffs’ amended particulars of claim.
[4] Two grounds of exception (relevant for our purposes) were taken by the
defendant. First, the defendant complained that there is no cause of action to secure
an appraisal remedy, unless the company has more than one class of shares. The
amended particulars of claim aver that the defendant has a single class of shares. The
amended particulars thus lack averments necessary to sustain an action. I refer to
this exception as ‘the class exception’.
[5] Second, the plaintiffs’ claim is based on the averment that the adoption of the
amended MOI caused the plaintiffs to become related to each other. The defendant
styles this ‘the Deemed Relatedness’. The Deemed Relatedness, the defendant
complains, does not have a material and adverse effect on the preferences, rights,
limitations, interests and other terms of the shares in the defendant, but, at worst,
upon the persons who happen to own those shares. On this ground also, the amended
particulars of claim are said by the defendant to lack averments necessary to sustain
a cause of action because the appraisal remedy requires a material and adverse effect
on the shares, and not merely upon the persons who own those shares. I refer to this
exception as ‘the relatedness exception’.
[6] Van Rensburg AJ in the high court upheld the exceptions. The plaintiffs, with
the leave of the high court, appealed to the full court of the Mpumalanga Division
of the High Court, Middelburg, per Langa J with Vukeya J and Mphahlele DJP (the
full court). The full court upheld the appeal and dismissed both the class exception
and the relatedness exception. With special leave, the defendant appeals to this
Court. The fact that leave to appeal has been granted upon application to the
President of this Court is not decisive of whether a case meets the criteria for special
leave.1 It still remains for us to consider whether we should entertain the appeal at
all.2
Appealability
[7] Before the full court, it was not contentious that the plaintiffs were entitled to
appeal the orders of the high court. The high court upheld both the class exception
1 See Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A) at 561E-F.
2 National Union of Mineworkers and Another v Samancor Ltd (Tubatse Ferrochrome) and Others [2011] ZASCA
74; [2011] 11 BLLR 1041 (SCA); (2011) 32 ILJ 1618 (SCA) para 15.
and the relatedness exception. It has long been our law that where an exception is
granted on the basis that a plaintiff’s particulars of claim fail to disclose a cause of
action, and ‘the order is fatal to the claim as pleaded and therefore final in its effect’,3
such an order is appealable. The class exception and the relatedness exception strike
at the validity of the plaintiffs’ claim. Absent an appeal, the high court had spoken
the final word on these matters, and the plaintiffs could not further pursue their claim
for an appraisal remedy, as pleaded. The full court correctly found that the class
exception and the relatedness exception were appealable. The full court, having
entertained the appeal, then reversed the high court’s order, and dismissed the
exceptions.
[8] Before this Court, the question is different. It is this: Is the full court’s order
dismissing the exceptions appealable to this Court? The parties were requested to
consider this question and to file supplementary heads of argument, more especially
in the light of the holding of this Court in Maize Board.4 This they did.
[9] A long line of cases, stretching back to Blaauwbosch,5 has consistently held,
save in very limited circumstances, that the dismissal of an exception is not
appealable. The basis of this holding is that such an order is not final in effect
because there is nothing to prevent the same law points being argued at the trial. As
Innes CJ put the matter, ‘. . . though the Court is hardly likely to change its mind
there is no legal obstacle to its doing so upon a consideration of fresh argument and
further authority’.6
3 Trope and Others v South African Reserve Bank [1993] 2 All SA 278 (A); 1993 (3) SA 264 (A) at 270G, citing
Liquidators, Myburgh, Krone & Co Ltd v Standard Bank of South Africa Ltd and Another 1924 AD 226 at 229.
4 Maize Board v Tiger Oats Ltd and Others [2002] 3 All SA 593 (A); 2002 (5) SA 365 (SCA).
5 Blaauwbosch Diamonds Ltd v Union Government (Minister of Finance) 1915 AD 599 at 601.
6 Idem.
[10] The issue was considered again by this Court in Maize Board. It affirmed the
position in our law. It framed the principle thus:
‘In the light of this Court’s interpretation of s 20, the decisions in Blaauwbosch, Wellington and
Kett, and the well-established principle that this Court will not readily depart from its previous
decisions, it now has to be accepted that a dismissal of an exception (save an exception to the
jurisdiction of the court), presented and argued as nothing other than an exception, does not finally
dispose of the issue raised by the exception, and is not appealable. Such acceptance would on the
present state of the law and the jurisprudence of this Court create certainty and accordingly be in
the best interests of litigating parties.’7
Maize Board has been followed in a long line of cases.8
[11] Faced with this authority of considerable pedigree, counsel for the defendant
made the following submissions. First, Maize Board recognised that the rule it
affirmed was not immutable. That recognition was enhanced by the dictum in Really
Useful Investments.9 There, the following appears, ‘[w]here it is incontrovertible on
the papers that the effect of the exception is, so to speak, the last word on the subject,
the dismissal of an exception is appealable’.10
[12] Second, it was submitted that the holding in Maize Board was closely
connected to the distinction in s 20 of the Supreme Court Act 59 of 1959 between a
judgment or order that was appealable, and a ruling, that was not. There were three
attributes of a judgment or order, authoritatively stated in Zweni:11 final in effect and
not susceptible of alteration by the court of first instance; definitive of the rights of
the parties, that is, the order must grant definitive and distinct relief; and, the order
7 Maize Board para 14.
8 See Itzikowitz v Absa Bank Ltd [2016] ZASCA 43; 2016 (4) SA 432 (SCA) para 22.
9 Minister of Water and Environmental Affairs and Another v Really Useful Investments No 219 (Pty) Ltd [2016]
ZASCA 156; [2017] 1 All SA 14 (SCA); 2017 (1) SA 505 (SCA) para 2.
10 Idem.
11 Zweni v Minister of Law and Order [1993] 1 All SA 365 (A); 1993 (1) SA 523 (A).
must have the effect of disposing of at least a substantial portion of the relief claimed
in the main proceedings. However, so it was argued, the Zweni trinity was subject to
relaxation by recourse to the interests of justice, even when the Supreme Court Act
was in force.12
[13] Third, that appealability is ultimately decided by recourse to the interests of
justice has gained ascendency by reason of s 18(2) of the Superior Courts Act 10 of
2013, which recognises that an interlocutory order may be the subject of an appeal.
This statutory endorsement has been reinforced by recent decisions of this Court. In
Gun Owners,13 it was said that the Zweni test has been subsumed under the ‘broader
constitutional “interests of justice” standard. What the interests of justice require
depends on the facts of a particular case. This standard applies both to appealability
and the grant of leave to appeal, no matter what pre-Constitution common law
impediments might exist’.14 Gun Owners was an appeal against the grant of an
urgent interim interdict, and its holding on appealability is, the defendant argues, of
a piece with the jurisprudence of the Constitutional Court.15 In sum, the lineage of
the rule from Blaauwbosch to Maize Board, though based on considerations that
remain relevant, must ultimately yield to the overarching criterion of the interests of
justice.
[14] Fourth, applying the test for appealability, so understood, five reasons support
the conclusion that the dismissal of the exceptions by the full court is appealable.
12 Philani-Ma-Afrika and Others v Mailula and Others [2009] ZASCA 115; [2010] 1 All SA 459 (SCA); 2010 (2) SA
573 (SCA) para 20.
13 National Commissioner of Police and Another v Gun Owners of South Africa [2020] ZASCA 88; [2020] 4 All SA
1 (SCA); 2020 (6) SA 69 (SCA) para 15.
14 Idem.
15 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012 (11)
BCLR 1148 (CC); 2012 (6) SA 223 (CC); City of Tshwane Metropolitan Municipality v Afriforum and Another [2016]
ZACC 19; 2016 (9) BCLR 1133 (CC); 2016 (6) SA 279 (CC).
The first reason is that the exceptions turn on a proper interpretation of the
Companies Act. No evidence led at trial will change the interpretation of the relevant
provisions of the Companies Act given by the full court.
[15] The second reason is that the trial judge is bound by the interpretation given
by the full court to s 164 of the Companies Act. The decision of the full court may
not render the matter res judicata, but adherence to precedent requires the trial judge
to follow the full court. The full court has decided the points of law, and the trial
before a single judge would thus be a costly, but empty exercise. The better course,
in the interests of justice, is for this Court to entertain the appeal, and determine the
law, since we are not bound to follow the full court.
[16] The third reason, following the reasoning of the Constitutional Court in
Khumalo,16 is that if the appeal were to succeed, it is likely to be determinative of
the case. It is unlikely that the plaintiffs would be able to reformulate their case
should the class exception and the relatedness exception prevail.
[17] The fourth reason is that the appraisal remedy is a novel aspect of our
company law. It has yet to enjoy an authoritative interpretation by this Court. The
public interest would be served if this Court were to do so.
[18] Finally, it is said that the defendant has prospects of success on the merits of
its exceptions. Its arguments in support of this contention are set out in its heads of
argument and were further developed in oral argument before us.
16 Khumalo and Others v Holomisa 2002 (5) SA 401 (CC); 2002 (8) BCLR 771 (CC) para 11.
[19] I commence with the following question: should this Court determine whether
a decision of the high court or a full court is appealable by recourse to the
overarching principle of the interests of justice? We were urged to do so for two
reasons. First, because the interests of justice figure so prominently in the
Constitutional Court’s consideration of when it will entertain an appeal, and the
adoption by this Court of the principle would lend coherence to the basis upon which
a litigant may ascend the judicial hierarchy. Second, there are decisions of this Court,
to which I have referred, that have adopted the interests of justice as the ultimate
norm that determines whether a decision is appealable to this Court.
[20] I appreciate the normative attraction of the interests of justice, and the place
that it has in the Constitution by recourse to which the Constitutional Court decides
whether it will hear an appeal. Who would not want decisions to be taken in the
interests of justice? The question would seem to answer itself. But we should not
lose sight of the founding provisions of the Constitution. Ours is one, sovereign,
democratic state founded upon values set out in s 1 of the Constitution. These values
include the supremacy of the Constitution and the rule of law. The rule of law
requires that the law is ascertainable and meets reasonable standards of certainty.
This means that the courts should be cautious to adopt standards for their decisions
so porous that a litigant cannot be advised, with any reasonable probability, as to the
decision that a court is likely to make.
[21] Whether the decision of a court is appealable is a matter of great importance,
both for litigants and for the discharge by an appellate court of its institutional
functions. That is why the doctrine of finality has figured so prominently in the
jurisprudence of this Court. As a general principle, the high court should bring
finality to the matter before it, in the sense laid down in Zweni. Only then should the
matter be capable of being appealed to this Court. It allows for the orderly use of the
capacity of this Court to hear appeals that warrant its attention. It prevents piecemeal
appeals that are often costly and delay the resolution of matters before the high court.
It reinforces the duty of the high court to bring matters to an expeditious, and final,
conclusion. And it provides criteria so that litigants can determine, with tolerable
certainty, whether a matter is appealable. These are the hallmarks of what the rule
of law requires.
[22] I do not consider the Superior Courts Act to have supplanted the primacy of
Zweni. Section 16 of the Superior Courts Act is cast in general terms: ‘an appeal
against any decision of a Division as a court of first instance lies, upon leave having
been granted’ to either this Court or a full court, as regulated by s 16, read with s
17(6). Any decision is not every decision. Section 16 determines to which court an
appeal lies. It does not define the class of decisions that can be appealed. That is left
open, hence the language of ‘any decision’. This Court decides when a decision is
appealable.
[23] Section 16 of the Superior Courts Act is entirely consistent with the powers
of this Court as set out in s 168 of the Constitution. Section 168(3)(a) of the
Constitution provides that this Court may decide appeals ‘in any matter arising from
the High Court of South Africa or a court of a status similar to the High Court’. The
jurisdiction of this Court is then limited in certain respects. Section 168(3)(b)
demarcates the jurisdiction of this Court. It reads thus: ‘The Supreme Court of
Appeal may decide only – (i) appeals; (ii) issues connected with appeals; and (iii)
any other matter that may be referred to it in circumstances defined by an Act of
Parliament’. Here too, one does not have direct recourse to the Constitution to
determine which of ‘any matter arising’ should be considered appealable.
[24] The defendant referenced s 18(2) of the Superior Courts Act. It does
contemplate that an interlocutory order not having the effect of a final judgment may
be the subject of an appeal. Section 18 regulates the suspension of decisions pending
an appeal. The scheme of s 18 is simply to allow for different suspension regimes
of application to decisions and interlocutory orders. The provision has nothing to say
about when an interlocutory order might be appealable. Only that if such an order is
sought to be appealed or leave has been given (rightly or wrongly), s 18(2) is the
regime of application to the suspension of the order. Section 18 does not overturn
this Court’s jurisprudence as to when a decision is appealable. Nor does it enthrone
the interests of justice as the overarching principle to decide when a matter is
appealable.
[25] I recognise that there is thought to be a compelling basis to render this Court’s
approach to appealability consistent with that of the Constitutional Court. And hence
to recognise the interests of justice as the ultimate criterion by reference to which
appealability is decided. I consider this to be a misreading of the Constitution.
Section 167 of the Constitution constituted the Constitutional Court as the highest
court. Section 167(3) sets out matters that the Constitutional Court may, and is thus
competent, to decide. The Constitutional Court may decide constitutional matters.
This competence was extended, by constitutional amendment, to any other matter,
but under the qualification that the Constitutional Court grants leave to appeal on the
grounds that the matter raises an arguable point of law of general public importance
which ought to be considered by that Court. The Constitution thereby states a
principle of appealability in respect of the Constitutional Court. The Constitution
does so also to allow a person to bring a matter directly to the Constitutional Court
or by way of direct appeal (s 167(6) of the Constitution). National legislation or the
rules of the Constitutional Court must allow a person to do so in the interests of
justice and with the leave of Constitutional Court.
[26] I draw attention to these provisions because the Constitution gives specific
treatment to principles that govern appealability to the Constitutional Court. Those
principles frame what the Constitutional Court may do, and it is for that Court to
decide how these principles are to be applied. The Constitutional Court has
developed a sizeable jurisprudence to that end. The interests of justice, as the
touchstone of the Constitutional Court’s doctrine of appealability, has an
institutional justification. The Constitutional Court, as the apex court, needs a highly
selective, but flexible, criterion to decide which matters warrant its attention. To
discharge its functions as an apex court, the Constitutional Court depends upon this
Court carrying out its functions in an orderly fashion. This means that, in general,
finality should be brought to decisions that ascend the court hierarchy, so that the
Constitutional Court can be highly selective in deciding upon the matters that should
be heard by it.
[27] To adopt the interests of justice as the foundational basis upon which this
Court decides whether to entertain an appeal would put in place a regime that is both
unpredictable and open-ended. It would encourage litigants to persuade the high
courts to grant leave, when they still have work to do, failing which, to invite this
Court to hear an appeal under the guidance of a standard of commanding
imprecision. That would diminish certainty and enhance dysfunction. It would also
compromise the freedom with which the Constitutional Court selects the matters it
hears from this Court.
[28] Furthermore, there is no constitutional requirement of congruence with the
Constitutional Court on questions of appealability, nor does such congruence
between this Court and the Constitutional Court have ineluctable institutional value.
[29] Nor, in my view, is it always necessary that there be such congruence. This
Court must determine how best it can discharge its constitutional mandate as a court
of appeal. One important aspect of that determination is how best this Court may
exercise its appellate functions in relation to the decisions of the courts from which
appeals lie. For reasons I have explained in paragraph 20, the doctrine of finality, as
articulated in Zweni, is central to a principled conception of when a matter may be
appealed to this Court. That, in turn, permits this Court to discharge its appellate
functions to allow the apex court the required freedom to act as a final court of appeal
in carefully selected matters.
[30] Even if this is so as a matter of principle, as the defendant’s counsel reminded
us, a number of decisions of this Court have been willing, with different degrees of
separation, to part from Zweni, or subsume Zweni under the capacious remit of the
interests of justice. I do not here essay a general account of appealability. I do affirm,
though, that the doctrine of finality must figure as the central principle of
consideration when deciding whether a matter is appealable to this Court. Different
types of matters arising from the high court may (I put it no higher normatively)
warrant some measure of appreciation that goes beyond Zweni or may require an
exception to its precepts. Any deviation should be clearly defined and justified to
provide ascertainable standards consistent with the rule of law. Recent decisions of
this Court that may have been tempted into the general orbit of the interests of justice
should now be approached with the gravitational pull of Zweni.
[31] We are here concerned with a particular matter: the dismissal of two grounds
of exception that go to the heart of the plaintiffs’ cause of action. Applying the
doctrine of finality, as I have sought to explain, a long line of authority in this Court
has held that the dismissal of an exception is not appealable because no legal obstacle
stands in the way of the trial court finally deciding the point of law. The dismissal
of an exception is simply not a final decision, and until the matter is finally decided,
an appeal should not lie to this Court to pre-empt what the high court has yet to bring
to finality.
[32] There are principled considerations which support this position. First, this
Court owes a duty of comity to the high court. The high court, having dismissed an
exception, has not pronounced its last word on the subject. What the high court has
decided may be right or wrong. But under the exception procedure, the high court
may yet correct itself or confirm its decision on exception. This Court should respect
that process.
[33] Second, if, at trial, the high court confirms its view of the law, it will do so
after further consideration of the matter, and perhaps, with further reasoning. This is
of benefit to this Court, if the matter then comes on appeal. If the trial court should
be persuaded that the points of law raised by the defendant are good, and the cause
of action is bad, then the high court will have corrected itself, without intervention
by this Court. That may or may not cause the plaintiffs to seek leave to appeal. But
should the matter come on appeal, this Court will then enjoy the benefit of two
judgments of the high court. The one dismissing the exception, the other of the trial
court giving a final judgment dismissing the action. That too is of assistance to this
Court.
[34] Third, awaiting the final judgment of the trial court has benefits for the
litigants. Sometimes, a true exception on a point of law may dispose of the matter,
if the exception is good. Often, however, there are other issues that must go to trial.
An exception brings the further exchange of pleadings to a halt. An appeal upon the
dismissal of an exception adds to the delay. If the dismissal of the exception is not
appealable, the litigant who has prevailed in having the exception dismissed by the
high court may then re-engage the process to bring the matter to trial on all the issues.
That is greatly to their benefit.
[35] It is also of systemic benefit. Delay atrophies due process. There is value in
moving the process forward to trial, and securing a final judgment on all the issues.
That allows for an orderly appeal process, with all the issues having crystallised
before coming to this Court, should the matter be appealed. But even the litigant who
has not prevailed before the high court on exception, in my example, secures some
benefit. The matter is finally decided on all issues, including those that would have
had to go to trial, whatever the fate of the exception.
[36] Fourth, the exception procedure can be very helpful, most especially to test
whether a cause of action or defence is sustainable as a matter of law. If it is not, to
resolve the dispute or some significant part of it, at an early stage of the proceedings,
has much utility. That utility generally diminishes if the dismissal of an exception
were to be appealable. As I have observed, the appeal stays the further progress of
the matter to trial. If the appeal court upholds the exception and that brings an end
to the litigation, that is plainly advantageous. But there are other outcomes that come
into the calculus. Engaging the appellate hierarchy on a point of law takes much
time, at no small cost. If the point of law is important, as in the present case, there
may be three appeal courts that consider the matter. If ultimately the exception is
dismissed, the law will be clear, but that may well be to the detriment of the parties
because the trial will have been long delayed, with many of the well-known risks
that can arise as to the availability of witnesses and their ability to recall distant
events. In many cases, the exception, even if ultimately successful, does not dispose
of the case. The trial will have been delayed, and so too the final judgment to which
the parties are entitled. There is also the practical reality that much litigation settles
as the trial approaches, and the fine points of law that engage lawyers yield to
commercial practicality. The possibility of such a settlement may be preferable to a
lengthy process of appeal to decide an exception.
[37] There is a further consideration relevant to the calculation of utility. It is this.
The exception procedure permits a litigant an opportunity to test the pleadings at an
early stage before the high court. If the exception is dismissed, it is not the last
opportunity to test the questions of law in an economical way. The rules make
provision for the separation of issues or a stated case. It will then be for the trial court
to decide whether to proceed in this way. The trial court will be placed in a position
to do so, on the basis of a case where all the issues have been pleaded and the
questions of fact and law (and their inter-dependence) can be analysed.
[38] In sum, bringing the matter to trial, as quickly as possible, upon the dismissal
of an exception, has many advantages. They are advantages yielded by avoiding
piecemeal litigation. I do not overlook the proposition, pressed in argument, that an
authoritative decision by this Court on a point of law that disposes of the case is an
optimal outcome. Proceeding first to trial, in these circumstances, is a long and costly
detour to no end.
[39] I do not doubt that the postulated outcome is secured by an appeal from the
dismissal of an exception. However, the utility of such an appeal cannot be assessed
by recourse to its most favourable outcome. As I have observed, there are many other
permutations that result from a rule that would allow an appeal from the dismissal
of an exception. On balance, those outcomes do not favour the adoption of such a
rule. And hence, in my view, the wisdom of retaining the rule in Maize Board, and
the long line of authority which it reflects.
[40] This holding means that the dictum in Really Useful Investments, to which I
have referred, cannot stand. This Court was there willing, as best one can discern, to
entertain an appeal from the dismissal of an exception on the basis that the decision
of this Court would be ‘the last word’ in resolving the litigation. This has never been
a qualification to the rule in Maize Board. Nor should it be, and for two reasons.
First, this Court should not pronounce the last word on the exception until the high
court has done so. Second, this Court cannot know whether its decision will finally
resolve the litigation without deciding the exception. A decision on the merits of the
appeal cannot provide the basis to decide whether the dismissal of an exception is
appealable.
[41] In response to the conclusion that the rule in Maize Board should be retained,
there are two counter-arguments. The first is the proposition that if an appeal from
the dismissal of an exception may, on balance, sometimes be worthwhile and in other
cases not, it would be preferable to decide appealability on a case-by-case basis,
under the ultimate guidance of the interests of justice. For reasons I have explained,
I consider this approach to pose dangers to the rule of law and to be institutionally
inapt to the place of this Court in the appellate hierarchy. Law by rule is greatly to
be preferred to decision-making by impression, under the guidance of a norm of
great abstraction and porosity.
[42] The second proposition is more modest, but more robust. Granted that the
position adopted in Maize Board should generally and presumptively be of
application, why not allow a modest expansion of the carve-out already recognised
under the holding in Maize Board to allow the dismissal of an exception to be
appealed, where the exception turns on a question of law, and it is decisive of the
case or at least a substantial part of it. The plaintiffs and the defendant supported this
position, even if only as an alternative to more ambitious submissions as to
appealability.
[43] Maize Board does recognise a carve-out to the rule that the dismissal of an
exception is not appealable. An order dismissing an exception will be appealable
where the exception challenges the jurisdiction of the court. That is so for reasons
that were explained in Moch.17 Where the challenge concerns the jurisdiction of a
court, and hence the competence of a judge to hear the matter, the decision of the
court is considered definitive, and appealable. This is consistent with the principles
enunciated in Zweni because the decision as to jurisdiction is considered final. This
position is entirely justified because an error as to jurisdiction, if not subject to
appellate correction, would permit the court below to proceed with a matter when it
had no competence to do so, rendering what it did a nullity. That is plainly an
undesirable outcome. Furthermore, a challenge to jurisdiction is taken at the
commencement of proceedings. Until this challenge is finally resolved, a court
should not exercise coercive powers that compel compliance.
17 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) para 14.
[44] The dismissal of the defendant’s exceptions is not analogous. They rest upon
whether the appraisal remedy sought by the plaintiffs is sustainable. That, at best for
the defendant, turns upon questions of law that have nothing to do with the
competence of the trial court to hear the trial. Rather, the trial court can consider
again whether the dismissal of the exceptions was correct. The rationale of Maize
Board as to finality holds good.
[45] The parties, at least as to the class exception, nevertheless urge us to entertain
the appeal because they say that, if the class exception is good, the litigation will be
resolved in the defendant’s favour. That will bring certainty, and this has value to
the litigants.
[46] There may be postulated conditions under which a rule may be thought to
have less utility than would ordinarily be the case. That is no reason to make an
exception to the rule. If a point of law, finally decided on appeal, would dispose of
a case, the rule requiring that the trial court first consider the dismissal of the
exceptions may seem duplicative and wasteful. But the formulation of a rule as to
appealability cannot be determined on the prospective outcome of an appeal. The
points of law could be decided in the defendant’s favour. But they equally might not.
We cannot be invited to decide the point of law to determine whether the matter is
appealable. The rule as to appealability cannot be formulated on the strength of a
litigant’s conviction that their law point is good. Nor should the rule rest upon
whether the parties consider it to be useful to have the appellate court’s decision at
a particular point in the proceedings. The rule must rather capture when it is
institutionally advantageous for this Court to entertain an appeal. When an exception
has been dismissed that time has not come because the principle of finality, justified
by compelling reasons and high authority, has not been satisfied. The high court has
yet to render its final decision.
[47] There remains one further argument pressed by the defendant. The full court
dismissed the exceptions. If the exceptions are considered again by the trial court,
although the exceptions are not res judicata, the trial court would, on questions of
law, be bound by precedent to follow what the full court has decided. This renders
the application of the rule in Maize Board an empty exercise, justifying an exception
to the rule in this case. I shall reference this as ‘the problem of precedent’.
[48] There is some merit to this submission, at least in respect of the class
exception which turns entirely on a question of law. I am unpersuaded however that
this case warrants different treatment. The problem of precedent comes about
because leave to appeal the decision of the high court to uphold the exceptions was
granted to the full court. That was a misstep. The exceptions taken by the defendant
concern important questions of company law. Had leave to appeal been granted to
this Court, as sought by the parties, an authoritative answer would have been given
by this Court, and the problem of precedent would not have arisen. The high courts
will henceforth, in like circumstances, avoid the risk of the problem of precedent
arising. Once that is so, there is no warrant to fashion a carve-out from the rule in
Maize Board stated as an exception of general application.
[49] This then leaves the problem of precedent as a difficulty in this particular case.
We formulate rules and follow them because their aggregate value depends upon
their general application. This principle lies at the heart of the rule of law. If we are
willing to deviate from rules because, in a particular case, the rule has less utility,
the value of rules unravels. We end up in a world of special pleading – the very
antithesis of the rule of law. The invitation to make the problem of pleading in this
appeal a special case is to be declined, if it cannot be justified under some principled
and rule-bound category of deviation from the holding in Maize Board. I have not
found there to be such a category.
[50] There is some solace for the parties in this conclusion. First, the trial court,
even if bound by precedent, may take the opportunity, with the benefit of all the
facts, to offer its position on the law. The trial court may agree with the full court,
or it may indicate its disagreement, while still following precedent in the decision it
renders. That further consideration may have value should the matter ultimately
return to this Court. Second, while the class exception turns on a question of law, the
relatedness exception is more closely bound up with factual averments that have
been pleaded. Even if the relatedness exception is good, it is not plain that the
plaintiffs will not bring their ingenuity to bear to reformulate their case. The
advantage of the matter going to trial is that the plaintiffs must pin their colours to
the mast. They must take a view on the law and the facts they mean to prove. These
will then be decided at trial with finality.
Conclusion
[51] For these reasons, I find that the orders made by the full court do not meet the
requirements of appealability to this Court. As a result, despite special leave having
been granted by two judges of this Court, the appeal is not properly before this Court
and the appeal must be struck from the roll. The parties both sought to persuade us
that we should entertain the appeal, at least in respect of the class exception. In that
they have failed. It would thus be appropriate that each party bears its own costs of
the appeal.
[52] In the result, I make the following order:
The appeal is struck from the roll.
__________________________
D N UNTERHALTER
ACTING JUDGE OF APPEAL
Appearances
For the appellant:
A Cockrell SC and I Kentridge
Instructed by:
Cliffe Dekker Hofmeyr Inc, Sandton
McIntyre Van der Post, Bloemfontein
For the respondents:
B Swart SC and J Mÿburgh
Instructed by:
VDT Attorneys Inc, Pretoria
Lovius Block Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
5 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
TWK Agriculture Holdings (Pty) Ltd v Hoogveld Boerderybeleggings (Pty) Ltd and Others
(273/2022) [2023] ZASCA 63 (5 May 2023)
Today, the Supreme Court of Appeal (SCA) struck an appeal from the court roll. Each party
was required to pay their own legal costs.
The respondents had instituted an action against the appellant in the Mpumalanga Division of
the High Court, Middelburg (the high court). For reference purposes, the parties were referred
to in the appeal as they were cited in the action. The plaintiffs (the respondents in the appeal)
were shareholders of the defendant (the appellant).
The plaintiffs’ cause of action was based on appraisal rights (the appraisal remedy). The
defendant excepted to the plaintiffs’ particulars of claim. Two relevant grounds of exception
were taken by the defendant. First, the defendant complained that there was no cause of action
to secure an appraisal remedy, unless the company had more than one class of shares, however,
it was averred that the defendant had a single class of shares (the class exception). Second, the
defendant complained that the adoption of the amended memorandum of incorporation (MOI)
did not have a material and adverse effect on the preferences, rights, limitations, interests and
other terms of the shares in the defendant, but, at worst, upon the persons who happen to own
those shares. Thus, the particulars of claim were said by the defendant to lack averments
necessary to sustain a cause of action because the appraisal remedy required a material and
adverse effect on the shares, and not merely upon the persons who own those shares (the
relatedness exception).
The high court upheld the exceptions. The full court upheld the appeal to it and dismissed both
the class exception and the relatedness exception. With special leave, the defendant appealed
to the SCA.
Before the SCA the question was whether the full court’s order dismissing the exceptions was
appealable to the SCA.
The SCA considered notable precedent so as to settle the jurisprudence in regard to
appealability. The SCA found that in Maize Board v Tiger Oats Ltd and Others [2002] 3 All
SA 593 (A); 2002 (5) SA 365 (SCA), the position in our law was affirmed, whereby a long line
of cases, stretching back to Blaauwbosch Diamonds Ltd v Union Government (Minister of
Finance) 1915 AD 599 (A) had consistently held, save in very limited circumstances, that the
dismissal of an exception was not appealable. The basis of this holding was that such an order
was not final in effect because there was nothing to prevent the same law points being argued
at the trial. Maize Board has been followed in a long line of cases.
Yet, in National Commissioner of Police and Another v Gun Owners of South Africa [2020]
ZASCA 88; [2020] 4 All SA 1 (SCA); 2020 (6) SA 69 (SCA) it was held that the traditional
requirements that render an order appealable, namely that it was final in effect or dispositive
of a substantial part of the case, had now been subsumed under the broader constitutional
‘interests of justice’ standard. Thus, on this approach, the lineage of the rule from Blaauwbosch
to Maize Board, though based on considerations that remain relevant, must ultimately yield to
the overarching criterion of the interests of justice.
In order to decide a consistent approach to appealability, the SCA considered the following
question: should the SCA determine whether a decision of the high court or a full court was
appealable by recourse to the overarching principle of the interests of justice?
The SCA found that whether the decision of a court was appealable was a matter of great
importance, both for litigants and for the discharge by an appellate court of its institutional
functions. That was why the doctrine of finality had figured so prominently in the jurisprudence
of the SCA. As a general principle, the high court should bring finality to the matter before it.
Only then should the matter be capable of being appealed to the SCA. It allowed for the orderly
use of the capacity of the SCA to hear appeals that warrant its attention. It prevented piecemeal
appeals that were often costly and delay the resolution of matters before the high court. It
reinforced the duty of the high court to bring matters to an expeditious, and final, conclusion.
And it provided criteria so that litigants could determine, with tolerable certainty, whether a
matter was appealable. These were the hallmarks of what the rule of law required.
The SCA found further that to adopt the interests of justice as the foundational basis upon
which the SCA decided whether to entertain an appeal would put in place a regime that was
both unpredictable and open-ended. It would encourage litigants to persuade the high courts to
grant leave, when they still had work to do, failing which, to invite the SCA to hear an appeal
under the guidance of a standard of commanding imprecision. That would diminish certainty
and enhance dysfunction. It would also compromise the freedom with which the Constitutional
Court selected the matters it heard from the SCA.
Therefore, the SCA affirmed that the doctrine of finality had to figure as the central principle
of consideration when deciding whether a matter was appealable to it. The SCA accordingly
remarked that recent decisions of the SCA that may have been tempted into the general orbit
of the interests of justice should henceforth be approached with the gravitational pull of the
doctrine of finality.
In regard to the particular matter in the appeal, the SCA found that the class exception and the
relatedness exception struck at the validity of the plaintiffs’ claim. The dismissal of the two
grounds of exception went to the heart of the plaintiffs’ cause of action. Applying the doctrine
of finality, the SCA found that authority of considerable pedigree had held that the dismissal
of an exception was not appealable because no legal obstacle stood in the way of the trial court
finally deciding the point of law. The dismissal of an exception was simply not a final decision,
and until the matter was finally decided, an appeal should not lie to the SCA to pre-empt what
the high court had yet to bring to finality.
The SCA found further that there were principled considerations which supported this position.
In sum, bringing the matter to trial, as quickly as possible, upon the dismissal of an exception,
had many advantages. They were advantages yielded by avoiding piecemeal litigation.
Thus, the SCA held that the orders made by the full court did not meet the requirements of
appealability to the SCA. As a result, despite special leave having been granted, the appeal was
not properly before the SCA and the appeal had to be struck from the roll. The SCA held further
that since the parties both sought, and failed, to persuade the SCA that it should entertain the
appeal, it was appropriate that each party bore its own costs of the appeal.
~~~~ends~~~~
|
3130
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
CASE NO: 286/06
Not Reportable
In the matter between
MINISTER OF SAFETY AND SECURITY
Appellant
and
KHAYALETHU NDINISO Respondent
Coram:
STREICHER, NUGENT, LEWIS, COMBRINCK JJA, MUSI AJA
Heard:
15 MARCH 2007
Delivered:
27 MARCH 2007
Summary: Appeal against order for return of vehicle seized in terms of s 20 of Criminal Procedure Act 51 of
1977: report from an unidentified source that model of vehicle different from that registered is not sufficient to
ground a reasonable belief that a police officer would obtain a search warrant from a magistrate or judge:
appeal dismissed.
Neutral citation: This case may be cited as Minister of Safety and Security v Ndiniso
[2007] SCA 29 RSA
LEWIS JA
[1] The respondent, Mr Khayalethu Ndiniso, purchased a used Toyota Hilux vehicle
from a motor dealer for R34 000. He registered the vehicle first in the name of his father,
and on the latter’s death in 2002, in the name of his mother. In June 2004 Ndiniso lent the
vehicle to Mr Selby Halam who drove it to Tsolo in the Transkei. There the vehicle was
seized by the police on the basis that they suspected that it was stolen.
[2] In January 2005 Ndiniso brought an application against the appellant (the State) for
return of the vehicle. Charges against him (presumably for being in possession of a stolen
article) were withdrawn in March 2005. Petse J (in the High Court, Transkei) granted the
order sought, finding that the vehicle had not been lawfully seized in terms of s 20 of the
Criminal Procedure Act 51 of 1977. The State appeals against that decision to this court
with its leave.
[3] The basis for the seizure is set out in the answering affidavit of the police officer
who seized the vehicle in Tsolo, Mr S S Somana. He said that he saw the vehicle being
driven by Halam, whom Somana thought was too young to ‘own a vehicle’ and so he
suspected that there was something amiss. He radioed to the local police station and
asked that the vehicle registration be checked. He received a ‘report’ from an unidentified
person that the model of the vehicle that he enquired about was different from the model
appearing on the record of registration. He suspected, then, that the vehicle had been
stolen and might afford evidence of the commission of an offence. Accordingly he ‘seized’
the vehicle, believing that if he were to apply for a warrant for search and seizure it would
be granted to him, but that any delay caused by obtaining a warrant would defeat the
object of the search. The vehicle was kept at the police station while the ‘vehicle unit’
conducted investigations. It was not returned to Ndiniso, despite the withdrawal of
charges, hence the application.
[4] Section 20(b) of the Act provides that the State may seize an article ‘which may
afford evidence of the commission or suspected commission of an offence, whether within
the Republic or elsewhere’. Section 21 requires a search warrant for the seizure of articles:
a magistrate or judge is empowered under the section to issue such a warrant where it
appears from ‘information on oath that there are reasonable grounds for believing that any
such article is in the possession or under the control of or upon any person . . . within his
area of jurisdiction. . .’ (s 21(1)(a)).
[5] Section 20 must, however, be read with s 22 which deals with seizure without a
search warrant. Articles may be seized from a person without a warrant only if the person
concerned consents to the seizure, or, under s 22(b)(i) and (ii), where the police officer
believes, on ‘reasonable grounds’ that a search warrant will be issued to him in terms of s
21 and that the delay in obtaining a warrant would defeat the object of the search.
[6] The State argues that Somana believed that the vehicle driven by Halam was stolen
and that it could afford evidence of the commission of an offence. That belief, it contended,
was reasonably held because Somana had received a report from the police station that
the vehicle model did not match that on the registration document.
[7] A police officer may seize an article, without a warrant, only where he believes on
reasonable grounds that he would be able to satisfy a magistrate or judge that the vehicle
may afford evidence of the commission or suspected commission of an offence. The only
ground for such reasonable belief advanced by the State is that a report had been
received by Somana about the disparity between the model of the vehicle itself and that
reflected on the registration papers. The court below considered that this was insufficient
evidence to determine whether Somana’s belief that he would obtain a search warrant was
based on reasonable grounds.
[8] The real difficulty with the State’s case is that no evidence is proffered by it as to the
nature or the status of the ‘report’ made to Somana: there is no information provided by
the State as to who made the report; what the capacity and status of the person was;
where the information had been obtained or why it should be regarded as reliable. There is
a mere assertion that a report indicated that there was a difference between the model of
the vehicle seen by Somana and its description on the registration papers. Would that
satisfy the magistrate or judge apprised of an application for a search and seizure warrant
under s 21? I think not. No facts were advanced to justify a finding that Somana’s belief
was based on reasonable grounds.
[9] In the circumstances I consider that the vehicle was unlawfully seized: there was no
compliance with the provisions of ss 20 and 22 of the Act. Ndiniso is thus entitled to the
return of the vehicle.
[10] The appeal is dismissed with costs including those occasioned by the employment
of two counsel.
_____________
C H Lewis
Judge of Appeal
Concur:
Streicher JA
Nugent JA
Combrinck JA
Musi AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
PRESS RELEASE
27 March 2007
STATUS: Immediate
Minister of Safety and Security v Ndiniso
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 respondent’s motor vehicle was seized by the police in Tsolo, Transkei, on the basis that a police officer
had received a report that the vehicle model was different from that on the record of registration. The High
Court, Transkei ordered the return of the vehicle, holding that the seizure was unlawful.
The Supreme Court of Appeal today dismissed an appeal against the high court order. A police officer may
seize an article, without a warrant, only where he believes on reasonable grounds that he would be able to
satisfy a magistrate or judge that the vehicle may afford evidence of the commission or suspected
commission of an offence. The only ground for such reasonable belief advanced by the State was that a
report had been received by the police officer about the disparity between the model of the vehicle itself and
that reflected on the registration papers.
The report received by the police officer came from an unidentified source. The State had provided no
evidence as to the origin of the report or its reliability. The seizure of the vehicle thus did not comply with the
provisions of the Criminal Procedure Act. The SCA confirmed the order of the High Court that the vehicle be
returned to the respondent.
________
|
3670
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 775/2020
In the matter between:
LONWABO HLAKANYANE
APPELLANT
and
ZIYANDA HLAKANYANE
RESPONDENT
Neutral citation: Lonwabo Hlakanyane v Ziyanda Hlakanyane (775/2020) [2021]
ZASCA 130 (30 September 2021)
Coram:
MBHA, MOCUMIE, SCHIPPERS, GORVEN and HUGHES JJA
Heard: Appeal disposed of without the hearing of oral argument 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 via email, publication on the Supreme Court of Appeal website and
release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 30
September 2021.
Summary: Matrimonial Property Act 88 of 1984 – interpretation of s 18 – amount
received as non-patrimonial delictual damages prior to marriage in community of
property – part of the joint estate – not excluded by s 18(a) of the Act – appeal in terms
of s 19(a) of the Superior Courts Act 10 of 2013.
____________________________________________________________________
ORDER
____________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, Mthatha (Majiki and Jaji JJ
and Mababane AJ sitting as court of appeal):
The appeal is upheld with no order as to costs.
The order of the Eastern Cape Division of the High Court, Mthatha is set aside
and replaced with the following order:
‘2.1
The appeal is upheld with no order as to costs.
2.2
The investment of the respondent is to be included in the joint estate for the
purposes of division of the estate.’
____________________________________________________________________
JUDGMENT
____________________________________________________________________
Hughes JA (Mbha, Schippers and Gorven JJA concurring):
[1] This appeal concerns the interpretation and application of s 18(a) of the
Matrimonial Property Act 88 of 1984 (the Act). The parties were married in community
of property on 22 December 2015. In 2011, the respondent was involved in a motor
vehicle accident and was awarded non-patrimonial damages in the amount of
R800 000. She invested an amount of R550 000 with Standard Bank in an interest-
bearing account (the investment). The appellant contended that prior to the marriage
the respondent had made him aware of the investment.
[2] In these proceedings the parties agreed that the appeal may be disposed of
without an oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013.
Further, the respondent also sought condonation for the late filing of her heads of
argument, which was nine days overdue. There is no opposition from the appellant,
the period is not excessive and a reasonable explanation has been proffered.
Accordingly, the non-compliance is condoned.
[3] In 2018 the appellant instituted divorce proceedings in the Mthatha Regional
Court seeking a decree of divorce and division of the joint estate. The respondent in
her amended plea contended that the investment did not form part of the joint estate
and should be excluded as it constituted non-patrimonial damages received as a result
of a delict committed against her in terms of s 18(a) of the Act. Section 18(a) of the Act
states as follows:
‘Notwithstanding the fact that a spouse is married in community of property—
(a) any amount recovered by him or her by way of damages, other than damages for
patrimonial loss, by reason of a delict committed against him or her, does not fall into the joint
estate but becomes his or her separate property;
(b) he or she may recover from the other spouse damages in respect of bodily injuries suffered
by him or her and attributable either wholly or in part to the fault of that spouse and these
damages do not fall into the joint estate but become the separate property of the injured
spouse.’
[4] The respondent placed reliance on Van Den Berg v Van Den Berg.1 She
contended that the non-patrimonial damages received as a result of the motor vehicle
collision in 2011 were personal in nature and as such should be excluded from the joint
estate. Van Den Berg is not relevant to the determination of this matter as it dealt
primarily with the question of whether damages received by a spouse during the course
of a marriage in community of property were either contractual or delictual in nature.
That court reasoned:
‘The damages received by the defendant are of a personal nature. The purpose and objective is to take
care of the defendant during or throughout his disabled life. Should the Legislature have intended that
such damages form part of the joint estate, the purpose and objective of such payment would be
negated. It is, besides, fair and equitable to exclude the money from the joint estate notwithstanding the
ethos of a marriage in community of property.’ 2
[5] Upon conclusion of the divorce proceedings, the regional court ordered the
division of the joint estate, but excluded the investment from the division. The regional
court stated that the meaning of ‘married in community of property’ in s 18(a) of the Act
referred ‘to the stage when it has to be determined if that property will be included in
the joint estate’. That being the case, this would be at the stage of divorce as opposed
to when such damages accrued to a person, thus the investment would fall out of the
joint estate.
1 Van Den Berg v Van Den Berg 2003 (6) SA 229 (T).
2 Ibid para 12.
[6] Unhappy with the outcome in the regional court, the appellant appealed to the
Eastern Cape Division of the High Court, Mthatha (high court). The high court was split
two to one, the majority, Majiki and Jaji JJ, confirmed the regional court’s order
excluding the investment from the joint estate. It acknowledged that s 18(a) applied
only to a spouse injured after the conclusion of their marriage, but went on to state:
‘Still, I would not view the non-reference to the spouses who were injured and paid before their
marriage in community of property as an intentional exclusion. The failure to specifically
provide for them appears to be more of an omission than an exclusion.
Therefore, in the light of the fact that I find no exclusion of the class of people in the
respondent’s position, I would conclude that their personal injury [pay-out] too, should not form
part of the joint estate.’
[7] Mbabane AJ in a minority judgment concluded that s 18 ‘by its design, applies
where there is a joint estate. The concept of a joint estate comes into being on the date
of the marriage’. He understood that the object of the section was to protect spouses
and that the respondent had a choice to exclude the investment, one way of which was
by entering into a marriage out of community of property. Thus, when the parties were
married in community of property that investment formed part of the joint estate.
[8] The proper approach to the interpretation of a statute was recently restated in
C:SARS v United Manganese of Kalahari (Pty) Ltd:
‘It is an objective unitary process where consideration must be given to the language used in
the light of the ordinary rules of grammar and syntax; the context in which the provision
appears; the apparent purpose to which it is directed and the material known to those
responsible for its production. The approach is as applicable to taxing statutes as to any other
statute. The inevitable point of departure is the language used in the provision under
consideration.’3
[9] The context of s 18 must be read in its entirety, and apparent therefrom is the
plain language and words used. The section highlights that delictual damages received
by a spouse during the course of a marriage in community of property, which are non-
patrimonial in nature (s 18(a)); and damages for bodily injuries owing to the fault of
3 C:SARS v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16; 2020 (4) SA 428 (SCA) para 8.
one’s spouse in terms of s 18(b) must be excluded from the division of the joint estate
on divorce.
[10] The protection afforded by s 18(a) applies notwithstanding a marriage in
community of property. In such a case, damages recovered during such a marriage for
non-patrimonial loss becomes the property of the injured spouse and does not form
part of the joint estate. It does not apply to damages recovered prior to such a marriage.
Consequently, the damages attained by the respondent which were received before
the conclusion of the marriage between the parties were the property of the
respondent. On being married in community of property, the property of each party to
the marriage fell into the joint estate, inclusive of any damages for non-patrimonial
losses recovered prior to the marriage.
[11] Thus, the respondent’s contention that she was entitled to the protection
afforded by s 18(a) is misplaced, absent the adoption of a different matrimonial
property regime which excluded the investment by way, for example, of an antenuptial
contract. Therefore, the appeal must succeed.
[12] In the result the following order is granted:
The appeal is upheld with no order as to costs.
The order of the Eastern Cape Division of the High Court, Mthatha is set aside
and replaced with the following order:
‘2.1
The appeal is upheld with no order as to costs.
2.2
The investment of the respondent is to be included in the joint estate for the
purposes of division of the estate.’
__________________
W HUGHES
JUDGE OF APPEAL
Mocumie JA
[13] I have had the benefit of reading the judgment of Hughes JA in which my other
colleagues concur. However, I find myself in respectful disagreement with her
conclusion that the appeal ought to succeed on the basis that ‘the respondent’s
contention that she was entitled to the protection afforded by s 18(a) is misplaced,
absent the exclusion of the investment by way of an antenuptial contract.’
[14] The majority disagrees with the crux of the respondent’s plea. They are of the
view that ‘the non-patrimonial damages received as a result of the motor vehicle
collision in 2011 were personal in nature and as such should be excluded from the
division of the joint estate. Thus, the reliance on Van Den Berg v Van Den Berg.’4
However, they accept that ‘the damages [paid to] the respondent which were received
before the conclusion of the marriage [in community of property] between the parties
were the property of the respondent. They also hold the view that ‘on being married in
community of property, the property of each party to the marriage fell into the joint
estate.’ In addition, they hold that ‘Van Den Berg is not relevant to the determination
of this matter as it dealt primarily with the question of whether damages received by a
spouse during the course of a marriage in community of property were either
contractual or delictual in nature.’
[15] As the majority in this judgment has mentioned, the principles of interpretation
of statutes are trite.5 The Act does not define the word ‘damages’. The point of
departure must be the common cause fact which the majority judgment also
acknowledged that the damages were non-patrimonial and thus personal in nature. In
Van der Merwe v Road Accident Fund and Another,6 the Constitutional Court in
interpreting the word ‘damages’ stated that the notion of damages is best understood
not by its nature but by its purpose. The primary purpose of awarding damages is to
place, to the fullest possible extent, the injured party in the same position [they] would
4 Van Den Berg v Van Den Berg 2003 (6) SA 229 (T) para 12.
5 See para 8 above. This approach was endorsed recently by the Constitutional Court in Road Traffic
Management Corporation v Wymark Infotech Pty Ltd (440/2017) [2018] ZASCA 11 (6 March 2018).
6 Van der Merwe v Road Accident Fund and Another (CCT48/05) [2006] ZACC 4; 2006 (4) SA 230 (CC);
2006 (6) BCLR 682 (CC) (30 March 2006).
have been in, but for the wrongful conduct.7 The court in Van den Berg in defining the
nature of this category of damages stated as follows:
‘The damages received by the defendant are of a personal nature. The purpose and objective
is to take care of the defendant during or throughout his disabled life. Should the Legislature
have intended that such damages form part of the joint estate, the purpose and objective of
such payment would be negated. It is, besides, fair and equitable to exclude the money from
the joint estate notwithstanding the ethos of a marriage in community of property.’ 8
[16] Besides the fact that ‘this matter …dealt primarily with the question of whether
damages received by a spouse during the course of a marriage in community of
property were either contractual or delictual in nature…’ as the majority contends, the
damages the respondent received are exactly the same in nature and were awarded
for the same purpose as the damages Van der Merwe and Van den Berg dealt with.
From the time that the RAF awarded the respondent non-patrimonial damages, those
were ring-fenced for her personal use and for her personal injuries. The nature and
purpose of the damages could not be changed by the respondent entering into a
marriage in community of property. If these damages are ordinarily excluded from
being divided, it matters not when the respondent received them. In any event, as a
general rule, non-patrimonial damages are personal to a particular person, and are
therefore not divisible whether or not they are expressly excluded. Therefore, portions
of the settlement designated as ‘pain and suffering’ or ‘loss of consortium’ are not
divisible between the spouses. This is the same rule that applies to gifts and
inheritance – it is the spouse’s ‘personal property’ and not divisible.
[17] The other significant principle in interpretation the majority judgment lost sight
of is the aspect that deals with the context and the purpose for which the text or section
is intended for. The textual interpretation preferred by the majority does not assist in
resolving the issue in this matter as it undercuts the purpose of the section. The issue
requires a close examination of the relevant context and purpose of the section. Should
the Legislature have intended that such damages form part of the joint estate, the
purpose and objective of such payment would be negated.
7 Paragraph 37.
8 Van Den Berg v Van Den Berg 2003 (6) SA 229 (T) para 12.
[18] First, in my considered view, the judgment of the Constitutional Court in Van der
Merwe, laid the foundation upon which s 18 in its entirety should be interpreted. The
RAF contended that the applicant chose to marry in community of property and should
have been held to the proprietary consequences of her choice, therefore, respondent
waived the right to attack the validity of the laws.9 The Constitutional Court held that
the objective validity of a law is derived from the Constitution and not personal choice
or preference. It stated as follows:
‘Section 39(2) obliges courts to interpret legislation in a manner that promotes the spirit, purport
and objects of the Bill of Rights. And importantly, s 172(1) makes plain that when deciding a
constitutional matter within its power, a court must declare that any law that is inconsistent with
the Constitution is invalid to the extent of its inconsistency. Thus, the constitutional obligation
of a competent court to test the objective consistency or otherwise of a law against the
Constitution does not depend on and cannot be frustrated by the conduct of litigants or holders
of the rights in issue. Consequently, the submission that a waiver would, in the context of this
case, confer validity to a law that otherwise lacks a legitimate purpose, has no merit (Emphasis
added).’10
[19] In this case, even if ‘the validity of the law’ was not challenged, as the minority
of the full court held, which the majority in this Court seems to uphold, the approach
propounded in Van der Merwe means that this Court and so too the regional court and
the full court, is bound to interpret s 18 (a) in line with the dictates of s 39(2) of the
Constitution which binds courts when interpreting any legislation; by taking into
account the spirit and purport of the values underpinning the Constitution including s
9, the equality clause. To do otherwise would be unjust and inequitable.
[20] Second, the regional court correctly held that the division of the estate must be
determined at the time of the dissolution of the marriage, not when the marriage was
entered into. So, in my view, and in line with the interpretation I espouse above, as at
the time of the division of the joint estate the respondent was entitled to the same
protection which ‘a spouse in a marriage in community of property’ provided by s
18(1)(b). That RAF awarded the respondent the damages before her marriage in
9 The Van der Merwe case para 59.
10 Ibid at para 61.
community of property cannot be used to disadvantage her. The law cannot impose
such an interpretation of the joint estate on the parties as suggested by the majority.
[21] In conclusion, conscious of the role of courts in the determination of issues
before them and the responsibility to defer certain matters to the legislature, I would
be remiss if I do not state that this is an opportunity for the legislature to study this
judgment, and make express provision for this class of persons as the respondent in
this matter to avoid any confusion in the future.
[22] Finally, if s 39(2) is invoked, as it ought to be, this Court is bound to follow the
interpretation and logic propounded in Van der Berg and Van der Merwe. In the result,
I would find that the damages paid by RAF to the respondent for her non-
patrimonial/special damages meant for her personal use, before her marriage in
community of property, do not fall into the joint estate. The appeal ought not to
succeed.
BC MOCUMIE
JUDGE OF APPEAL
APPEARANCES
For appellant:
Z Z Matebese SC (with H Kelaotswe)
Instructed by:
Caps Pangwa & Associates, Mthatha
Bokwa Inc., Bloemfontein.
For respondent:
L L Sambudla (with Z Badli)
Instructed by:
Manitshana Tshozi Attorneys, Mthatha
Gcasamba 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:
30 September 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
Lonwabo Hlakanyane v Ziyanda Hlakanyane (775/2020) [2021] ZASCA 130 (30 September
2021)
___________________________________________________________________________
Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal by the
appellant, and set aside the order of the Eastern Cape Division of the High Court, Mthatha (high court).
The issue before the SCA concerned the interpretation and application of s 18(a) of the Matrimonial
Property Act 88 of 1984 (the Act), specifically whether an award of R800 000 in respect of non-
patrimonial damages formed part of the joint estate.
The parties were married in community of property on 22 December 2015. In 2011, the respondent was
involved in a motor vehicle accident and was awarded non-patrimonial damages in the amount of
R800 000. She invested an amount of R550 000 with Standard Bank in an interest-bearing account (the
investment). The appellant contended that prior to the marriage the respondent had made him aware
of the investment. In 2018 the appellant instituted divorce proceedings in the Mthatha Regional Court
seeking a decree of divorce and division of the joint estate. The respondent in her amended plea
contended that the investment did not form part of the joint estate and should be excluded as it
constituted non-patrimonial damages received as a result of a delict committed against her in terms of
s 18(a) of the Act. Upon conclusion of the divorce proceedings, the regional court ordered the division
of the joint estate, but excluded the investment from the division. The appellant appealed to the high
court. The high court was split two to one, the majority however confirmed the regional court’s order
and excluded the investment from the joint estate.
On appeal the SCA in a majority judgment held that the investment of the respondent was to be included
in the joint estate for the purposes of division of the estate. The SCA held further that the context of
s 18 must be read in its entirety, and apparent therefrom was the plain language and words used. The
section highlighted that delictual damages received by a spouse during the course of a marriage in
community of property, which were non-patrimonial in nature (s 18(a)); and damages for bodily injuries
owing to the fault of one’s spouse in terms of s 18(b) must be excluded from the division of the joint
estate on divorce. The SCA concluded that the protection afforded by s 18(a) applied notwithstanding
a marriage in community of property. In such a case, damages recovered during such a marriage for
non-patrimonial loss became the property of the injured spouse and did not form part of the joint estate.
It did not apply to damages recovered prior to such a marriage; and therefore it did form part of the joint
estate.
In a separate dissenting judgment it was held that the damages paid to the respondent for her non-
patrimonial/special damages meant for her personal use, before her marriage in community of property
did not fall into the joint estate and thus appeal ought not to succeed. There were no reasons for
restricting the reach of the section to the award of damages that were acquired before the marriage by
spouses who were married in community of property subsequent thereto. This interpretation would not
offend against the provisions of the Act as the date of such award was not expressly excluded in it.
|
2327
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 146/09
ABSA BANK LIMITED
Appellant
and
PIETER DE VILLIERS
First Respondent
THE MAGISTRATE FOR THE DISTRICT
Second Respondent
OF SIMON’S TOWN
________________________________________________________________
Neutral citation: Absa v De Villiers (146/09) [2009] ZASCA 140 (17 November
2009)
CORAM:
Navsa, Ponnan, Maya, Mhlantla JJA and Tshiqi AJA
HEARD:
5 November 2009
DELIVERED:
17 November 2009
CORRECTED:
SUMMARY:
Review of decision by Magistrate on the basis of gross
irregularity in the proceedings ─ contention that Magistrate’s mistaken
view of the law constituted such irregularity ─ held that decision not
susceptible to review.
________________________________________________________________
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
High Court, Cape Town reviewing a decision of a Magistrate.
(Full court).
The appeal is dismissed.
________________________________________________________________
JUDGMENT
________________________________________________________________
NAVSA JA (PONNAN, MAYA, MHLANTLA JJA and TSHIQI AJA concurring):
[1] During September 2007, the appellant, Absa Bank Limited (Absa), a
commercial bank, applied ex parte in the Magistrates’ Court for the district of
Simon’s Town for an order, the relevant parts of which are set out hereafter:
‘A
AN interim interdict be authorized which would prohibit the respondent to use the vehicle
[mentioned below];
B
THE Sheriff of this Honourable Court be authorized to attach, remove and to hand over to
the applicant for safe-keeping, the following goods, wherever it might be found: -
VEHICLE MAKE:
OPEL CORSA LITE 140i
…
REGISTRATION NUMBER:
CY126181
C
A Rule Nisi be issued in terms whereof the Respondent be called upon to provide
reasons, if any, before this Honourable Court on THURSDAY, 25th OCTOBER 2007 at 09h00: -
(a)
Why the attachment should not be made final;
(b)
Why the costs of this application shall not be paid as between attorney and client;
(c)
Why such alternative relief as may be just, not be granted.’
[2] Absa is the owner of the motor vehicle in question, which it had sold to the
first respondent, Mr Pieter de Villliers, in terms of an instalment sale agreement
as defined in the National Credit Act 34 of 2000 (the NCA).
[3] The instalment sale agreement had been concluded on 25 August 2006.
The material terms of the agreement are:
‘The Purchaser will:
2.1
Keep the Goods in the Purchaser’s possession, maintain them in good working condition
at the Purchaser’s own cost, not make the Goods available for use by another person or body.
…
2.5
Allow the Seller or the Seller’s agent reasonable opportunity to inspect the Goods.
…
4.
Notwithstanding delivery, ownership of the Goods shall not pass to the Purchaser until all
amounts owing under this agreement have been paid in full.
…
BREACH
10.1
The Purchaser will be in breach of this agreement if the Purchaser –
10.1.1 fails to make payment in terms of this agreement.
10.1.2 fails to comply with any other provision of this agreement.
…
10.3
In the event of any breach of this agreement, including 10.1.1 ... the Seller may, in
addition to any other remedies that it may have in terms of this agreement or at law:
10.3.1 terminate this agreement and/or
10.3.2 claim, at the Purchaser’s cost return and possession of the Goods, …
10.3.3 claim damages (which may include immediate payment of all arrear payments plus
finance charges thereon).’
[5] The first respondent defaulted in paying instalments. The amount in
arrears was alleged to be R6 980.59 and the total outstanding balance was said
to be R65 049.08.
[6] On 24 August 2007, Absa, purportedly acting in terms of s 129(1) (a) of
the NCA, gave written notice to Mr de Villiers of his default and informed him of
the arrears and outstanding balance as set out in the preceding paragraph. The
material part of the letter by Absa reads:
‘We have been instructed to demand from you, as we hereby do, payment of the aforesaid
amount within 10 days of delivery hereof.
Should you not be able to pay the arrears, you are requested to return the item in question to our
clients, but you will remain liable for the payment of all amounts owed to our clients after
realisation of the item.
Your attention is further drawn to the provisions of Section 129 of the National Credit Act, 34 of
2005, and this letter must be regarded as a notice in terms of the said section. You may refer the
credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or
ombud with jurisdiction, with the intent to resolve any dispute under the agreement or develop
and agree on a plan to bring the payments under the agreement, up to date.
We suggest that you give this matter your urgent attention.’
[7] The first respondent did not respond to the notice.
[8] In its affidavit in support of the ex parte application Absa stated that, Mr de
Villiers had given a number of undertakings to settle the arrears but failed to
adhere to them ‘while the [vehicle] is deteriorating and depreciating in value on a
daily basis as the respondent is using it and will continue to do so unless
interdicted and restrained from doing so’. Absa did not allege that the respondent
was in fact abusing the motor vehicle or was failing to maintain it in working
condition.
[9] In support of the application Absa relied on the affidavit of a manager in its
motor vehicle and asset finance department, who stated that during his lengthy
career he ‘frequently experienced’ that a purchaser would damage and/or neglect
goods intentionally pending the hearing of an application of which notice had
been given or would conceal the whereabouts of the vehicle.
[10] Although Absa alleged that the first respondent was in arrears and
therefore in breach of the instalment agreement, it did not state that it had
cancelled the agreement. Absa submitted that it was entitled to be placed in
possession of the motor vehicle in terms of the provisions of the NCA.
[11] The matter was heard by the second respondent, the Magistrate for the
district of Simon’s Town. He considered the affidavit on behalf of Absa to contain
only generalities but no pertinent factual information in relation to harm caused or
the potential of harm being caused to the vehicle. In the Magistrate’s view the
provisions of the NCA did not, in the circumstances of the present case, assist
Absa as a credit provider to regain possession, absent a cancellation of the
instalment agreement. He consequently dismissed the application.
[12] Absa was aggrieved. However, instead of appealing the decision as it was
entitled to, it chose, to apply to the Cape High Court for an order ‘reviewing,
setting aside and correcting [the Magistrate’s] decision to dismiss the applicant’s
application for an interdict.’
[13] In substantiation of its application Absa stated that the Magistrate’s
decision was reviewable on the grounds of a gross irregularity in the
proceedings, and further, on the basis that he had rejected admissible,
competent and available evidence. The evidence aspect does not appear to have
been persisted with in argument before the Cape High Court. Nor, rightly, was it
persisted in before us.
[14] As correctly observed by the Magistrate and the court below the
application was not for relief pendente lite but, was in fact, for a final order
authorising the attachment of the vehicle in question. Absa had not instituted an
action for cancellation of the agreement, nor was it alleged that it intended
instituting an action of any kind in relation to the vehicle.
[15] Properly analysed, Absa’s contention that proceedings in the Magistrates’
Court were reviewable on the grounds of a gross irregularity is based on the view
the Magistrate took of the provisions of the NCA in relation to its claim to be
placed in possession of the motor vehicle. The following two paragraphs of the
affidavit in support of Absa’s application demonstrate this:
‘20.
The procedure introduced by the National Credit Act is vastly different. Section 127(2) to
Section 127(9) which deal with the voluntary surrender of goods by a consumer is in terms of
Section 130(1) of the Act applicable to the procedure that applies subsequent to an attachment
order being made by a Court. As is evident from Section 127 as a whole and in particular the
provisions of Section 127(6)(b) and Section 127(8)(b) an instalment agreement is now terminated
in accordance with the provisions of the Act and the return of the asset is no longer dependant on
a prior cancellation of the instalment agreement.
…
22.
I therefore submit that the Second Respondent’s dismissal of the application on the
aforesaid basis constituted a gross irregularity that can be reviewed by this Honourable Court.’
[16] After making the unambiguous claim that the Magistrate’s decision to
dismiss its application was reviewable on the basis of a gross irregularity, thereby
bringing its review application squarely within the ambit of s 24(1)(c) of the
Supreme Court Act, Absa set out what it considered to be the Magistrate’s most
important reason for dismissing the application, thereby suggesting that it was
the most compelling basis for a review:
‘[18]
The most important reason being that the Applicant has failed to substantiate the bringing
of the application for the return of the vehicle whilst the application lacked an averment that the
agreement was cancelled and furthermore that the application was not accompanied by a
simultaneously issued summons in which a claim was made for the cancellation of the
agreement, the return of the motor vehicle and damages to be determined subsequent to the
attachment of the vehicle.’
[17] Probably because Absa considered the review application as a test case
for credit providers, a full court was constituted to hear the matter. The Cape
High Court (Fourie, Saldanha JJ and Madima AJ concurring) recorded in the first
line of the judgment that it was considering a ‘review application’. In the second
sentence of the judgment the following is stated:
‘In particular, it involves the interpretation of certain provisions of the NCA dealing with the
repossession of property that is the subject of an instalment agreement.’
[18] The court below did not pause to consider whether there was a proper
basis for review. Put differently, it did not consider whether the Magistrate’s
decision was indeed susceptible to review. The full court immediately went on to
consider the provisions of the NCA and the merits of Absa’s contentions in
relation thereto. The court below said the following in the penultimate paragraph
of its judgment:
‘[43]
I accordingly agree with the finding of second respondent that, absent a claim for the
cancellation of the instalment agreement, applicant was not entitled to a final order for the
attachment of the vehicle in terms of section 131 of the NCA. It accordingly follows that the
application for review cannot succeed. In view of my conclusion, it is not necessary to deal with
second respondent’s finding that the allegations in applicant’s founding affidavit fell short of what
is required for the granting of applications of this nature.’
[19] Because Absa proceeded by way of an ex parte application, the first
respondent was not party to the proceedings in the Magistrates’ Court and
despite having the review application served on him he did not take part in the
review proceedings nor was he represented before us.
Conclusions
[20] As far back as 1903 Innes CJ spelt out, with customary clarity, the
distinction between the review of proceedings of inferior courts, both civil and
criminal, and a review of the decisions of public bodies acting in furtherance of
statutory duties imposed on them.1
[21] At that time the grounds for the review of inferior courts were set out in the
Administration of Justice Proclamation. The mechanism to be employed in such
a review was indicated by the prevailing Rules of Court. The proceedings of an
inferior court could be reviewed on the basis of ‘grave irregularities or illegalities’
occurring during such proceedings.
1 Johannesburg Consolidated Investment Co v Johannesburg Town Council 1903 TS 111.
[22] Insofar as the second species of review was concerned, a public body
which disregarded provisions of a statute or was guilty of gross irregularity or
clear illegality in the performance of its duty was liable to have its decision
reviewed and set aside or corrected. A review of this kind was different from a
review of the decisions of inferior courts. The body being reviewed was not a
judicial one and the grounds upon which a review might be claimed were
‘somewhat wider than those which alone would justify a review of judicial
proceedings’.2
[23] Although a high court has overriding jurisdiction to prevent abuse of
process, it has inherent power to make orders furthering the administration of
justice only when a statute or rule of court is silent.3
[24] The constitutionalisation of administrative law has fundamentally altered
the basis of judicial review of administrative action. The enactment of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA) had the effect of adding
new kinds of administrative-law review to those available in the past. The
common-law grounds have become subsumed under the Constitution.4
[25] Importantly, PAJA which gives effect to administrative action that is lawful,
reasonable and procedurally fair as contemplated in the Constitution provides
bases on which ‘administrative action’ can be reviewed. Administrative action
does not include the judicial functions of a judicial officer of a court referred to in
s 166 of the Constitution, which includes the Magistrates’ Courts.5
2 Johannesburg Consolidated Investment Co op cit at pp 115-116.
3 Op cit at 116 and Western Bank Limited v Packery 1977 (3) SA 137 (T) at 142C-E; Sabena
Belgian World Airlines v Ver Elst and Another 1980 (2) SA 238 (W) at 242E-G and see
A C Cilliers, C Loots, HC Nel SC Herbstein & Van Winsen The Civil Practice of the High Courts
and the Supreme Court of Appeal of South Africa 5 ed (2009) Vol 2 at p1270.
4 Cora Hoexter Administrative Law in South Africa (2007); Cilliers et al op cit 1302; Telcordia
Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) 266 at para 60.
5 See definition of administrative action in s 1 of PAJA.
[26] Presently, the review of proceedings of inferior courts is provided for by
s 24 of the Supreme Court Act 59 of 1959, which sets out the grounds on which it
could be brought. Section 24(1)(c) lists ‘gross irregularity in the proceedings’ as
one such ground. A gross irregularity in civil proceedings in an inferior court
means an irregular act or omission by the presiding judicial officer in respect of
the proceedings, of so gross a nature that it was calculated to prejudice the
aggrieved litigant, on proof of which the court would set aside such proceedings,
unless it was satisfied that the litigant had in fact not suffered any prejudice.6 An
example of conduct justifying a review based on a gross irregularity in the
proceedings is where a judicial officer acts in a high-handed manner and
prevents a party from having its case heard.7
[27] As a rule, where the complaint is against the result of proceedings rather
than the method, the proper remedy is by way of appeal rather than review. Put
differently, if the motivation for having a judgment of an inferior court set aside is
that it came to the wrong conclusion on the facts or the law, the appropriate
procedure is by way of appeal.8
[28] Generally speaking, a bona fide mistake of law is not a ground for review.9
Sometimes, a mistake of law might qualify as a gross irregularity. In Goldfields
Investment Ltd and another v City Council of Johannesburg and another 1938
TPD 551 Schreiner J said the following (at 560-561):
‘The law, as stated in Ellis v Morgan (supra) has been accepted in subsequent cases, and the
passage which has been quoted from that case shows that it is not merely high-handed or
arbitrary conduct which is described as a gross irregularity; behaviour which is perfectly well-
intentioned and bona fide, though mistaken, may come under that description. The crucial
question is whether it prevented a fair trial of the issues. If it did prevent a fair trial of the issues
then it will amount to a gross irregularity. Many patent irregularities have this effect. And if from
the magistrate’s reasons it appears that his mind was not in a state to enable him to try the case
fairly this will amount to a latent gross irregularity. If, on the other hand, he merely comes to a
6 D E van Loggerenberg, P B J Farlam Erasmus Superior Court Practice (2009) A1-71.
7 For further examples see Cilliers et al op cit 1270 and Van Loggerenberg et al op cit A1-72.
8 Van Loggerenberg et al op cit A1-70A.
9 Loots et al at 1273 and the authorities there cited.
wrong decision owing to his having made a mistake on a point of law in relation to the merits, this
does not amount to gross irregularity. In matters relating to the merits the magistrate may err by
taking a wrong one of several possible views, or he may err by mistaking or misunderstanding the
point in issue. In the latter case it may be said that he is in a sense failing to address his mind to
the true point to be decided and therefore failing to afford the parties a fair trial. But that is not
necessarily the case. Where the point relates only to the merits of the case, it would be straining
the language to describe it as a gross irregularity or a denial of a fair trial. One would say that the
magistrate has decided the case fairly but has gone wrong on the law. But if the mistake leads to
the Court’s not merely missing or misunderstanding a point of law on the merits, but to its
misconceiving the whole nature of the inquiry, or of its duties in connection therewith, then it is in
accordance with the ordinary use of language to say that the losing party has not had a fair trial.’
[29] Counsel for Absa attempted to persuade us that the present case fell
within the latter class of case referred to at the end of the dictum set out in the
preceding paragraph. Before us counsel for Absa rightly conceded that the
conclusion reached by the Magistrate was tenable, but submitted that Absa’s
view was preferable and more compelling. For present purposes I discount
confirmation by the court below of the merits of the conclusion reached by the
magistrate. The court below was faced with a basis of review which it ought to
have scrutinised at the outset. It ought to have considered not just whether Absa
had provided a sustainable basis for review but also whether review was indeed
the appropriate remedy.
[30] That the Magistrate was correct in his view of the relevant provisions of
the NCA is, at the very least, arguable. For completeness, I record that both the
Magistrate and the court below considered the NCA not to be a model of
elegance and clarity ─ a view that appears at face value to be justifiable. The
Magistrate was concerned that Absa’s submissions in relation to the provisions of
the NCA militated against fundamental contractual principles.10 He considered
the relevant provisions of the NCA closely and came to the conclusion, that in the
circumstances referred to above, it did not provide a basis for Absa to reclaim
possession. Even if one were to assume, in Absa’s favour, that the Magistrate’s
10 See in this regard Mulder v Combined Motor Finance (Pty) Ltd 1981 (1) SA 428 (W).
view of the law is incorrect, this is certainly not a case where a judicial officer’s
view of the law is such as to amount to a gross irregularity.
[31] Perhaps even more fundamentally, the Magistrate was entitled to refuse to
entertain the application on the basis that, in effect, final relief was being sought
without the knowledge of the respondent, who was excluded on the flimsiest
basis. He was being denied an opportunity of presenting his case in relation to
the interpretation contended for by Absa. In Jordan and Another v Penmill
Investments CC and Another 1991 (2) SA 430 (E) the high court set aside a
decision of a magistrate on the basis of a gross irregularity which consisted of a
magistrate deciding to eject an occupant of a flat on application by the owner,
pending finalisation of the main action in which the legality of the ejectment was
to be considered. The magistrate had not provided reasons for doing so. There
was no averment by the owner that continued occupancy of the flat would have
caused damage to it or would in any way have frustrated his claim. The high
court observed that the very object of an interlocutory order is to freeze the
position until the court decides where the right in issue lies, whereas the order
under review had the effect not of preserving the position at the time of the
initiation of the action, but of changing the status quo in favour of the owner
without there being any justification for it. The Magistrate in the present case was
being asked to do exactly what the court in that case considered objectionable.
[32] To sum up: No sustainable basis was provided for a review on the basis of
a gross irregularity in the proceedings. The court below rightly refused the
application for review, but for the wrong reasons. The more appropriate order in
the court below should have been to strike the matter off the roll. However, there
is in effect, no difference. It is therefore not necessary to have the order of the
court below substituted. Considering that the matter was not opposed there is no
necessity for a costs order.
[33] The following order is made:
The appeal is dismissed.
_________________
M S NAVSA
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
P Coetsee SC
Instructed by
Sandenbergh Nel Haggard Bellville
Schoeman Maree Inc Bloemfontein
For Respondent:
No opposition
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
17 November 2009
Status:
Immediate
Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal
On 17 November 2009 the Supreme Court of Appeal handed down judgment
in Absa Bank Ltd v P de Villiers and another, in terms of which it dismissed an
appeal by Absa Bank against a judgment of the Cape High Court. That court
had refused an application brought by Absa for a review of a Magistrate’s
decision denying it the authority to repossess a motor vehicle it had sold to
the respondent, Mr Pieter de Villiers.
During September 2007 Absa had approached the Magistrates’ Court for the
district of Simon’s Town, ex parte, seeking an order that the vehicle it had sold
to Mr de Villiers be returned to it. At the time that it applied to court the
amount in arrears was said to be R6 980.59 and the total outstanding
R65 049.08.
Shortly before it applied to court, Absa had sent Mr de Villiers a letter,
informing him of the arrears and the outstanding balance. Payment was
demanded, alternatively, he was requested to return the vehicle voluntarily.
Mr de Villiers was informed, in terms of the provisions of the National Credit
Act 34 of 2005 (the NCA), of his right to refer the matter to a debt counsellor,
alternative dispute resolution agent, consumer court or ombud with
jurisdiction, with the intent to resolve any dispute under the agreement or
develop and agree on a plan to bring the payments under the agreement, up
to date.
Mr de Villiers did not respond to the notice, prompting Absa’s approach to
court, claiming that the provisions of the NCA entitled it to the return of the
motor vehicle. The Magistrate considered that, apart from generalised
comments, Absa had provided no acceptable proof that harm had been
caused to the vehicle or that it was likely that the vehicle would be damaged if
it remained in Mr de Villiers’ possession. The Magistrate considered the
provisions of the NCA and concluded that as Absa had not cancelled the
agreement it was not in the circumstances of the case entitled to the return of
the vehicle. He held that Absa’s reliance on the NCA was fallacious.
Aggrieved, Absa applied to the Cape High Court to review the decision of the
Magistrate on the basis of ‘a gross irregularity in the proceedings’ as
contemplated in s 24 of the Supreme Court Act 59 of 1959. The basis for the
review was no more than that the Magistrate’s view of the law was incorrect.
The Cape High Court, instead of concluding that no basis existed for the
review, went on to decide the merits of the case, confirming the Magistrate’s
conclusion and in essence, his reasoning.
This court held that the application for review should not have been
entertained at all as it lacked a jurisdictional foundation. Even assuming that
the Magistrate’s view of the law was incorrect, which is not at all clear, Absa’s
relief lay in an appeal and not by way of review. This court observed that
perhaps even more fundamentally, the Magistrate was entitled to refuse to
entertain the application on the basis that, in effect, final relief was being
sought without the knowledge of Mr de Villiers, who was excluded on the
flimsiest basis. He was being denied an opportunity of presenting his case in
relation to the interpretation contended for by Absa. Mr de Villiers was not
represented before the Cape High Court nor before us. The appeal was
accordingly dismissed without any order as to costs.
|
1291
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 204/09
In the matter between:
THE COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE
Appellant
and
FASCINATION WIGS (PTY) LTD
Respondent
Neutral citation:
CSARS v Fascination Wigs (204/09) [2010] ZASCA 06
(4 March 2010)
Coram:
HARMS DP, LEWIS and LEACH JJA, and THERON and
SERITI AJJA
Heard:
16 February 2010
Delivered
4 March 2010
Summary:
Tariff classification under Customs and Excise Act 91 of
1964: wefts imported for attachment to hair are not
prepared for making of a wig or the like and thus fall
under tariff heading 67.04 which covers finished items of
false hair.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from : North Gauteng High Court (Pretoria) (Prinsloo J sitting as
court of first instance):
1 The appeal is upheld with costs including those of two counsel.
2 The order of the high court is replaced with the following:
‘The applicant’s appeal in terms of s 47(9)(e) of the Customs and Excise
Act 91 of 1964 is dismissed with costs, including the employment of two
counsel’.
JUDGMENT
LEWIS JA ( Harms DP, Leach JA and Theron and Seriti AJJA concurring)
[1] At issue in this appeal is whether synthetic hair products imported by
the respondent, Fascination Wigs (Pty) Ltd (Fascination Wigs), are to be
classified as completed products for the purpose of levying customs duty on
them, or whether they fall under a tariff heading that attracts no customs duty.
Wigs, for example, are dutiable. Are wefts or weaves or braids?
[2] On 6 December 2005 the appellant, the Commissioner for the South
African Revenue Service (the Commissioner), acting in terms of s
47(9)(a)(i)(aa) of the Customs and Excise Act 91 of 1964, determined that
certain synthetic hair products imported by Fascination Wigs should be
classified under tariff heading 6704.19 of Part 1 of Schedule 1 to the Act.
Fascination Wigs appealed against that determination in terms of s 47(9)(e) of
the Act. The high court upheld the appeal, and the Commissioner appeals to
this court with the leave of the high court.
[3] Fascination Wigs imports a number of natural hair products and
synthetic or animal hair. Although initially the parties disputed the
classification of human hair imports as well as animal and synthetic hair, the
question of the human hair products was not pursued in the high court and we
are not concerned with it on appeal. The products in issue fall into two
classes: ‘weaves’ for integration into a person’s hair or for gluing on to a
scalp, and ‘braiding fibres’ for integration into hair by braiding (plaiting) it.
Weaves are also referred to as wefts. Indeed, the term weave is but the
American word for a weft. A weft, in general terms, comprises fibres woven or
stitched together. In the world of hairdressing, a weft comprises a number of
fibres (natural or acrylic) stitched together to form tufts. They are used in
making wigs or are attached to a person’s own hair by different processes.
[4] The essence of the dispute is whether the wefts in question, which are
attachable by braiding or weaving into a person’s natural hair, or gluing them
to the scalp, are to be classified, in broad terms, as items used for making up
a wig, or as completed or finished products. If they fall into the first category
they are not dutiable. In the second category they would attract duty.
Naturally, Fascination Wigs contends that they are items used in making up
wigs, or the like, and the Commissioner contends that they are completed
products that are not themselves changed in any way after importation, even
though a complex and time-consuming process may be required to attach
them to hair or to a head.
[5] The specific tariff categories in issue are in chapter 67 of Schedule 1 of
the Act. Fascination Wigs contends that the wefts are to be classified under
tariff heading 67.03, while the Commissioner has determined that they fall
under 67.04.
[6] The headings and relevant explanatory notes are as follows:
‘67.03 - Human hair, dressed, thinned, bleached or otherwise worked; wool or other
animal hair or other textile materials, prepared for use in making wigs or the like’ (my
emphasis).
The explanatory notes include the following (excluding references to human
hair):
‘This heading also includes wool, other animal hair (eg, the hair of the yak, angora or
Tibetan goat) and other textile materials (eg, man-made fibres), prepared for use in
making wigs and the like, or dolls’ hair. Products prepared for the above purposes
include, in particular:
(1) Articles consisting of a sliver, generally of wool or other animal hair, interlaced
on two parallel strings and having the appearance of a plait. These articles
(known as “crape”) are normally presented in long lengths and weigh about 1
kg.
(2) Waved (curled) slivers of textile fibres put up in small bundles each containing
a length of 14 to 15 m and weighing about 500g.
(3) “Wefts” consisting of man-made fibres dyed in the mass, folded in two to form
tufts which are bound together, at the folded ends, by a machine-made plait
of textile yarns approximately 2 mm wide. These “wefts” have the appearance
of a fringe in the length.’
67.04 – ‘Wigs, false beards, eyebrows and eyelashes, switches and the like, of
human or animal hair or of textile materials; articles of human hair not elsewhere
specified or included.
-Of synthetic textile materials:
6704.11 – Complete wigs
6704.19 – Other
6704.20 – Of human hair
6704.90 – Of other materials’
The explanatory notes state:
‘This heading covers:
(1) Made up articles of postiche of all kinds manufactured of human or animal
hair or of textile materials. These articles include wigs, beards, eyebrows and
eyelashes, switches, curls, chignons, moustaches and the like. They are
usually of high-class workmanship intended for use either as aids to personal
toilet or for professional work (eg, theatrical wigs).
. . . .’
[7] The principles applicable in determining whether articles fall under a
particular classification are well-settled. I shall not rehearse them, save to
refer to the basic principles briefly. In International Business Machines SA
(Pty) Ltd v Commissioner for Customs and Excise1 Nicholas AJA said:
'The process of classification
1 1985 (4) SA 852 (A) at 863F-H.
Classification as between headings is a three-stage process: first,
interpretation – the ascertainment of the meaning of the words used in the
headings (and relevant section and chapter notes) which may be relevant to the
classification of the goods concerned; second, consideration of the nature and
characteristics of those goods; and third, the selection of the heading which is
most appropriate to such goods.'
[8] A court must also have regard to the General Rules for the
Interpretation of the Harmonized System (the Brussels Notes),2 Rule 1 of
which states that 'for legal purposes, classification shall be determined
according to the terms of the headings and any relative section or chapter
notes and, provided such headings or notes do not otherwise require,
according to the following provisions'.
[9] The explanatory notes are guides to classification and interpretation. In
Secretary for Customs and Excise v Thomas Barlow & Sons Ltd3 Trollip JA
said that 'they are not worded with the linguistic precision usually
characteristic of statutory precepts; on the contrary they consist mainly of
discursive comment and illustrations'. On the general principles of
classification see too Commissioner for Customs and Excise v Capital Meats
CC (in liquidation);4 Lewis Stores (Pty) Ltd v Minister of Finance & another;5
CSARS v Komatsu Southern Africa (Pty) Ltd6 and CSARS v The Baking Tin
2 Section 47(8)(a) of the Act.
3 1970 (2) SA 660 (A) at 676C-D.
4 1999 (1) SA 570 (SCA) 573A-E.
5 65 (2003) SATC 172 para 8.
6 2007 (2) SA 157 (SCA) para 8.
(Pty) Ltd.7 These cases all affirm that when classifying imported goods one
must have regard to their objective characteristics at the time of importation.
[10] The parties accept that the essential difference between tariff headings
67.03 and 67.04 is that the former covers ‘products prepared for use’ in
making wigs or the like – that is, components of articles such as wigs,
hairpieces, switches, false eyebrows, beards and moustaches, whereas the
latter covers the complete articles. The components that are non-dutiable
have been processed or worked upon to a point where they can be used in
the making of articles of postiche, as referred to in the explanatory notes to
67.04. ‘Postiche’ means false hair. In the Shorter Oxford English Dictionary it
is defined, inter alia, as ‘an imitation substituted for the real thing’.8
[11] The Commissioner contends that the wefts or braids imported by
Fascination Wigs are complete articles. Nothing further need be done to them
for use. Fascination Wigs, on the other hand, maintains that the articles need
further working in order to constitute postiche. The fibres cannot simply be
attached to the head. They must be woven or braided onto a person’s hair, or
glued onto the scalp, with skill and expertise. The final appearance of the
false hair is like a wig – very different from the product as imported. And
counsel for Fascination Wigs argues that the conclusive words in the heading
of 67.03 are ‘prepared for use in making wigs or the like’ (my emphasis). The
contention is thus that when a skilled hairdresser attaches the fibres to a
7 2007 (6) SA 545 (SCA) paras 5 and 6.
8 Third ed 1988. The word does not appear in the 10th ed of the Concise Oxford English
Dictionary (2002).
person’s head he or she is preparing something like a wig and that the final
appearance is postiche.
[12] The argument is based on the evidence of hairdressers and wigmakers
that the process of attachment may be complex and time-consuming, and that
the finished work is like a wig. It is indeed so that the attached components –
the finished appearance – may look very different from the products as
imported. But the question remains whether the fibres in issue are ‘prepared
for use in making wigs or the like’. The Commissioner contends that they are
not: they are complete products which undergo no process themselves. They
are not used for making a wig or the like. The method of attachment, and the
skill and time required to weave or glue the fibres onto the person’s hair or
head, are irrelevant. A new product does not come into being.
[13] The Commissioner contends further that although the process of
attachment of the fibres (the braids and wefts) may be complex, the products
are similar in effect to the false curls, switches, chignons, eyebrows,
eyelashes, beards and moustaches referred to in 67.04. They are not
components of something else, and are not prepared for use in making
something like a wig.
[14] The high court found that the evidence of the manufacturer of the fibres
(Mr Chan Kwok Keung of Evergreen Products Factory Ltd (Evergreen) in
China) supported Fascination Wigs’ contention that the articles should fall
under 67.03: they were materials prepared for use in making wigs or the like.
[15] However, the evidence of Kueng, as argued by counsel for the
Commissioner, does not support that finding. He said (in a replying affidavit to
that of Ms Reinette Cremore for the Commissioner) that Fascination Wigs
imports single wefts, with a single line of stitching, comprising a plait.
Evergreen also manufactures, he stated, ‘wigs from both single and double
wefts’. The double wefts used to make wigs ‘are not similar to the double
wefts imported by the Applicant [Fascination Wigs]’.
[16] Keung continued:
‘The double wefts imported by the Applicant are stitched differently in that the
weft when doubled is not stitched directly on top of each other, it is stepped one
on up and one down. However, if Evergreen should ever use the double wefts
imported by the Applicant to make wigs, we would stitch the wefts directly on top
of each other, which in my opinion would give additional volume to the design of
the wig.
The double wefts made by Evergreen for the Applicant are specifically made
according to the Applicant’s preference, in that a single weft is folded over and
the weft is then sewed so that one weft is sewn above the other. Notwithstanding
the latter, I maintain that the product remains a weft and confirm that it is as
simple as picking the stitch to turn the double weft into a single weft.’
[17] Fascination Wigs relied heavily on the fact that explanatory note 3 to
heading 67.03 refers to and defines wefts, arguing that certain of the products
it imports fall within that definition. This begs the question. The wefts referred
to in the definition must still comply with the heading which requires that they
are prepared for use in making wigs and the like – which is not the case here.
In any event, the term weft on its own has no significance. Wefts are used to
make wigs, and are expressly referred to for such purpose in the explanatory
notes to 67.03, set out earlier.
[18] There is no reference to wefts in 67.04. But, as I have said, a weft is no
more than a collection of fibres woven or stitched together and may be folded
to form tufts. And it is not disputed that braids are also wefts. The question is
not whether wefts are referred to in the explanatory notes to tariff heading
64.04. It is whether, objectively, the wefts in issue – and not wefts in general –
are themselves complete and can be used without being changed or
processed in any way.
[19] Keung’s evidence was that if Fascination Wigs wished to use
Evergreen wefts for making up wigs, it would make a product that is different
from that which they actually do supply. The wefts that Evergreen supplied to
Fascination Wigs, and that are in question, are not, he said, suitable for
making wigs.
[20] Nor are these wefts actually used for making wigs. They are used as
attachments to a person’s hair or head, in the same way as are switches or
chignons. The complexity of the manner of attachment and the ultimate
appearance when the attachment is completed, does not change their
essential nature. That seems to me to be conclusive of the dispute. The
articles were correctly classified by the Commissioner as falling under tariff
heading 67.04.
[21] 1 The appeal is upheld with costs including those of two counsel.
2 The order of the high court is replaced with the following:
‘The applicant’s appeal in terms of s 47(9)(e) of the Customs and Excise
Act 91 of 1964 is dismissed with costs, including the employment of two
counsel’.
_______________
C H Lewis
Judge of Appeal
APPEARANCES
APPELLANTS:
A Meyer SC (with him I Enslin)
Instructed by State Attorney, Pretoria;
State Attorney, Bloemfontein.
RESPONDENTS:
C E Puckrin SC (with him I Ellis)
Instructed by Marlon Shevelew &
Associates, Cape Town;
Webbers, Bloemfontein.
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE
4 February 2010
STATUS: Immediate
CSARS v Fascination Wigs (204/09) [2010] ZASCA 6 (4 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
The Supreme Court of Appeal today upheld an appeal by the Commissioner
of the South African Revenue Services against a decision of the North
Gauteng High Court concerning the correct tariff classification for customs
duty purposes of synthetic fibres, stitched as wefts, and used to adorn hair.
The high court held that the particular products, imported from China, were
used in the making of wigs and were therefore not dutiable, not being finished
products. The SCA considered, however, that the wefts in question, which are
used to create the appearance of a wig by attaching them to a person’s own
hair or to the scalp, were not components of a wig, or the like, but finished
articles: the fact that expertise and time was needed to attach them to hair or
to a scalp did not entail that a new product was made when the final
appearance of a wig was achieved.
The SCA thus upheld the Commissioner’s contention that the particular wefts
should be classified under a tariff heading that attracts customs duty.
|
3824
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 225/2021
In the matter between:
OPEN HORIZON LTD
APPELLANT
and
CARNILINX (PTY) LTD
RESPONDENT
Neutral citation: Open Horizon Ltd v Carnilinx (Pty) Ltd (Case no 225/2021)
[2022] ZASCA 75 (26 May 2022)
Coram:
PONNAN,
ZONDI,
MAKGOKA
and
MABINDLA-
BOQWANA JJA and MEYER AJA
Heard:
18 May 2022
Delivered:
26 May 2022
Summary: Trade Marks Act 194 of 1993 – s 34(1)(a) – whether the various
ATLANTIC marks used by the respondent are confusingly or deceptively similar to
the appellant’s registered PACIFIC trade marks – whether respondent’s adoption
and use of the ATLANTIC marks amounts to unlawful competition.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Hughes J, sitting as
court of first instance):
The appeal is dismissed with costs, including those of two counsel.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Ponnan JA (Zondi, Makgoka and Mabindla-Boqwana JJA and Meyer AJA
concurring)
[1] This is an appeal against a judgment of the Gauteng Division of the High
Court, Pretoria (per Hughes J), dismissing with costs the appellant’s application in
terms of s 34(1)(a) of the Trade Marks Act 194 of 1993 (the Act), as also, for
interdictory relief based on unlawful competition.
[2] The appellant, Open Horizon Ltd, sought an order interdicting and restraining
the respondent, Carnilinx (Pty) Ltd, from infringing its PACIFIC trade marks, by
using the marks: ATLANTIC, ATLANTIC WAVE, ATLANTIC MENTHOL,
ATLANTIC BREEZE, ATLANTIC BLUE, ATLANTIC CORAL, ATLANTIC
APPLE CRUSH and ATLANTIC CHERRY CRUSH or any other marks so similar
thereto, as would likely cause deception or confusion in terms of s 34(1)(a) of the
Act.
[3] The appellant is the registered proprietor of various PACIFIC trade marks, the
earliest of which dates back to 5 November 2003. All of the marks are registered in
class 34, which covers, amongst others, tobacco and cigarettes. The respondent first
applied to register the trade mark, ATLANTIC, in respect of class 34 goods on 26
June 2012 under application no. 2012/17521. On 6 September 2016, the respondent
applied to register its ATLANTIC WAVE, ATLANTIC MENTHOL, ATLANTIC
BREEZE, ATLANTIC BLUE and ATLANTIC CORAL trade marks and thereafter,
on 31 August 2017, its ATLANTIC APPLE and ATLANTIC CHERRY trade marks.
[4] The rights acquired by the registration of a trade mark are infringed by the
commission of one or other of the acts referred to in s 34(1) of the Act (subject to
the exclusions referred to in s 34(2), which are not relevant for present purposes).
The appellant relies in this case upon subsection (a) of s 34(1) of the Act, which
provides:
‘The rights acquired by registration of a trade mark shall be infringed by the unauthorized use in
the course of trade in relation to goods or services in respect of which the trade mark is registered,
of an identical mark or of a mark so nearly resembling it as to be likely to deceive or cause
confusion.’
[5] The dispute in this case, insofar as it relates to subsection (a), is confined to
whether the respondent’s marks so nearly resemble the appellant’s registered trade
marks as to be likely to deceive or cause confusion. That requires a comparison of
the marks, in the circumstances in which they can be expected to be encountered, to
determine whether they so nearly resemble one another that a substantial number of
persons will probably be deceived into believing that the respondent’s goods
originate from or are connected with the proprietor of the appellant’s trade mark, or
at least be confused as to whether that is so.1 The approach to be adopted when
making that comparison, which is well-known and need not be repeated here, is set
out in Plascon-Evans Paints (TVL) Ltd v Van Riebeeck Paints (Pty) Ltd.2
[6] In a case like the present the likelihood (or otherwise) of deception or
confusion must be attributable to the resemblance (or otherwise) of the marks
themselves and not to extraneous matter.3 In Lucky Star Ltd v Lucky Brands (Pty)
Ltd and Others, this Court confirmed that in a trade mark infringement case, what is
required is an objective comparison between the registration and the infringing mark
actually being used. The enquiry is confined to the marks themselves and no regard
should be had to other features of the get-up or other indications of origin of the
goods as actually marketed by the parties.4 Similarities in the goods themselves or
in the form in which they are presented might form the basis for an action for
passing-off. And, although ‘passing off might have been a better horse to ride than
trade mark’5 in this case, that is not what is before us and, for present purposes, those
similarities must be disregarded.
[7] The appellant relies on the following registered trade marks for the purposes
of its s 34(1)(a) claim:
(a)
Registration no:
2003/19330
Trade mark:
1 National Brands Ltd v Blue Lion Manufacturing (Pty) Ltd [2001] ZASCA 17; 2001 (3) SA 563 (SCA) para 6.
2 Plascon-Evans Paints (TVL) Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A).
3 Tri-ang Pedigree (South Africa) (Pty) Ltd v Prima Toys (Pty) Ltd [1984] ZASCA 127; [1985] 1 All SA 276 (A);
1985(1) SA 448(A) at 468G-H.
4 Lucky Star Ltd v Lucky Brands (Pty) Ltd and Others [2016] ZASCA 77; 2017 (2) SA 588 (SCA) para 7.
5 Blue Lion Manufacturing (Pty) Ltd v National Brands Ltd (Blue Lion) [2001] ZASCA 62; [2001] 4 All SA 235
(A) para 17.
(b)
Registration no:
2016/03118
Trade mark:
PACIFIC
(c)
Registration no:
2016/03134
Trade mark:
(d)
Registration no:
2016/03151
Trade mark:
PACIFIC STORM
(e)
Registration no:
2016/03157
Trade mark:
PACIFIC MIST
[8] It is these PACIFIC trade marks that are to be compared to the respondent’s
use of the ATLANTIC trademark to determine if the marks are deceptively or
confusingly similar. It is only the respondent’s actual use that is relevant to the
infringement enquiry. The ATLANTIC trade mark depicted in actual use is as
follows:
[9] In the founding affidavit filed in support of the application, it is stated on
behalf of the appellant:
‘39. The dominant element of the respondent’s infringing marks is the word “ATLANTIC”, which
is conceptually identical to the applicant’s PACIFIC trade marks. The marks conjure up the image
of an ocean and convey the same idea.
. . .
41. Consequently, the recognition of the conceptual similarity between the marks necessarily
indicates that it is permissible for the applicant to object to the use of a mark conveying the same
sense/concept for identical goods.’
[10] It has never been the appellant’s case that the PACIFIC and ATLANTIC trade
marks are phonetically or visually similar. The appellant accepts that the words
PACIFIC and ATLANTIC do not look or sound the same. The appellant’s case, in
short, is that the respondent is not entitled to use the ATLANTIC trade mark, which
happens to be the name of an ocean, because it might conjure up the same idea as
the appellant’s registered trade mark, which also happens to be the name of another
ocean, namely the PACIFIC ocean. It was put as follows in the replying affidavit
filed on behalf of the appellant:
‘51. The fact that the PACIFIC and ATLANTIC oceans are different oceans in different
geographical locations is not determinative of the matter, neither is the fact that the words do not
look or sound the same. While the applicant maintains that the marks are conceptually identical, it
is also entitled to object to the use of confusingly similar marks.’
[11] However, registered trade marks do not create monopolies in relation to
concepts or ideas. Indeed, as McCreath J explained in Sun International Ltd v La
Chemise Lacoste:
‘Whilst conceptual deception or confusion can constitute a bar to registration in an appropriate
case, caution must be exercised not to create a monopoly in relation to a concept. It is significant,
in my view, that the quoted passage from Searle’s case begins with the learned Judge’s comment:
“The applicant does not and indeed cannot claim a monopoly in ‘respect of any horse’s head’.” It
is apparent from what follows in the passage that the issue in Searle’s case involved two horse-
head devices comprising in each case the profile of a horse’s head with a flowing mane and the
Court rejected any suggestion that the applicant in that case was entitled to a monopoly in respect
of a horse head of whatever description. In my judgment the opponent is not entitled to a monopoly
in respect of the concept of any crocodile, whatever the representation thereof may be. Indeed, in
Cowbell AG v IGS Holdings Ltd 2001 BIP 384 (SCA) (2001 (3) SA 941) at 948 (A) the Supreme
Court of Appeal stated pertinently that trade marks do not create monopolies in relation to concepts
or ideas and went on to point out . . .
“The global appreciation of the visual, oral or conceptual similarity of the marks must be based on
the overall impression given by the marks, bearing in mind, in particular, their distinctive and
dominant components.”’6
[12] McCreath J’s judgment was followed in La Chemise Lacoste v Rong Tai
Trading CC, a matter which also dealt with the conceptual similarity between the
word ‘crocodile’ and a crocodile device. It was there held:
‘[77] The court must also deal with the judgment of McCall J in the case of Safari Surf Shop CC
v Heavywater and Others [1996] 4 All SA 316 (D). He was called upon to consider whether an
interim interdict should be granted against the use of a spider device on surfboards - this on the
basis that the use of such a device infringed the applicant’s word mark “SPIDER” and also on the
basis that the respondent was passing of its boards as those of the applicant. The learned judge did
not consider the dictum of Goldstone J in the case of Searles Industries (Pty) Ltd v International
Power Marketing (Pty) Ltd 1982 (4) SA 123 (T) where Goldstone J stated it to be axiomatic that
the applicant could not claim a monopoly in respect of any horse’s head device (at 127). The
learned judge’s observations on the fact that a monopoly may not be claimed in regard to
something such as a horse were echoed in a later decision of the Registrar of Trade Marks. There,
McCreath J, sitting as an assistant registrar of trade marks in an application by Sun International
to register a number of marks, all of which bear a crocodile device in one form or another and
some of which bear, in addition, the word mark Kamp Kwena (it appears from the judgment that
McCreath J, quite correctly, with respect, regarded him as entitled to take judicial notice of the
fact that the word Kwena in the Tswana language means crocodile).
[78] Several passages in the judgment of McCreath J bear repeating:
6 Sun International Ltd v La Chemise Lacoste 2004 BIP 9 (RTM) 11.
(a) he observed (page 3 of the judgment) that the crocodile devices as used in the two sets of marks
differed;
(b) he referred to the dictum of Goldstone J in the Searle matter to the effect that a monopoly in
respect of a horse’s head cannot be claimed;
(c) he made it clear that whilst “conceptual deception or confusion can constitute a bar to
registration in an appropriate case, caution must be exercised not to create a monopoly in relation
to a concept”;
(d) he stated that in his judgment “the opponent is not entitled to a monopoly in respect of the
concept of any crocodile whatever the representation thereof may be”. He found support for this
proposition in the case of Cowbell AG v ICS Holdings Ltd . . . .’7
[13] In July 2014, digital marketing company, Pear Technologies Ltd, applied to
register the following figurative sign as a European Union Trade Mark (EUTM):
The application, was in three classes, namely 9 (computer software), 35 (consultancy
services) and 42 (computer services). The application was opposed by Apple Inc.
before the European Intellectual Property Office (EUIPO). Apple based its
opposition on its prior European Union (EU) registration for the well-known apple
logo (see below).
7 La Chemise Lacoste v Rong Tai Trading CC [2007] ZAGPHC 27; 2007 BIP 175 (T) paras 77 and 78.
[14] Apple’s opposition was upheld by the EUIPO in early 2016 on the basis of
Article 8(5) of the EU Trademark Regulation (EUTM), which entitles the owner of
an earlier trade mark with a reputation to prevent the registration of a later identical
or similar mark.8 In terms of Article 8(5), the use of the later mark must ‘without
due cause…take unfair advantage of, or be detrimental to, the distinctive character
or the repute of the earlier trade mark’. The Board found that Apple’s registered logo
had a reputation; Apple’s logo was considered to be similar to Pear’s logo; and, that
use without due cause of Pear’s logo would take unfair advantage of, or be
detrimental to, the distinctive character or the repute of Apple’s logo.
[15] Pear Technologies appealed, but this was rejected by the EUIPO Board of
Appeal, which found that there was ‘at most remote visual similarity and a weak
conceptual similarity between the marks at issue’. The finding of ‘visual similarity’
was based on the fact that both marks ‘depicted sleek rounded silhouettes of fruit’.
As to ‘conceptual similarity’: the Board of Appeal found that ‘although apples and
pears are two distinguishable fruits, they are fruits which are closely related in a
biological sense’. Whilst accepting that the finding would involve the consumer in
‘making some mental steps’, the Board of Appeal concluded that because of the high
reputation of the Apple mark and the ‘somewhat mocking’ image of the pear in the
mark applied for, the consumer would establish a mental link with the earlier mark.
8 Article 8(5) provides: ‘Upon opposition by the proprietor of a registered earlier trade mark within the meaning of paragraph
2, the trade mark applied for shall not be registered where it is identical with, or similar to, an earlier trade mark, irrespective of
whether the goods or services for which it is applied are identical with, similar to or not similar to those for which the earlier trade
mark is registered, where, in the case of an earlier EU trade mark, the trade mark has a reputation in the Union or, in the case of
an earlier national trade mark, the trade mark has a reputation in the Member State concerned, and where the use without due
cause of the trade mark applied for would take unfair advantage of, or be detrimental to, the distinctive character or the repute of
the earlier trade mark.’.
[16] Pear Technologies appealed again; this time to the General Court of the
European Union. In overturning the decision of the Board of Appeal (see Pear
Technologies Ltd v Euipo & Apple Inc),9 the Court noted that on a visual comparison:
contrasted with the Apple mark, which would be viewed as ‘an apple, with a bite
taken out of it’, the Pear Technologies mark comprised a ‘large number of squares
with curved edges of black colour’ that combined ‘to form the image of a pear in the
mind of the observer’; the Board of Appeal had wrongly dismissed as negligible the
word ‘PEAR’ written below the image, which contributed ‘significantly to
determining the image of the mark’; and, while the positioning of the stem or leaf
elements were at a similar angle, ‘the concrete shape and size of those elements
[were] very different’.
[17] From a conceptual perspective, the Court found that there were ‘clear
differences between the concepts conveyed by the [two] marks’ - put simply, one
was an apple and the other a pear. The Court reasoned that whilst: the later mark
evoked ‘the idea of a full pear’, it did not share the concept of a ‘fruit with a bite
taken out of it’; both marks could be described as a fruit, it was inconceivable that
the relevant public would use that term instead of the more specific apple or pear;
and, pears and apples are fruit with shared characteristics, the Board of Appeal was
wrong to give that factor decisive importance in the context of the conceptual
comparison.
[18] The Court proceeded to hold (para 69):
9 Judgment of the General Court of the European Union, Fifth Chamber, Case T-215/17, which was upheld on appeal
by the Court of Justice of the European Communities, Case No. C-295/19P.
‘In that regard, it should be noted, first, that it is admittedly true that each of the conflicting marks
may be described as using the image of a fruit. However, as all parties to the action also argue, the
mere fact that there is a generic term which includes the terms used to describe the semantic content
of the marks at issue is not a relevant factor in the context of the conceptual comparison. In the
same vein, it should be borne in mind that the examination of the similarity takes into consideration
the conflicting marks as they have been registered or as they have been applied for. Accordingly,
it should be observed that the conflicting marks invoke the concept of ‘fruit’ only in an indirect
manner. It follows from the consideration set out in paragraphs 62 and 63 above that the conflicting
marks will not be perceived as depicting 2 unidentifiable fruits, but rather as (i) an apple with a
bite taken out of it, possessing a leaf, and (ii) a pear with a stem. In those circumstances, it is
inconceivable that the relevant public displaying a high level of attention will use the term “fruit”
instead of “pear” or “apple” when referring to the conflicting marks.’
[19] The reasoning in Pear Technologies Ltd v Euipo & Apple Inc is apposite. The
PACIFIC and ATLANTIC trade marks evoke the concept of an ocean in an indirect
manner. The fact of the matter is that the words relate to two different oceans.
PACIFIC and ATLANTIC will not be perceived by the average consumer as
depicting two unidentifiable oceans but rather as two vastly different oceans located
in two different geographical locations in the world. It follows, in my view, that there
is not likely to be deception or confusion as contemplated by s 34(1)(a).
[20] That leaves the unlawful competition: The appellant’s application initially
commenced as one relying exclusively on the provisions of s 34(1)(a) of the Act.
This was the case that the respondent was required to meet when delivering its
answering affidavit. After all the papers had been exchanged in the application, the
appellant proceeded to amend its notice of motion to include a new prayer 4 for relief
based on unlawful competition. Prayer 4 in the amended notice of motion reads:
‘Interdicting and restraining the Respondent from competing unlawfully with the Applicant by
using the confusingly similar infringing marks and ATLANTIC get-ups . . . , to promote its
cigarettes, thereby imitating the Applicant’s PACIFIC range of products; obtaining a springboard
advantage and taking unfair advantage of the Applicant’s fruits and labours in respect of its
PACIFIC trade marks and PACIFIC get-ups . . . ; and interfering with the Applicant’s exclusive
rights in its PACIFIC trade marks and PACIFIC get-ups.’
[21] The amendment was introduced about 6 months after the application had been
issued and 4 months after delivery of the respondent’s replying affidavit. The
amendment was sought absent a supporting or supplementary affidavit. Moreover,
the amendment was sought in the face of the repeated refrain in the replying affidavit
that the appellant’s case was based exclusively on the provisions of s 34(1)(a) of the
Act. It had been variously stated in the replying affidavit that:
‘43.
It is not necessary for an applicant relying upon section 34(1)(a) . . . to produce evidence
of use. However, in applying the notional use test applicable, such evidence can be useful to the
Honourable Court and was provided to assist the Court.
. . .
61.
The applicant is not required to present a copy of any licence agreement in support of its
cause of action under s 34(1)(a) . . . and is also not required to prove that . . . is licensed to use its
marks. The cause of action is not based on statutory or common law user rights.
. . .
98.
There is no need to put up proof of supply to wholesalers as the cause of action is not based
upon user rights.’
[22] In the event, the appellant’s founding affidavit, which exclusively sought to
make out a case in support of the relief under s 34(1)(a) of the Act, is also the
evidence that the appellant now seeks to rely on for its belatedly introduced cause of
action based on unlawful competition. However, first, the appellant’s unlawful
competition claim has no legitimate connection to the evidence advanced in the
founding affidavit and thus lacks any evidentiary support. Second, the appellant was
obliged to make out its case in its founding papers. Third, the respondent is only
obliged to meet such case as is made out in the founding papers.10
[23] What is more, our courts have generally declined to come to the aid of an
applicant, who complains that a rival trader has used its trade name for its own
commercial purposes unless that applicant can establish that the rival trader is using
its trade mark or trade name in a manner likely to deceive or confuse members of
the public.11 As it was put by Schutz JA in Payen Components SA Ltd v Bovic CC
and Others:
‘In my opinion a Court should be wary of allowing the sharp outlines of these two established
branches of the law of unlawful competition [copyright and passing-off], evolved through long
experience, to be fudged by allowing a vague penumbra around the outline. Unlawful competition
should not be added as a ragbag and often forlorn final alternative to every trade mark, copyright,
design or passing off action. In most such cases it is one of the established categories or nothing.’12
[24] The appellant contends in its heads of argument that its case based on unlawful
competition is supported by the factual allegations and evidence in the founding
affidavit. That is not so. There is simply no evidence in the appellant’s papers in
support of such a case. On the contrary, the appellant expressly disavowed any
possible reliance on unlawful competition when it said ‘there is no need to put up
proof of supply to wholesalers as the cause of action is not based upon user rights’.
10 Molusi and Others v Voges NO and Others [2016] ZACC 6; 2016 (3) SA 370 (CC); 2016 (7) BCLR 839 (CC) para
27 and 28.
11 See Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd and Another [2016] ZASCA 74; [2016] 3 All
SA 345 (SCA); 2016 (6) SA 1 (SCA) para 24 and the cases there cited.
12 Payen Components South Africa Ltd v Bovic Gaskets CC and Others (Payen Components) [1995] ZASCA 57;
[1995] 2 All SA 600 (A); 1995 (4) SA 441 (A) at 453.
[25] In any event, the appellant relies for its unlawful competition claim on the
identical trade marks relied on for its trade mark infringement relief. The unlawful
competition relief that the appellant seeks is premised on the factual assertion that
the respondent is using ‘confusingly similar infringing marks’, thereby imitating the
appellant’s PACIFIC range of products. Having determined that the marks are not
confusingly similar for the purposes of trade mark infringement, how, it must be
asked, can they be confusingly similar for the purposes of the alternative claim based
on unlawful competition.
[26] In Blue Lion, Schutz JA had occasion to repeat the caution sounded by him
some 16-years earlier in Payen Components.13 He did so in these terms.
‘. . . concerning the illegitimacy of using some general notion of unlawful competition to create
an ersatz passing off with requirements (in the alternative) less exacting than those required by the
common law. . . .’14
He added;
‘. . . Some of the restraints that the common law places on the passing off action (the one relevant
to this case is the need to prove the likelihood of deception and confusion) are important in
preventing the creation of impermissible monopolies. . . .’15
I daresay, this is precisely the kind of matter that Schutz JA cautioned against.
[27] It follows that, like the trade mark infringement claim under s 34(1)(a), the
unlawful competition claim must also fail.
13 Payen Components fn 12 above.
14 Blue Lion fn 5 above para 1.
15 Ibid.
[28] In the result, the appeal is dismissed with costs, including those of two
counsel.
_________________
V M Ponnan
Judge of Appeal
APPEARANCES
For appellant:
C E Puckrin SC (with L G Kilmartin)
Instructed by:
Von Seidels Attorneys, Cape Town
Pieter Skein Attorneys, Bloemfontein
For respondent:
R Michau SC (With P Cirone)
Instructed by:
RHK Attorneys, Johannesburg
Hendre Conradie 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:
26 May 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
Open Horizon Ltd v Carnilinx (Pty) Ltd (Case no 225/2021) [2022] ZASCA 75 (26 May 2022)
Today the Supreme Court of Appeal (SCA) delivered a 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).
The appellant, Open Horizon Ltd, had sought an order interdicting and restraining the respondent,
Carnilinx (Pty) Ltd, from infringing its PACIFIC trade marks in terms of s 34(1)(a) of the Trade Marks
Act 194 of 1993 (the Act). The appellant also sought an additional prayer based on unlawful competition.
The dispute, insofar as it related to section 34(1)(a) Act, was confined to whether the respondent’s
ATLANTIC marks so nearly resembled the appellant’s registered trade marks as to likely deceive or
cause confusion.
The appellant’s case, in short, was that the respondent was not entitled to use the ATLANTIC mark,
which happened to be the name of an ocean, because it might conjure up the same idea as the
appellant’s registered trade mark, PACIFIC, which also happened to be the name of another ocean.
The SCA held that a comparison of the marks was required to determine whether they so nearly
resembled one another that a substantial number of persons would probably be deceived into believing
that the respondent’s goods originated from or were connected with the proprietor of the appellant’s
trade mark, or at least be confused as to whether that was so. The likelihood (or otherwise) of deception
or confusion must be attributable to the resemblance (or otherwise) of the marks themselves and not
to extraneous matter. The Court further held that, registered trade marks did not create monopolies in
relation to concepts or ideas. The fact of the matter was that PACIFIC and ATLANTIC were two vastly
different oceans located in two different geographical locations in the world. There was thus not likely
to be deception or confusion as contemplated by s 34(1)(a).
Turning to the issue of unlawful competition, the SCA noted that, the amendment based on unlawful
competition was only introduced about 6 months after the application had been issued and 4 months
after delivery of the respondent’s replying affidavit. The amendment was sought absent a supporting or
supplementary affidavit. As a result, the court then held that first, the appellant’s unlawful competition
claim had no legitimate connection to the evidence advanced in the founding affidavit and thus lacked
any evidentiary support. Second, the appellant was obliged to make out its case in its founding papers.
Third, the respondent was only obliged to meet such case as was made out in the founding papers.
Furthermore, the SCA held that the courts have generally declined to come to the aid of an applicant,
who complained that a rival trader had used its trade name for its own commercial purposes unless that
applicant could establish that the rival trader was using its trade mark or trade name in a manner likely
to deceive or confuse members of the public. Consequently, the appeal was dismissed with costs.
~~~~ends~~~~
|
2356
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 171/09
DIRK JOHN FLETCHER
First Appellant
RUDOLF DU PLESSIS
Second Appellant
and
THE STATE
Respondent
Neutral citation:
Fletcher v S (171/09) [2009] ZASCA 169 (1 December
2009).
Coram:
STREICHER, BRAND, HEHER, BOSIELO JJA et TSHIQI
AJA
Heard:
20 NOVEMBER 2009
Delivered:
1 DECEMBER 2009
Summary:
Rape – single witness – approach to be followed –
many indications that complainant's evidence true –
accused version improbable
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: High Court, Johannesburg (Joffe and Mokgoatlheng JJ sitting
as a court of appeal from the regional magistrate's court).
The appeal is dismissed.
_____________________________________________________________
JUDGMENT
______________________________________________________________
TSHIQI AJA (STREICHER, BRAND, HEHER, BOSIELO JJA concurring):
[1] The two appellants appeared together with Mr F de Kock before the
regional magistrate in Randburg on a charge of rape. There were also other
charges but they are no longer of relevance on appeal. In support of the rape
charge the State alleged that on 16 January 1998 the three accused had
sexual intercourse with the complainant, Bianca, without her consent. All three
pleaded not guilty. The two appellants both testified in their defence. De Kock
did not. The trial court convicted the first appellant, Mr Fletcher, of rape and
sentenced him to twelve years' imprisonment. The second appellant, Mr Du
Plessis, was acquitted on the rape charge but convicted as an accomplice to
the rape by Fletcher for which he was sentenced to six years' imprisonment.
De Kock was acquitted on all charges. The appeal by the appellants against
their convictions and sentences to the Johannesburg High Court (Joffe and
Mokgoatlheng JJ) was unsuccessful. Both appellants then sought and
obtained leave from the court a quo to appeal further, again against both their
convictions and sentences to this court. Du Plessis's appeal was struck from
the roll for non-appearance. This judgment therefore relates to the appeal by
Fletcher only.
[2] According to Bianca's testimony she was raped by Fletcher – who was
assisted by Du Plessis – during the early morning hours of 16 January 1998.
This was denied by the two of them. They did not dispute, however, that they
were in the company of Bianca at the time. In the main, Bianca's version as to
how this occurred is also common cause. According to Bianca she was 24
years old and single at the time. On the evening of 15 January 1998 she
accompanied four of her friends to a night club in Rosebank, Johannesburg.
When she became separated from her friends, she had a panic attack. She
left the club and sat outside crying. Fletcher offered her a lift home in his car
which she eventually accepted. As they set out, Fletcher was driving while
she occupied the front passenger seat. Du Plessis and De Kock were
passengers at the back.
[3] Along the way Fletcher did not take the highway as she expected but
took a road which was unfamiliar to her. Fletcher's explanation for this is that
he wanted to avoid the traffic police as he was intoxicated. Bianca testified
that once she realised that Fletcher was using a different route, she became
scared and started crying. Bianca and Fletcher contradicted each other on
what really happened as Fletcher continued to drive. Fletcher's version
suggests that Bianca started behaving irrationally and irritated him whilst he
was driving. Bianca's version suggests that she became more agitated as
they continued along the way as she feared for her life. However, they agreed
that at some stage there was a tussle over her handbag which eventually
disappeared through the open window on Fletcher's side. According to Bianca
she needed the bag to dial an emergency button on her cell phone which was
in the bag. According to Fletcher's version, on the other hand, Bianca
continuously hit his arm with her handbag, thereby disturbing his driving. What
was, however, common cause between them was that at some stage Bianca
tried to jump out of the moving vehicle through Fletcher's window and that she
was pulled back inside. Bianca further stated that along the way De Kock
touched her on her breast and that Fletcher started masturbating. Fletcher
denied that he did that. De Kock, as I said, did not testify.
[4] It is common cause that Fletcher then brought the car to a standstill on
the side of the road where they were surrounded by open veld. According to
Bianca she then opened her door and ran. All three of the men chased her
and caught up with her.
[5] Bianca testified that after she was pushed to the ground Fletcher pulled
down her pants and underwear and then his own trousers and made her lie
on her back. He then penetrated her anus. She screamed. He withdrew and
penetrated her vagina. Du Plessis was holding her arms when Fletcher was
taking off her pants and De Kock was just standing next to them. Her mind
went blank for a while. At some stage De Kock told Fletcher it was his turn.
She thought Fletcher could have ejaculated because she felt wet. Fletcher
moved away from her and De Kock opened the fly of his trousers and climbed
on top of her. She could feel his penis on her thigh. He whispered to her and
asked her to co-operate with him because he wanted to help her. He told her
to pretend she was enjoying herself and she complied. He asked the other
two to leave them as they were enjoying themselves. At first they stood on the
left-hand side and he again asked them to leave. They climbed into the
vehicle and left. She and De Kock ran away from the scene. De Kock lifted
her on his shoulders and they ran until they came across the patrol vehicle
driven by two security guards. At that time, Bianca testified, she only wore a
jacket and a T-shirt. Below the waist she was completely naked.
[6] Bianca's version is supported in this regard by the two security guards,
Messrs Mbokazi and Sithole. They testified that they were driving a patrol
vehicle during the early morning hours of 16 January 1998 when they heard a
woman screaming for help near Cedar Road, Fourways. They drove in the
direction of where the screams came from and saw De Kock and Bianca
standing next to the road. Bianca was completely naked below the waist and
she was trying to pull down her leather jacket to cover herself. Bianca and De
Kock requested the two security guards to take them to the nearest police
station which they then did.
[7] Fletcher's version, which was supported in all material respects by the
evidence of Du Plessis went as follows: After he brought the vehicle to a
standstill, Bianca got out of the car through the driver's window and ran across
the road into the veld. He thought of leaving her but they all decided to go and
find her. As he was running he fell into a donga. He then saw Bianca on his
right-hand side lying on her back. Before he had a chance to say anything she
called out to him and said 'please do not do this to me'. He was angry and
frustrated and went to her and straddled her with his knees on either side and
told her in a harsh manner to relax. He was joined by De Kock and Du Plessis
and at that time she relaxed completely. She asked Du Plessis to fetch a
cigarette and whilst Du Plessis was gone he and De Kock remained behind.
When De Kock nudged him on the shoulder he got up and moved away. Du
Plessis came back with the cigarette which Bianca smoked. He noticed that
her pants were down to her knees and that she and De Kock were whispering
to each other while he lay next to her in what could be described as an
intimate position. They then started kissing. De Kock asked Fletcher to leave
the two of them alone. Fletcher, on the other hand, insisted that they should
all leave together. Bianca then said that she and De Kock were enjoying
themselves and asked to be left alone. According to Fletcher he thereupon left
with Du Plessis. After a while the two of them, however, decided to come
back, which they did. At that stage they saw De Kock carrying Bianca over his
shoulder on a dirt road, moving away from the tarmac.
[8] Bianca was a single witness to the rape. It is trite that her evidence
should be approached with caution. The objective of this approach is mainly
to reduce the risk of wrong convictions. It is not to be confused with the
erstwhile requirement of corroboration in sexual offences. This appears from
the following statement by Olivier JA in S v Jackson:1
'In my view, the cautionary rule in sexual assault cases is based on an irrational and
out-dated perception. It unjustly stereotypes complainants in sexual assault cases
(overwhelmingly women) as particularly unreliable. In our system of law, the burden
is on the State to prove the guilt of an accused beyond reasonable doubt ─ no more
and no less. The evidence in a particular case may call for a cautionary approach,
but that is a far cry from the application of a general cautionary rule.'
1 1998 (1) SACR 470 (SCA) at 476e-f.
[9] In S v Chabalala2 Heher JA formulated the principles in evaluating the
evidence of the state and an accused person in a criminal trial as follows:
'The trial court's approach to the case was, however, holistic and in this it was
undoubtedly right: S v Van Aswegen 2001 (2) SACR 97 (SCA). The correct approach
is to weigh up all the elements which point towards the guilt of the accused against
all those which are indicative of his innocence, taking proper account of inherent
strengths and weaknesses, probabilities and improbabilities on both sides and,
having done so, to decide whether the balance weighs so heavily in favour of the
State as to exclude any reasonable doubt about the accused's guilt.'
[10] Applying these principles to the present facts, the main enquiry is
whether Bianca’s version can be accepted without reasonable doubt despite
the fact that her behaviour was, by all accounts, at times, quite bizarre. In
answering this question sight should not be lost of the following statement by
Cloete JA as to the meaning of 'corroboration' in S v Gentle:3
'The representative of the State submitted on appeal that (I quote from the heads of
argument):
"(T)here was sufficient corroboration or 'indicators' to support the occurrence of the
rapes."
It must be emphasised immediately that by corroboration is meant other evidence
which supports the evidence of the complainant, and which renders the evidence of
the accused less probable, on the issues in dispute (cf R v W 1949 (3) SA 772 (A) at
778-9). If the evidence of the complainant differs in significant detail from the
evidence of other State witnesses, the Court must critically examine the differences
with a view to establishing whether the complainant's evidence is reliable. But the
fact that the complainant's evidence accords with the evidence of other State
witnesses on issues not in dispute does not provide corroboration. Thus, in the
present matter, for example, evidence that the appellant had sexual intercourse with
the complainant does not provide corroboration of her version that she was raped, as
the fact of sexual intercourse is common cause. What is required is credible evidence
which renders the complainant's version more likely that the sexual intercourse took
place without her consent, and the appellant's version less likely that it did not.'
2 2003 (1) SACR 134 (SCA) para 15.
3 2005 (1) SACR 420 (SCA) at para 18.
[11] So, what we are looking for are indications on the undisputed facts
which lend support to Bianca's version and at the same time renders
Fletcher's conflicting version so unlikely that it cannot reasonably possibly be
true. As to what happened while they were travelling from the night club, it is
common cause that Bianca tried to jump out of a moving car. Whilst her
choice to jump out of the driver's side is bizarre, her action shows that she
was indeed scared. This is consistent with her version that she became more
terrified as Fletcher drove on a route unfamiliar to her. Fletcher also supports
her version, in broad outline, as to what happened after he had parked the
vehicle next to the road. He confirmed that she indeed opened her door and
ran out of the vehicle into the open veld. Although Fletcher denied that he
caused her to fall and further denied that he pulled her pants and underwear
down, he admitted that he climbed on top of her and straddled her with his
knees on either side. It is this part of Fletcher's version that I find particularly
unconvincing in several respects. First, it is improbable that Bianca would be
lying on her back while she was trying to get away from the three men of
whom she was clearly frightened. Secondly, since Fletcher knew that Bianca
was frightened of what might happen to her – because she said so – it is
highly unlikely that he would straddle her, as he said he did, to calm her down.
Thirdly, it is highly unlikely that De Kock would nudge him to get off Bianca
and then get on top of her himself after she had been calmed down by
Fletcher. Fourthly, on Fletcher's version there is simply no explanation for the
fact, which is common cause – that Bianca's pants and underwear were
pulled down at that stage. The possibility that it was done by either Bianca or
De Kock is extremely unlikely. It would raise the rhetorical question why he or
she would pull down her pants and underwear and then run through the veld
naked; stop an unknown vehicle and so forth, while she was in that
undignified state. That leaves only Fletcher as the one who did it, as Bianca
said.
[12] Another unconvincing part of Fletcher's version relates to what
happened while they were travelling. He agreed that it was potentially clear to
him that Bianca wanted to go home and that initially she was doubtful of
accepting a lift from him when they were joined by his two friends in the
vehicle; yet when he decided to take a detour to avoid traffic police, he did not
convey this to her at all, even after she had tried to jump out of the window.
The only probable explanation is that Bianca indeed became more nervous as
they drove along and tried measures; albeit bizarre, to escape from the
situation.
[13] Bianca’s version was further corroborated by the two security guards
who met her and drove her and De Kock to the police station. They testified
that she was trembling, scared and could not speak properly and that she was
naked from the waist down. Her emotional state is also confirmed by the
evidence of her father whom she telephoned and who met with her soon
thereafter.
[14] Further corroboration is to be inferred from her inability to cope at work
and to continue living by herself. This clearly shows that she was subjected to
trauma which had an impact on her lifestyle. In addition she had to attend
treatment by a psychologist and a psychiatrist. Although it is not in dispute
that she had mild depression before this date, this evidence clearly shows that
something aggravated her situation such that she had to receive more
intensive treatment.
[15] Her behaviour immediately after the incident also gives credence to her
version. She asked to be taken to the police station to report the rape in her
half naked state. It is highly unlikely she would have gone to two police
stations in such an undignified state to falsely incriminate two men she had
met that same evening and who did nothing but offer her a lift home. She
persistently informed the police and the doctor that she had been raped. Even
her physical and emotional state at the time was consistent with her version.
There is no basis for such an emotional state if Fletcher's version is accepted,
ie that she had completely relaxed and was in fact, enjoying herself when they
left her with De Kock.4 There is therefore no reason to find that Bianca was
not telling the truth.
4 S v Hammond 2004 (2) SACR 303 (SCA) para 22.
[16] The quality of the medical attention afforded to Bianca was, as stated
by the court below, completely unsatisfactory. However, the J88 states that
her emotional state was indicative of 'trauma/sexual assault'.
[17] Finally De Kock's behaviour in the veld gives credence to Bianca's
version and is inconsistent with that of Fletcher. It is inexplicable why De Kock
would find it necessary to nudge Fletcher whilst he was straddling Bianca if all
he was doing was to try and calm her down. Moreover, if she had not been
raped it would have been unnecessary for De Kock to behave as he did
thereafter. The evidence of Fletcher was therefore correctly rejected by the
trial court.
[18] I therefore make the following order:
'The appeal is dismissed.'
_______________________
Z L L TSHIQI
ACTING JUDGE OF APPEAL
Appearances:
Counsel for Appellant:
L M Hodes
Instructed by
Ian Levitt Attorneys, Sandton
Lovius Block Attorneys, Bloemfontein
Counsel for Respondent: Ms A M Williams
Instructed by
The National Prosecution Service of the Director of
Public Prosecutions, Johannesburg
The Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 1 December 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
D J FLETCHER v THE STATE
The Supreme Court of Appeal has dismissed an appeal against conviction and sentence by
the appellant who was convicted of rape of a 24 year old girl after she had been picked up by
the appellant and his friends outside a nightclub in Rosebank. The court rejected the
appellant's version and accepted the complainant's version as true.
--ends--
|
3118
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
RAPPORTEERBAAR
Saaknommer : 216/2006
In die saak tussen :
GEORGE FREDERIK WESSELS NO
APPELLANT
en
DIE MEESTER VAN DIE HOOGGEREGSHOF,
BLOEMFONTEIN
EERSTE RESPONDENT
FREDERIK JOHANNES THEODORUS
BEZUIDENHOUT (JNR)
TWEEDE RESPONDENT
JACOMINA JOHANNA GROBLER
DERDE RESPONDENT
JEREMIAS JACOBUS ANDRIES BEZUIDENHOUT
VIERDE RESPONDENT
WILHELMINA CECILIA RAUTENBACH
VYFDE RESPONDENT
FREDDIE RAUTENBACH
SESDE RESPONDENT
REINETTE RAUTENBACH
SEWENDE RESPONDENT
ESMERELDA BEZUIDENHOUT
AGTSTE RESPONDENT
JOHANNA ELIZABETH NEL
NEGENDE RESPONDENT
PATRICIA BEZUIDENHOUT
TIENDE RESPONDENT
FREDERIK BEZUIDENHOUT (JNR)
ELFDE RESPONDENT
CORAM :
BRAND, VAN HEERDEN et COMBRINCK
ARR
DATUM :
15 FEBRUARIE 2007
GELEWER :
23 MAART 2007
Neutral citation:
This judgment may be referred to as Wessels NO v Die
Meester [2007] SCA 17 (RSA)
Samevatting:
Gesamentlike testament wat verval het by die dood van die
testatrise – in beginsel kon testateur dit laat herleef in latere
kodisil – herlewingsbedoeling aan die kant van testateur
egter nie bewys nie.
_______________________________________________________
BRAND AR/
BRAND AR :
[1] Hierdie is 'n appèl teen die uitspraak van Van der Merwe R in
die Bloemfonteinse Hooggeregshof. Die vrae waarom dit wentel, is in
die breë soos volg: het 'n gesamentlike testament wat die testateur
vroeër saam met sy vooroorlede eggenoot verly het, by haar dood
verval? Indien wel, kan die testateur dit in beginsel op een of ander
wyse laat herleef? Indien wel, het dit in hierdie saak gebeur? Die feite
waaruit hierdie vrae ontstaan het, blyk uit wat volg.
[2] Die appellant is die eksekuteur in die boedel van wyle F J T
Bezuidenhout ('die testateur') wat op 7 Maart 2004 oorlede is. Op 18
Januarie 2002 het die testateur en sy vooroorlede eggenote ('die
testatrise'), met wie hy binne gemeenskap van goedere getroud was,
'n gesamentlike testament gemaak. Die bemakings in die testament
is nie heeltemal so duidelik nie. In der waarheid lyk dit of dieselfde
bates soms aan meer as een erfgenaam bemaak is. Hoewel dit nie
die vrae is waaroor uitsluitsel gegee hoef te word nie, is dit tog 'n
aanduiding van onkunde en verwarring aan die kant van die testateur
en sy adviseurs wat, soos aanstons sal blyk, wel ter sake is.
[3] Die kernbemakings in die testament gaan duidelik uit van die
veronderstelling dat die testatrise die testateur sal oorleef. So bepaal
die inleiding tot klousule 2: 'Ons bemaak spesiaal die opbrengs van
ons beleggings en kontant, indien die Testateur die eerste te sterwe
kom soos volg: . . . .' Klousule 3(a) begin weer met: 'Ons bemaak
spesiaal indien die Testateur eerste te sterwe kom aan ons kleinseun
Freddie Rautenbach al ons vaste eiendom . . .' Vir geval die testateur
die langslewende sou wees, word voorsiening gemaak in klousule 8.
Dit bepaal heel bondig: 'Indien die Testatrise eerste te sterwe mag
kom, benoem en stel ons hiermee aan die Testateur as die enigste
erfgenaam.'
[4] Soos vroeër aangedui, het die testatrise toe inderdaad eerste te
sterwe
gekom.
Na
haar
oorlye
is
haar
boedel
beredder
ooreenkomstig die bepalings van die gesamentlike testament.
Bygevolg het die testateur in effek die hele gesamentlike boedel
ontvang; sy helfte uit hoofde van die huwelik binne gemeenskap van
goed en haar helfte uit hoofde van klousule 8 van die gesamentlike
testament. Daarna het hy op 7 Mei 2003 'n kodisil verly ('die eerste
kodisil'). Dit lui soos volg:
'Ek, die ondergetekende,
FREDERICK JOHANNES THEODORUS BEZUIDENHOUT
maak hiermee hierdie KODISIL wat deel sal vorm van my Testament gedateer
18 JANUARIE 2002.
Die bemaking in terme van Klousule 3(a) is verder onderhewig aan die bepaling
dat my kleinseun, FREDDIE, maandeliks 'n bedrag van R1 000,00 (EEN
DUISEND RAND) sal betaal aan JOHANNA NEL, vanaf datum van my afsterwe
tot datum van haar afsterwe.
Die res van my Testament bly onveranderd.'
[5] Op 11 Junie 2003 verly die testateur 'n tweede kodisil. Soos in
die eerste kodisil, verklaar hy ter inleiding uitdruklik dat die kodisil
deel sal vorm van 'my Testament gedateer 18 JANUARIE 2002'. In
die eerste klousule bemaak hy spesifiek 'n Datsun-bakkie en 'n
televisiestel aan sy vriendin, Johanna Nel, waarna hy weer in
klousule 2 afsluit met 'Die res van my Testament bly onveranderd.'
[6] Onmiddellik na die tweede kodisil het die testateur, nog steeds
op 11 Junie 2003, ook 'n derde kodisil verly. Na sy oorlye kon die
oorspronklike van hierdie dokument egter nie gevind word nie. Om
dié rede het die Meester geweier om die derde kodisil te aanvaar,
welke besluit nie deur enige een van die party aangeveg is nie. Geen
poging is ook deur enigiemand aangewend om by wyse van 'n
aansoek ingevolge a 2(3) van die Wet op Testamente 7 van 1953
('die Wet') die derde kodisil met regskrag te laat beklee nie. Omdat
die inleidende gedeelte van die derde kodisil in die uitspraak van die
hof a quo en in argument ter sprake gekom het, haal ek dit aan
sonder om daarmee toelaatbaarheid of relevansie te kenne te gee.
Dit lui soos volg:
'Ek, synde die enigste erfgenaam kragtens die gesamentlike Testament gedateer
18 JANUARIE 2002 bepaal dat alle bemakings en voorwaardes van gemelde
Testament mutatis mutandis onmiddellik van krag sal word en van toepassing sal
wees by my afsterwe behalwe . . ..'
Op die 'behalwe' volg dan sekere uitdruklike wysigings van die
bemakings in die gesamentlike testament van 18 Januarie 2002.
[7] Na sy aanstelling as eksekuteur in die boedel van die testateur,
het die appellant die standpunt ingeneem dat die testament van 18
Januarie 2002, saamgelees met die eerste en tweede kodisille, as die
testament van die oorledene beskou moet word. Daarteenoor was die
eerste respondent, synde die Meester, van oordeel dat die testateur
in wese, op enkele onsaaklike uitsonderings na, sonder enige
testament gesterf het en dat sy boedel gevolglik intestaat moes
vererf. Dit het die appellant genoop om die Hoogeregshof in
Bloemfontein te nader vir 'n bevel wat daarop neerkom dat sy
standpunt bekragtig word.
[8] Diegene wat, benewens die Meester, as respondente in die
aansoek gesiteer is, val breedweg in twee kategorieë: aan die
eenkant, dié wat deur die bemakings in die gesamentlike testament,
soos gewysig deur die eerste twee kodisille, bevoordeel word en, aan
die anderkant, dié wat groter voordeel uit intestate vererwing sou
trek. Slegs die tweede en derde respondente, wat uiteraard in die
laasgenoemde groep val, het die aansoek betwis en terselfdertyd 'n
teenaansoek gebring waarin hulle gevra het vir 'n verklarende bevel
dat die boedel van die testateur intestaat moet vererf. Die hof a quo
het die appellant se hoofaansoek van die hand gewys en die
teenaansoek toegestaan. Daarteen kom die appellant nou in hoër
beroep met die verlof van hierdie hof.
[9] 'n Nuttige vertrekpunt by die oorweging van die geskilpunte is
die aanvaarde beginsel dat, in 'n geval soos die onderhawige, waar
daar geen boedelsamesmelting is nie, 'n gesamentlike testament, ten
spyte van sy 'gesamentlike' vorm, eintlik maar neerkom op twee
aparte testamente, wat in een dokument vervat is, waarin die
testateur en testatrise elkeen oor sy of haar eie boedel beskik. In so
'n geval staan dit die langslewende vry om te enige tyd, ook na die
eerssterwende se dood, weer 'n testament te maak waarin opnuut
oor sy of haar bates beskik word. Die feit dat die langslewende
intussen die voordele van die eerssterwende se bemakings aanvaar
het, doen aan hierdie vryheid geen afbreuk nie (sien bv Rhode v
Stubbs 2005 (5) SA 104 (HHA); M M Corbett, Gys Hofmeyer en
Ellison Kahn, The Law of Succession in South Africa 2 uitg (2001)
pp 436-7).
[10] 'n Meer pertinente vraag vir doeleindes van die onderhawige is
egter: wat is die posisie as 'n testateur wat geregtig was om na die
dood van die testatrise 'n nuwe testament te maak, uiteindelik self te
sterwe kom sonder om dit te doen? Volgens aanvaarde beginsels
hang die antwoord op dié vraag daarvan af of die testateur sy
beskikking oor sy gedeelte in die gesamentlike testament onderworpe
gestel het aan die gebeurlikheid dat hy eerste te sterwe kom. Indien
nie, bly sy gedeelte, by ontstentenis aan 'n nuwe testament,
eenvoudig voortbestaan en is dit steeds van krag by sy dood (sien bv
De Klerk v Estate De Klerk 1950 (3) SA 62 (T) op 66G-67H). Is die
testateur se gedeelte van die testament egter wel onderworpe gestel
aan die voorwaarde dat hy eerste te sterwe kom, sal dit by die
vooroorlye van die testatrise verval. By gebreke aan 'n nuwe
testament sal sy boedel dan intestaat vererf (sien bv Estate Coaton v
The Master 1915 CPD 318; Ex parte Wessels NO and Lubbe 1954
(2) SA 225 (O) op 229D-G; Corbett et al, op cit, pp 439-440).
[11] In die onderhawige geval is die wesenlike bemakings uitdruklik
onderworpe
gestel
aan
die
vooroorlye
van
die
testateur.
Daarbenewens bepaal klousule 8 onomwonde dat, in geval die
testatrise eerste te sterwe sou kom, die testateur die enigste
erfgenaam sal wees. Inderwaarheid word dus geen voorsiening
gemaak vir wat by die testateur se dood moet gebeur indien hy die
langslewende sou wees nie. Die duidelike veronderstelling skyn te
wees dat hy in dié geval, na die dood van die testatrise, 'n nuwe
testament sou maak. Gevolglik stem ek saam met die bevinding van
die hof a quo dat die gesamentlike testament by die oorlye van die
testatrise verval het.
[12] Nietemin is die appellant se saak juis dat die testateur duidelik
die bedoeling gehad het dat die testament van 18 Januarie 2002,
soos gewysig of aangevul deur die latere twee kodisille, sy testament
sou wees. Ietwat anders gestel, was die testateur se duidelike
bedoeling dus, volgens die appellant se argument, dat na die
afsterwe van die testatrise dieselfde tersaaklike bepalings in die
gesamentlike testament, soos gewysig deur die kodisille, as sy eie
testament moes geld.
[13] In die konteks van die erfreg, dien dit egter weinig doel om van
die 'duidelike bedoeling van die testateur' te praat tensy daardie
bedoeling uit 'n geldige testament blyk. Of, soos Wessels RP dit
gestel het in Re Estate Marks 1921 TPD 180 op 185:
'It seems to me that [the Roman Dutch jurists] attached great importance to the
real intention of the testator, provided that his intention was expressed in a
testamentary disposition executed with such due solemnity as the law requires
. . .'
[14] Aangesien die gesamentlike testament by die dood van die
testatrise verval het, is die status daarvan analoog aan dié van 'n
herroepe testament. Tensy die testateur dit weer op een of ander
wyse kon en inderdaad laat herleef het, is dit van geen krag en
werking meer nie. In dié geval sal enige bedoeling wat daaruit mag
blyk dus onsaaklik wees. Namens die appellant is twee wyses, in die
alternatief, aan die hand gedoen waarop herlewing van die vervalle
testament inderdaad geskied het, te wete, (a) by wyse van die
herinstelling daarvan in die twee latere kodisille, alternatiewelik, (b)
by wyse van die inlywing deur verwysing daarna in die twee kodisille.
[15] Die vrae wat voortspruit uit hierdie betoog is analoog aan dié
wat ontstaan het in Moses v Abinader 1951 (4) SA 537 (A). Die feite
van Moses was in breë trekke soos volg: die erflater het op 6
Augustus 1948 'n testament verly waarin hy sy hele boedel aan sy
twee stiefbroers bemaak het. 'n Paar dae later, op 12 Augustus 1948,
verly hy 'n tweede testament. Daarin herroep hy sy eerste testament
en bemaak hy helfte van sy boedel aan sy twee stiefbroers en die
ander helfte aan die appellant, mev. Moses. Op 5 Julie 1949 verly hy
'n kodisil waarin hy 'n bepaling van die eerste testament wysig sonder
om hoegenaamd na die tweede te verwys. Op grond van hierdie feite
word toe deur een van die stiefbroers, Abinader, betoog dat die
eerste testament, soos gewysig deur die kodisil, as die erflater se
laaste wilsbeskikking aanvaar moet word.
[16] Schreiner AR gaan uit van die standpunt dat onderskei moet
word tussen herinstelling van 'n herroepe testament en inlywing of
inkorporering
daarvan
as
deel
van
'n
latere
testament.
Laasgenoemde, so het hy (op 546H-547G) bevind, was weens die
formaliteitsvereistes vir 'n geldige testament, wat indertyd van
toepassing was (synde vervat in Ordonnansie 14 van 1903
(Transvaal)) nie moontlik nie. Hierteenoor was herlewing deur
herinstelling by wyse van 'n latere testament, volgens Schreiner AR,
in beginsel wel moontlik (op 543B-544C), mits aan die volgende twee
vereistes voldoen word: eerstens moet die dokument waaruit die
testateur se herinstellingsbedoeling blyk, self behoorlik verly wees
(544B); tweedens moet die testateur se bedoeling om die testament
te laat herleef duidelik uit die nuwe dokument blyk (544B-F). Oor die
tweede vereiste laat hy hom onder meer soos volg uit (op 544G-
545A):
'The difficulty I have in agreeing with that decision [of the court below] arises from
the fact that it appears to treat the recognition . . . of a revoked will as if it were
the same thing as an intention to make it effective, which revival requires. The
view of the Provincial Division . . . does not seem to me to be correct. Revival is
the intentional act of bringing to life that which was dead; there is no rule of law
which makes recognition of a revoked will an operative equivalent to revival. The
question is one of fact, whether, there was as [an?] intentional act of revival; and
for recognition to establish such an act the testator must know that his will if not
revived is dead and inoperative.'
[17] Wat die feite van die Moses-saak betref kom Schreiner AR dan
tot die volgende slotsom (op 546G-H):
'Since the will of the 6th August was revoked by that of the 12th August the onus
lay upon the party who alleged that the former had been revived to prove such
revival. In order to discharge that onus he had to show that the terms of the
codicil, read in the light of the circumstances at the time, created a balance of
probabilities that the testator executed the codicil with knowledge at that time that
the will of the 6th August had been revoked and was then of no effect. As it
seems to me to be at least as probable that the testator had in July, 1949, lost
sight of the fact, if he had ever fully appreciated it, that his second will had
completely revoked the first, the onus was in my view not discharged.'
[18] Soos Schreiner AR, was Van den Heever AR ook die mening
toegedaan dat die statutêre formaliteitsvereistes vir 'n geldige
testament geen ruimte laat vir die herlewing van 'n herroepe
testament by wyse van inlywing deur verwysing in 'n latere testament
nie. Anders as Schreiner AR, kom hy egter tot die slotsom dat
herlewing deur herinstelling, volgens ons gemene reg soos aangevul
deur wetgewing, insgelyks nie moontlik was nie. Die enigste manier
waarop 'n testateur, volgens Van den Heever AR se siening, 'n
herroepe testament kan laat herleef, is om dit weer opnuut te verly
(op 552B-C).
[19] Greenberg AR, met wie Fagan AR saamgestem het, was van
oordeel dat die saak suiwer op die feite beslis kon word. In die
verband was hulle dit met Schreiner AR eens, dat die testateur se
indruk dat sy eerste testament nog geldig was, in die pad gestaan het
van 'n herlewingsbedoeling (op 542A-B). Derhalwe het hulle dit
onnodig gevind om tot die debat aangaande die moontlikheid van
herlewing deur herinstelling toe te tree. Wat die uitslag van die appèl
betref, kom Hoexter AR ook tot dieselfde slotsom as dié van sy vier
ampsbroers. Hoewel sy standpunt nie so duidelik blyk uit sy bondige
uitspraak nie, wil dit tog lyk of hy Van den Heever AR se siening
aangaande herinstelling van 'n herroepe testament deel (op 533G-
534H).
[20] Na Moses het die vraag aangaande die moontlike herinstelling
van 'n testament wat herroep is (of verval het) sigself nog nie weer in
hierdie hof voorgedoen nie. Ook in die Hooggeregshof is nog geen
pertinente antwoord daarop gegee nie. In twee beslissings is obiter
aanvaar dat herlewing deur herinstelling in beginsel wel moontlik is,
maar dat 'n herlewingsbedoeling nie op die feite van daardie sake
bevind kon word nie (sien Estate Gonsalves v Pataca 1957 (4) SA
585 (T) op 590G-591A; Raabe v The Master 1971 (1) SA 780 (T) op
781H). In Loureiro v The Master 1981 (4) SA 248 (N) is wel gelas dat
'n testament wat vroeër herroep was as die testateur se uiterste
wilsbeskikking aanvaar moet word, op grond daarvan dat dit deur
herinstelling vervat in 'n latere kodisil herleef het. Aangesien hierdie
bevel egter op onbestrede basis en sonder enige beredenering
toegestaan
is,
dra
dit
nie
werklik
tot
oplossing
van
die
probleemstelling by nie.
[21] Daarteenoor
is
rigtinggewende
bydraes
gelewer
deur
akademiese skrywers (sien bv N J van der Merwe & C J Rowland Die
Suid-Afrikaanse Erfreg, 6 uitg (1990) pp 199-204; Corbett et al, op cit
111; J C Sonnekus 'Herlewing van herroepe testament – vereistes'
1981 TSAR 284; N J Wiechers 'Herlewing van herroepe testament'
(1982) 45 THRHR 80). Al hierdie skrywers ondersteun die standpunt
van Schreiner AR in Moses en doen aan die hand dat dit bo dié van
Van den Heever AR aanvaar moet word.
[22] Ek glo die tyd het aangebreek dat hierdie hof standpunt oor die
aangeleentheid inneem. Veral met die voordeel van akademiese
insette in die tyd wat sedert Moses verloop het, lê die keuse, myns
insiens, voor die hand, naamlik dat ons die standpunt van Schreiner
AR moet aanvaar. Die algemene uitgangspunt in ons reg is van
oudsher dat effek gegee moet word aan die bedoeling van 'n
testateur wat uitdrukking gevind het in 'n geldig verlyde testament
(sien bv Wessels RP in Re Estate Marks supra op 185). Aan beide
die
elemente
van
geldige
verlyding
en
bedoeling
word,
ooreenkomstig Schreiner AR se benadering, erkenning verleen. As
nie aan albei voldoen is nie, het herlewing nie plaasgevind nie en bly
die herroepe testament sonder krag. Geldige verlyding word vereis
ten opsigte van sowel die testament wat herroep is en die
herinstellende testament. Op die aanvaarding dat 'n testateur sy
bedoeling om 'n herroepe testament te laat herleef in 'n geldig verlyde
testament of kodisil te kenne gegee het, ontstaan die vraag welke
doel dit sou dien om, soos Van den Heever AR, daarop aan te dring
dat die testament wat herroep is, weer opnuut verly moet word.
Geldige verlyding is 'n historiese feit wat nie deur die herroeping van
die testament ongedaan gemaak is nie. Soos Van der Merwe en
Rowland op cit 204 dit stel:
'Herroeping beteken slegs dat die behoorlike verlyde instrument nie meer die
uiterste wilsbeskikking van die testateur verteenwoordig nie. Klop die testateur se
uiterste wense op 'n later stadium weer met dié soos in die herroepe testament
weergegee, is daar geen rede waarom die herroepe testament nie opnuut
regskrag kan kry indien die testateur met inagneming van die nodige
testamentsformaliteite, sy begeerte in dié verband kenbaar maak nie.'
[23] In die onderhawige geval gaan dit uiteraard nie oor 'n testament
wat herroep is nie, maar oor een wat verval het. Ek glo egter nie dat
dit in beginsel enige verskil maak nie. By herlewing behoort dieselfde
beginsels en vereistes vir albei te geld. My slotsom is dus dat dit, in
beginsel, wel vir die testateur moontlik was om die vervalle
gesamentlike testament in die latere kodisille te laat herleef. Dit lei
tot die feitevraag – het hy dit inderdaad gedoen? Aan die geldige
verlydingsvereistes is daar duidelik voldoen. Die gesamentlike
testament van 18 Januarie 2002 sowel as die twee latere kodisille
was behoorlik verly.
[24] Die probleem ontstaan met die bedoelingsvereiste. Die
verhoorhof se bevinding was dat die appellant hom nie van sy
bewyslas gekwyt het om 'n herlewingsbedoeling aan die kant van die
testateur te bewys nie. Vir sy redenasie wat tot hierdie benadering
gelei het, het die hof onder meer steun gevind in die inleiding van die
ongeldige derde kodisil (wat in para [6] hierbo aangehaal word). Die
rol wat aan hierdie dokument toegeken is blyk uit para 15 van die hof
a quo se uitspraak. Dit lui soos volg:
'Ek word in hierdie gevolgtrekking versterk deur die bepalings van die derde
kodisil. In die derde kodisil is van uitdruklike bewoording gebruik gemaak om 'n
bedoeling van herlewing of inlywing weer te gee. Die afwesigheid van sodanige
uitdruklike bepaling in die eerste kodisil wat kort tevore verly is en die tweede
kodisil wat op dieselfde dag verly is, is na my mening gevolglik bevestigend van
die afwesigheid van 'n bedoeling van herlewing of inkorporering van die
bepalings van die vervalle testament.'
[25] Ek stem saam met die appellant se beswaar teen die
aanwending van die derde kodisil vir interpretasie doeleindes.
Aangesien hierdie dokument nie as geldige testamentêre geskrif
aanvaar is nie, kan dit nie op enige wyse gebruik word ter bepaling
van die testateur se bedoeling nie en dus ook nie om 'n uitleg te gee
aan geldige testamentêre geskrifte nie. Nietemin moet die hof se
uiteindelike gevolgtrekking myns insiens onderskryf word. Ek vind
ook niks in die bewoording van die eerste en tweede kodisille wat dui
op 'n bedoeling aan die kant van die testateur, dat die gesamentlike
testament van 18 Januarie 2002 wat verval het weer moet herleef
nie. Inteendeel, soos ek hierdie twee kodisille lees, het die testateur
waarskynlik geglo dat die gesamentlike testament voortbestaan het
en derhalwe steeds geldig was. Hy verwys immers daarna as 'my
testament' wat hy dan deur aanvulling wysig terwyl hy die 'res'
onveranderd laat. Die onbeholpe formulering van die testament as
geheel dui voorts op die reële moontlikheid dat hy verkeerde
regsadvies ontvang het aangaande die voortgesette geldigheid van
die gesamentlike testament.
[26] So gesien, is die onderhawige saak nie op die feite te onderskei
van Moses nie. Die redenasie van Schreiner AR, met wie twee van sy
ampbroers op hierdie punt saamgestem het, is dus eweneens hier
van toepassing. Volgens hierdie redenasie sluit 'n verkeerde indruk
aan die kant van 'n testateur dat sy testament nog geldig is, 'n
herlewingsbedoeling uit. Namens die appellant is aan die hand
gedoen dat dit darem 'n hoogs tegniese houding is om in te neem. Ek
stem nie saam nie. Vir al wat ons weet kon die testateur heel anders
opgetree het indien hy geweet het dat die gesamentlike testament nie
meer geldig is nie en dat hy gevolglik 'n vrye keuse het om oor sy
boedel te beskik soos hy wil. Hiervolgens is die onafwendbare
slotsom dus dat die appellant nie daarin geslaag het om 'n
herlewingsbedoeling aan die kant van die testateur te bewys nie.
[27] Dit bring my by die appellant se alternatiewe betoog dat die
testateur die gesamentlike testament laat herleef het deur dit by die
latere kodisille in te lyf. Soos ek egter reeds vroeër aangedui het, was
die een aangeleentheid waaroor die regters in Moses dit eens was,
dat
inlywing
deur
verwysing
nie
ingevolge
die
statutêre
formaliteitsvereistes vir 'n geldige testament wat indertyd van
toepassing was, kon plaasvind nie. Voorts blyk die algemeen
aanvaarde standpunt te wees dat die huidige Wet (van 1953) geen
verandering aan hierdie posisie teweeg gebring het nie (Sien bv
Corbett et al op cit pp 66-68; Van der Merwe en Rowland op cit
pp 302; LAWSA 1st Re-issue Vol 31 para 240).
[28] In die algemeen gesproke, is die probleem wat die erkenning
van inlywing deur verwysing in die weg staan, die feit dat selfs waar
beide die herroepe (of vervalle) testament en die herinstellende
testament elkeen op sy eie behoorlik verly was, hulle gewoonlik nie in
teenwoordigheid van dieselfde getuies en by dieselfde geleentheid
deur die testateur onderteken is nie (sien bv Estate Orpen v Estate
Atkinson 1966 (2) SA 639 (C) 645A-C). Na die toevoeging van a 2(3)
tot die Wet in 1992, is aan die hand gedoen dat hierdie probleme
ondervang kan word deur die hof vir kondonasie van die
formaliteitsgebreke te nader (sien bv Corbett et al op cit pp 68;
Francois du Toit 'Enkele gedagtes rondom artikel 2(3) van die Wet op
Testamente van 1953, inlywing deur verwysing en die herlewing van
herroepe testamente' (1997) 60 THRHR 101). Aangesien daar egter
in hierdie saak geen aansoek in terme van a 2(3) was nie, kom
hierdie moontlikheid nie ter sprake nie.
[29] Wat die appellant wel aangevoer het, was dat die onderhawige
saak van die 'normale' te onderskei is deurdat dieselfde twee getuies
toevallig teenwoordig was toe die gesamentlike testament en die
twee kodisille geteken is. Of dit werklik 'n verskil maak, hoef egter, na
my oordeel, nie beslis te word nie. Soos ek dit sien, is daar 'n ander
onoorkomelike struikelblok in die pad van die appellant se argument
gebaseer op inlywing deur wysiging. Dit is dat, ooreenkomstig die
bewoording van die kodisille, die testateur nooit bedoel het om die
gesamentlike testament by die kodisille in te lyf nie. Sy verklaarde
bedoeling was immers om die gesamentlike testament, wat volgens
sy indruk, steeds 'n afsonderlike, geldige bestaan gevoer het, te
wysig. Ook in hierdie opsig stem ek derhalwe met die verhoorhof
saam.
[30] Om hierdie redes word die appèl van die hand gewys met
koste, welke koste uit die boedel van wyle F J T Bezuidenhout betaal
moet word.
..................................
F D J BRAND
APPÈLREGTER
STEM SAAM:
Van Heerden AR
Combrinck AR
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA OPSOMMING - In die Hoogste Hof van Appèl
In die saak tussen :
GEORGE FREDERIK WESSELS NO
APPELLANT
en
DIE MEESTER VAN DIE HOOGGEREGSHOF,
BLOEMFONTEIN
EERSTE RESPONDENT
FREDERIK JOHANNES THEODORUS
BEZUIDENHOUT (JNR)
TWEEDE RESPONDENT
JACOMINA JOHANNA GROBLER
DERDE RESPONDENT
JEREMIAS JACOBUS ANDRIES BEZUIDENHOUT
VIERDE RESPONDENT
WILHELMINA CECILIA RAUTENBACH
VYFDE RESPONDENT
FREDDIE RAUTENBACH
SESDE RESPONDENT
REINETTE RAUTENBACH
SEWENDE RESPONDENT
ESMERELDA BEZUIDENHOUT
AGTSTE RESPONDENT
JOHANNA ELIZABETH NEL
NEGENDE RESPONDENT
PATRICIA BEZUIDENHOUT
TIENDE RESPONDENT
FREDERIK BEZUIDENHOUT (JNR)
ELFDE RESPONDENT
Van:
Die Griffier, Hoogste Hof van Appèl Appeal
Datum:
23 Maart 2007
Status:
Dadelik
Op 23 Maart 2007 het die Hoogste Hof van Appèl uitspraak gegee in die
saak van Wessels NO v Die Meester van die Hooggeregshof,
Bloemfontein, en andere. Mnr Wessels is die eksekuteur in die boedel
van wyle F J T Bezuidenhout (die testateur) wat op 7 Maart 2004
oorlede is.
Op 18 Januarie 2002 het die testateur en sy eggenote (die testatrise) 'n
gesamentlike testament gemaak. Die testament was duidelik gebaseer
op die veronderstelling dat die testateur eerste te sterwe sou kom.
Hierdie veronderstelling het egter later geblyk onjuis te wees aangesien
die testatrise toe inderdaad eerste oorlede is. Na die dood van die
testatrise het die testateur twee kodisille verly waarin hy die
gesamentlike testament as sy testament beskryf het en daarna
voortgegaan het om die bepalings van die testament in sekere opsigte
te wysig.
As eksekuteur in die testateur se boedel, het mnr Wessels die standpunt
ingeneem dat die gesamentlike testament, soos gewysig deur die twee
kodisille, as die testateur se laaste wilsbeskikking aanvaar moes word.
Daarteenoor was die Meester van oordeel dat die gesamentlike
testament by die testatrise se dood verval het, dat die testateur
derhalwe sonder enige testament te sterwe gekom het en dat sy boedel
gevolglik intestaat moet vererf.
Die Hooggeregshof in Bloemfontein het die Meester se standpunt
bevestig. Op appèl het die Hoogste Hof van Appèl met die beslissing
van die Hooggeregshof akkoord gegaan. Omdat die gesamentlike
testament gebaseer was op die veronderstelling dat die testatrise die
langslewende sou wees, so het beide howe bevind, het die testament by
haar vooroorlye verval.
Die appellant se verdere betoog dat die testateur die vervalle testament
deur middel van die twee latere kodisille laat herleef het, het twee vrae
laat ontstaan. Eerstens die regsvraag, waaroor daar voor die beslissing
van die Hoogste Hof van Appèl in hierdie saak onsekerheid was,
naamlik of 'n testateur in beginsel in staat is om 'n vervalle testament in
'n latere kodisil te laat herleef. Tweedens, die feitevraag of, indien dit
wel moontlik is, die testateur op die feite van die onderhawige geval
bedoel het om dit te doen.
Op die regsvraag het die HHA die appellant gelyk gegee. Op die
feitevraag het die hof egter bevind dat die appellant nie daarin geslaag
het om 'n herlewingsbedoeling aan die kant van die testateur te bewys
nie. Die bewoording van die twee kodisille, so het die hof bevind, dui
daarop dat die testateur geglo het dat die gesamentlike testament nog
geldig is. Hoewel hierdie geloof verkeerd was, was dit, na die hof se
oordeel, in stryd met 'n bedoeling aan die kant van die testateur om die
testament te laat herleef. Met appellant se antwoord hierop, dat dit 'n
hoogs tegniese standpunt is om in te neem, het die hof nie saamgestem
nie. Dit kan nie gesê word, het die hof bevind, dat die testateur op
dieselfde wyse sou optree indien hy geweet het dat die gesamentlike
testament nie meer geldig was nie.
|
3714
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 1192/2018
In the matter between:
DIRECTOR OF PUBLIC PROSECUTIONS,
PRETORIA
APPELLANT
and
MFANIMPELA NTOKOZO ZULU
RESPONDENT
Neutral citation: DPP, Pretoria v Zulu (1192/2018) [2021] ZASCA 174 (10
December 2021)
Coram:
SALDULKER
ADP
and
MATHOPO,
NICHOLLS
and
MABINDLA-BOQWANA JJA and KGOELE AJA
Heard:
This appeal was disposed of without an oral hearing in terms of s
19(a) of the Superior Courts Act 10 of 2013.
Delivered: 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 are
deemed to be 09h45 on 10 December 2021.
Summary: Sentence – Appeal by the State in terms of s 311(1) of the Criminal
Procedure Act 105 of 1977 – whether the issue raised is a question of law or fact
– whether sentence disproportionate to the crime – sentence imposed by Regional
Court reinstated.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Davis J and Nair
AJ sitting as court of appeal):
The appeal is upheld.
The order of the high court in respect of the sentences on the three counts
of rape is set aside and replaced with the following order:
‘1. The appeal against the sentences in respect of the three counts of rape is dismissed.
2. The judgment of the Ermelo Regional Court in the Regional Division of Mpumalanga
in respect of the life sentences imposed on counts 1, 2, and 3 are confirmed. The
sentences will run concurrently.’
JUDGMENT
Kgoele AJA (Saldulker ADP and Mathopo, Nicholls and Mabindla-
Boqwana JJA concurring):
[1] This is an appeal by the Director of Public Prosecutions, Pretoria (the
appellant), against the sentence imposed on 1 June 2018 by the Gauteng Division
of the High Court, Pretoria, wherein Davis J and Nair AJ (the high court) partially
set aside the sentence of Magistrate Jonker sitting at Ermelo, Mpumalanga
Regional Division (the regional court). The appeal is brought in terms of s 311(1)
of the Criminal Procedure Act 51 of 1977 (the CPA).
[2] On 12 May 2016, Mr Mfanimpela Ntokozo Zulu (the respondent), was
convicted of three counts of rape read with the provisions of s 51(1) of the
Criminal Law Amendment Act 32 of 2007 (the CLAA) and two counts of
common assault, by the regional court. He was sentenced to life imprisonment on
each of the rape counts and to three months imprisonment in respect of both the
assault counts. All of the sentences were ordered to run concurrently.
[3] He successfully obtained leave from the regional court against his
conviction and sentence. The appeal was heard by the high court, which
dismissed the appeal against conviction. However, the high court upheld the
appeal against sentence, and the life imprisonment imposed on each count of rape
was set aside and substituted with a sentence of 20 years imprisonment on counts
1, 2, and 3 respectively. The concurrency of the sentences remained intact with
the result that the respondent’s effective sentence is 20 years.
[4] It bears mention that the sentences of life imprisonment imposed by the
regional court in respect of the rape counts, were in consequence of the finding
that no substantial and compelling circumstances were present that could warrant
a deviation from the prescribed minimum sentences of life, prescribed by the
CLAA. The high court, even though it did not find any reason to interfere with
this finding by the regional court, including the concurrency of the sentences
imposed, concluded that the sentence of life imprisonment was disproportionate
to the offences of rape the respondent was convicted of. In arriving at its
conclusions, it relied on the judgments of Abrahams, Mahomotsa, Nkomo, GN,
and Ganga,1 where it was found that, even when a life sentence is a prescribed
minimum sentence, as an ultimate sentence, it must not be imposed lightly. It
considered itself bound by those judgments on the basis that they were the
precedents and found that the regional court misdirected itself in that it did not
consider the approach adopted by our courts in those cases.
1 S v Abrahams 2002 (1) SACR 116 (SCA); S v Mahomotsa 2002 (2) SACR 435 (SCA); S v Nkomo 2007 (2)
SACR 198 (SCA); S v GN 2010 (1) SACR 93 (T) and S v Ganga [2015] ZAWCHC 171; 2016 (1) SACR 600
(WCC).
[5] Aggrieved by these findings, the appellant launched this appeal against the
reduced sentences. As already indicated, the appellant raised what it termed a
question of law in terms of s 311 of the CPA, which was formulated as follows:
‘Did the court a quo correctly weigh the cumulative factors in aggravation and mitigation of
sentence against the accused’s criminal liability, in terms of the Criminal Law Amendment Act
105 of 1997, in accordance with the principles enunciated in S v Malgas 2001 SACR 496 (SCA)
inter alia?’
[6] Before turning to the requirements of section 311, a brief summary of the
background facts that led to the respondent's conviction is necessary. The
complainant, who was a minor at the time, started staying with her mother and
the respondent, who is her stepfather, in 2010. She testified that during the periods
November 2011, August 2012, and February 2015, she was raped on numerous
occasions by the respondent. She was 12, 13, and 15 years old, respectively, at
the time. The respondent would usually approach her after school when no one
else was present at home. He gained her trust by telling her that he would show
her what boys do to girls. He would then smear Vaseline on his penis and
gradually, over a period extending over weeks and months, penetrate the
complainant vaginally.
[7] The repeated rapes did not only cause the complainant to lose her virginity,
but also to fall pregnant several times. The respondent influenced her to tell her
mother that she was impregnated by her boyfriend on each occasion. When the
complainant’s mother wanted to approach the boy’s parents, the respondent
convinced her not to, saying it was unnecessary as boys nowadays always deny
impregnating girls. The multiple pregnancies were terminated by the use of pills
from shops allegedly run by Nigerian citizens. These were procured for her at the
insistence of the respondent. The complainant’s mother rejected her at some stage
believing that this young boy impregnated her.
[8] The respondent also isolated the complainant because he did not want to
see her with her male school friends. He often followed her after school to check
on her. On one of the days, he assaulted the complainant with an open hand when
he found her with one Thabo Dludlu after school. He also threatened to stab
Thabo with a knife, but Thabo outran him. These are the allegations informing
the two counts of assault he was convicted of.
[9] Coming back to the jurisdictional requirements of s 311, it is now settled
that essentially, s 311 provides the prosecuting authority with an appeal
opportunity directly to this Court under the following conditions:
(a)
There was an appeal to the high court (it is irrelevant which party brought
this appeal);
(b)
That court of appeal (ie the high court) found in favour of the convicted
person on a question of law.2
This section confers an automatic right of appeal when the conditions set out
above are satisfied.3
[10] The first jurisdictional requirement does not pose any problem in this
appeal. The second one, whether the question raised by the appellant is a question
of law is one of the issues pertinently raised by the respondent. This Court can
only entertain the merits if it is satisfied that the appellant's ground of appeal
involves a question of law.
2 Director of Public Prosecutions, Gauteng Division, Pretoria v Moabi [2017] ZASCA 85; 2017 (2) SACR 384
(SCA) para 32. See also a Du Toit et al Commentary on the Criminal Procedure Act [Service 60, 2018] p 30-67.
3 Ibid paras 35, 45 and 47. See also Director of Public Prosecutions, Gauteng v MG [2017] ZASCA 82; 2017 (2)
SACR 132 (SCA) para 16.
[11] Before us, the respondent relied on several decisions of this Court to
support the contention that the nature of the question formulated by the appellant
is simply a question of fact clothed as a legal question to provide it with
legitimacy.4 Most of these authorities were thoroughly analysed by this Court in
MG and need no further emphasis. It suffices to state that the finding in
Mphaphama, upon which the respondent heavily relied, was qualified therein as
follows:5
‘Although the facts in Mphaphama are at first blush not materially distinguishable from the
facts of this case, the issues raised in the two cases are different. Hence the different outcomes.
Accordingly, the dictum in Mphaphama, that “the exercise of a judicial discretion in favour of
a convicted person in regard to sentence . . . cannot be a question of law”, is cast too wide. In
particular, it does not deal with the position where that discretion has been exercised on an
incorrect legal basis. An exercise of a judicial discretion based on a wrong principle or
erroneous view of the law is clearly a question of law decided in favour of a convicted person.
This also distinguishes the present matter from that of Mosterd because it is not the nature of
the sentence, but the legal basis on which it was approached, which places this matter within
the ambit of s 311 of the CPA.’
[12] To substantiate the fact that the question raised involves a question of law,
the appellant argued that ‘the high court failed to properly assess the respondent’s
criminal liability against Schedule 2, Part 1 of the CLAA, in that the offences the
respondent was convicted of resorted under item (a)(i), since the complainant had
been raped more than once and further under item (b)(ii) in that the complainant
was a minor under the age of 16 years. Further that, its ‘maudlin sympathy’ for
the respondent is against the principles enunciated by this court in Malgas.’6
4 Director of Public Prosecutions, Gauteng, v Mphaphama [2016] ZASCA 8; 2016 (1) SACR 495 (SCA) para
11; Director of Public Prosecutions v Olivier 2006 (1) SACR 380 (SCA) paras 21-22; Director of Public
Prosecutions, Western Cape v Kock [2015] ZASCA 197; 2016 (1) SACR 539 (SCA) para 9; Director of Public
Prosecutions: Gauteng Division, Pretoria v Mbonani [2020] (SCA) ZASCA 115 para 31.
5 Para 29 MG (fn 3 above).
6 S v Malgas 2001 SACR 496 (SCA).
[13] As to the question of whether the issues raised in an appeal are a question
of law or facts, Magmoed7 remains a good authority on how to approach this
question. The approach has been widely accepted and applied by this Court in
various judgments8 and needs no further emphasis.
[14] Although the high court concluded, that ‘to impose an imprisonment for
life in the present matter would be disproportionate to the life sentences in such
other matters which would deserve the ultimate penalty’, it confirmed the
regional court’s finding that there were no substantial and compelling
circumstances that warranted the court to deviate from the prescribed minimum
sentence prescribed, which is life imprisonment. However, the high court
bemoaned the fact that the regional court did not consider the issue of
proportionality as one of the principles a court must take into consideration when
imposing a sentence of life imprisonment.
[15] There is no doubt that the facts and circumstances of this case bring the
respondent’s rape convictions within the ambit of the prescribed minimum
sentence of life imprisonment. First, the complainant is a minor, and second, she
was raped more than once. The provisions of the CLAA are implicated as being
the law applicable to the conduct of the respondent.
[16] My understanding of the question raised by the appellant is that it requires
an inquiry first into whether the high court’s view and understanding of the
mandatory provisions of the CLAA are correct and second, whether the high court
properly appreciated the import of the circumstances of this matter in its
determination of the proportionality test as espoused in Malgas, together with the
7 Magmoed v Janse van Rensburg & Others 1993 (1) SACR 67 (A); 1993 (1) SA 777.
8 Director of Public Prosecutions: Gauteng Division, Pretoria v Pooe [2021] ZASCA 55; [2021] 3 All SA 23
(SCA); 2021 (2) SACR 115 (SCA); Director of Public Prosecutions, Western Cape v Schoeman and Another
2020 (1) 449 SACR (SCA); Director of Public Prosecutions: Limpopo v Molope and Another [2020] ZASCA 69;
[2020] 3 All SA 633 (SCA); 2020 (2) SACR 343 (SCA).
precedents it quoted. The issue regarding proportionality involves a question of
whether the punishment fits the crime, it is, therefore, a question of law. Simply
put, the inquiry does not concern the nature of the sentences, but the legal basis
on which the reduced sentences were approached. After all, as already quoted
above, it is trite that an erroneous view of the law is a question of law. I am
satisfied that the question raised is a question of law.
[17] That being so, this Court is empowered to consider the sole question in
the appeal as to whether there was any legal basis that entitled the high court to
interfere with and reduce the sentences imposed by the regional court. The nub
of the appellant’s case is that the reduction of the sentences in the rape counts was
based on an incorrect application of the accepted legal principles in sentencing
and the provisions of the CLAA, including an incorrect finding that the
circumstances of this case are not the ‘worse kind of rape’ that warrants a
maximum punishment.
[18] It is important at the outset to re-state the basic principle that the
determination of a sentence in a criminal matter is pre-eminently a matter for the
discretion of the trial court and that the power of the appellate court to interfere
with a sentence imposed by a lower court is limited. I now consider whether this
Court is entitled to interfere with the sentences imposed by the high court.
[19] After confirming the order of the regional court that there are no
substantial and compelling circumstances in this matter, the high court held in
para 10 of its judgment in justifying its decision to interfere with the sentences
imposed by the regional court:
‘However, that is not the end of the inquiry. Our courts have, in a series of judgments
emphasised that one should not lose sight of the fact that life imprisonment is the most severe
sentence which a court can impose and that the question whether it is an appropriate sentence
in respect of its proportionality to the particular circumstances of a case requires careful
consideration. See: S v Abrahams 2002 (1) SACR 116 (SCA); S v Mahomotsa 2002 (2) SACR
435 (SCA); S v Nkomo 2007 (2) SACR 189 (SCA) and S v GN 2010 (1) SACR 93 (T). In S v
Ganga 2016 (1) 600 (WCC) it was further found that, even when a life sentence is a prescribed
minimum sentence, as an ultimate sentence, it must not be imposed lightly. A court must still
seek to differentiate between sentences in accordance with the dictates of justice and where a
magistrate did not sufficiently give consideration to the approach adopted by our courts in the
cases referred to above and simply considered whether the circumstances of the accused
displayed substantial and compelling circumstances, such an approach would amount to a
misdirection. Unfortunately, this is what happened in this present instance, necessitating
interference by this court on appeal.’
[20] In coming to the conclusion that the sentences were disproportionate to
the offences of rape the respondent was convicted of, it remarked ‘society has
given us worse examples of the extent or brutality of crimes against women’. The
latter remarks depict that it did not consider the circumstances of this case to fall
into the category of ‘the worse kind of scenario’. As the latter remarks are
inextricably linked with the issue of proportionality, the two will be analysed
together hereunder.
[21] In Malgas, the issue of proportionality was couched as follows:9
‘What that something more must be it is not possible to express in precise, accurate and all-
embracing language. The greater the sense of unease a court feels about the imposition of a
prescribed sentence, the greater its anxiety will be that it may be perpetuating an injustice. Once
a court reaches the point where unease has hardened into a conviction that an injustice will be
done, that can only be because it is satisfied that the circumstances of the particular case render
the prescribed sentence unjust or, as some might prefer to put it, disproportionate to the crime,
the criminal and the legitimate needs of society. If that is the result of a consideration of the
circumstances the court is entitled to characterise them as substantial and compelling and such
as to justify the imposition of a lesser sentence.’
9 S v Malgas 2001 (2) SA 1222 SCA at 1234H (para 22).
[22] To assess the proportionality of the prescribed sentence in a particular case,
the sentencing court must determine what a ‘proportionate’ sentence would be,
considering all the circumstances traditionally relevant to sentencing.10 The
proportionality of a sentence cannot be determined in the abstract.11 The principle
is trite and was couched in Malgas as follows:
‘To attempt to deny a court the right to have any regard whatsoever to past sentencing patterns
when deciding whether a prescribed sentence is in the circumstances of a particular case
manifestly unjust is tantamount to expecting someone who has not been allowed to see the
colour blue to appreciate and gauge the extent to which the colour dark blue differs from it. As
long as it is appreciated that the mere existence of some discrepancy between them cannot be
the sole criterion and that something more than that is needed to justify departure, no great
harm will be done.’12
[23] In Mahomotsa,13 one of the authorities relied upon by the respondent’s
legal representative, a practical approach of this principle is well illustrated and
buttresses the point made above. The court remarked ‘[whilst] I am persuaded
that in respect of the first count the factors mentioned in para 17 above, taken
together with the accused’s relative youth and his other personal circumstances,
the fact that his previous conviction, though of a sexual nature, did not involve
non-consensual sex, are such that a departure from the prescribed sentence is
justified on the basis that such a sentence would be disproportionate to the crime,
the criminal and the legitimate interest of the society, the same cannot be said
without more about the second count’.
[24] It is therefore clear that there is a contradictory and irreconcilable tension
in the findings of the high court. It found no substantial and compelling
10 S v Vilakazi [2008] ZASCA 87; [2008] 4 All SA 396 (SCA); 2009 (1) SACR 552 (SCA); 2012 (6) SA 353
(SCA) para 16.
11 Ibid para 20.
12 S v Malgas 2001 (1) SACR 469 (SCA) at para 21.
13 Mahomotsa above fn 1 para 20.
circumstances justifying a departure from the prescribed minimum sentences and
found no reason to interfere with the concurrency of sentences as ordered by the
regional court, yet, after making this finding, it found another reason that justified
the imposition of a lesser sentence. In this regard it erred.
[25] Although the legislature’s aim in promulgating the minimum sentence
regime was to achieve a ‘severe, standardised and consistent’ response from
courts in imposing sentences unless there were truly convincing reasons for a
different response’ as enunciated in Malgas,14 it is important to always note that
it is trite that the invocation of the proportionality test must always be determined
on the peculiar facts of each case.
[26] In more recent times and after the guidelines in Malgas were confirmed
by the Constitutional Court, Petse JA as he then was, remarked as follows in
Kwanape:15
‘It was further submitted on behalf of the appellant that this was not the worst rape imaginable.
Thus, concluded the argument, that consideration, viewed with other mitigating factors,
justifies a lesser sentence. I do not agree. In S v Mahomotsa this court made plain that the fact
that more serious cases than the ones under consideration are imaginable is not decisive. Mpati
JA said:
“[19] Of course, one must guard against the notion that because still more serious cases than
the one under consideration are imaginable, it must follow inexorably that something should
be kept in reserve for such cases and therefore that the sentence imposed in the case at hand
should be correspondingly lighter than the severer sentences that such hypothetical cases would
merit there is always an upper limit in all sentencing jurisdictions, be it death, life or some
lengthy term of imprisonment, and there will be cases which, although differing in their
respective degrees of seriousness, nonetheless all call for the maximum penalty imposable. The
fact that the crimes under consideration are not all equally horrendous may not matter if the
14 Para 25.
15 S v Kwanape [2012] ZASCA 168; 2014 (1) SACR 405 (SCA) para 20. (References omitted.)
least horrendous of them is horrendous enough to justify the imposition of the maximum
penalty.”
Accordingly this case, on its facts, is indeed horrendous enough to justify the imposition of the
maximum penalty.’
[27] In this matter, sight should not be lost of the fact that society views the
respondent’s heinous conduct in a very serious light. This was also borne out by
the high court, also referring to the offences the respondent was convicted of as
‘abhorrent’. Within the context of this case, the injunction to protect children
from these crimes assumes a prominent role. Courts are reminded in Malgas that
when considering what sentence to impose, ‘emphasis was to be shifted to the
objective gravity of the type of crime and public’s need for effective sanctions
against it’.16
[28] In this matter, we have a step-father who abused his step-daughter in the
early years of her life and not only impregnated her several times but caused her
to experience the trauma and pain associated with abortion. Not only once, but
many times. That the commission of these offences took place over a protracted
period of three years, with the resultant after-effects, are some of the egregious
distinguishing features which set apart this case from the cases the high court
relied on.
[29] In fact, there are more aggravating factors in this case. This also comes
out clearly from the remarks by the high court that ‘[having] regard to the
evidence of the minor, the conduct of the [appellant] could have resulted in many
more than the three charges . . .’. In addition, the respondent is not a candidate
for rehabilitation. He spurned the mercy he was given by the previous court
because five years after he was released on parole, he committed rape again. If
16 Para 25.
one has regard to the circumstances as to how the rapes were committed including
the resultant consequences that flowed from them, there is no doubt that they are
horrendous enough to justify the imposition of the maximum penalty. Unlike the
regional court, the high court gave insufficient weight to the seriousness of the
offences in this case. It is in the interest of society that the respondent’s conduct
in the circumstances of this case be appropriately sentenced.
[30] Apart from the fact that the reasons given by the high court rested on
tenuous grounds, what is disturbing, in this case, is that the sentences imposed by
the high court are woefully inadequate when viewed within the context of the
circumstances of this case. In finding that the crimes the respondent was
convicted of were not the worst kind of rapes, the high court clearly underplayed
the circumstances in this matter. The failure by the high court to apply correctly
the appropriate provision of the CLAA and the principles as laid down in Malgas,
coupled with how it underplayed the seriousness of the offences viewed in the
context of the circumstances of this matter, is a material misdirection that entitles
this court to interfere.
[31] For all the preceding reasons, I am not persuaded that there was
misdirection, let alone a material misdirection on the part of the regional court. I
conclude that the sentences imposed by the regional court should stand, as they
are proportionate to the offences committed by the respondent and the
circumstances of this case. The appeal must, accordingly, succeed. The appeal
against the reduced sentences in respect of the three counts of rape imposed by
the high court should be upheld.
[32] In the result, the following order is made:
The appeal is upheld.
The order of the high court in respect of the sentences on the three counts
of rape is set aside and replaced with the following order:
‘1. The appeal against the sentences in respect of the three counts of rape is dismissed.
2. The judgment of the Ermelo Regional Court in the Regional Division of Mpumalanga
in respect of the life sentences imposed on counts 1, 2, and 3 are confirmed. The
sentences will run concurrently.’
_____________________
A M KGOELE
ACTING JUDGE OF APPEAL
APPEARANCES
For the appellant:
C P Harmzen
Instructed by:
Director of Public Prosecutions,
Pretoria
Director of Public Prosecutions,
Bloemfontein
For the respondent:
M G Botha
Instructed by:
Pretoria Justice Centre
Bloemfontein Justice Centre
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
10 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
DPP, Pretoria v Zulu (1192/2018) [2021] ZASCA 174 (10 December 2021)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal against the
sentence imposed by the Gauteng Division of the High Court, Pretoria.
On 12 May 2016, the respondent (the step-father of the complainant) was convicted of three counts of
rape and two counts of common assault by the regional court. The complainant was a minor when she
was raped in November 2011, August 2012, and February 2015. The respondent impregnated her on
these occasions and persuaded her to abort the pregnancies.
He was sentenced to life imprisonment on each of the rape counts and three months’ imprisonment
regarding both the assault counts. All of the sentences were ordered to run concurrently. His appeal
against conviction and sentence, with leave of the regional court, was heard by the high court, which
dismissed the appeal against conviction. However, the high court upheld the appeal against the
sentence, and the life imprisonment imposed on each count of rape was reduced to a sentence of 20
years imprisonment on counts 1, 2, and 3. The concurrency of the sentences remained intact, with the
result that the respondent’s effective sentence was 20 years.
In coming to its conclusion, the high court bemoaned the fact that the regional court did not consider
whether the sentences it imposed were proportional to the rape counts the respondent was convicted
of. Further that, the rape counts were not the worst imaginable.
The appellant brought this appeal in terms of s 311(1) of the Criminal Procedure Act 51 of 1977 (the
CPA) which confers a party an automatic right of appeal to this Court if it involves a question of law.
The nub of the appellant’s case was that the reduction of the sentences in the rape counts was based
on an incorrect application of the accepted legal principles in sentencing and the provisions of the CLAA,
including an incorrect finding that the circumstances of this case were not of a ‘worse kind of rape’ that
warranted a maximum punishment. The respondent argued that the issue raised by the appellant is not
a question of law but fact, and that the high court’s decision to reduce the rape sentences is
unassailable.
The SCA found that the question raised by the appellant is a question of law that entitles it to hear the
appeal. Furthermore, the SCA held that there was a material misdirection that warranted it to intervene
because the high court failed to apply correctly the provision of the CLAA and the principles laid in S v
Malgas dealing with the issue of proportionality, coupled with how it underplayed the seriousness of the
offences viewed in the context of the circumstances of this matter.
As a result, the SCA concluded that there are more aggravating factors that displayed the respondent's
egregious conduct, which justify the maximum sentences prescribed in the circumstances of this matter.
The appeal accordingly succeeded.
~~~~ends~~~~
|
3918
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 1109/2020
In the matter between:
RUSTENBURG PLATINUM MINES LIMITED FIRST APPELLANT
ARM MINING CONSORTIUM LIMITED SECOND APPELLANT
and
THE REGIONAL MANAGER, LIMPOPO
REGION, DEPARTMENT OF
MINERAL RESOURCES (DMR) FIRST RESPONDENT
DEPUTY DIRECTOR-GENERAL:
MINERAL REGULATION, DMR SECOND RESPONDENT
MINISTER OF MINERAL RESOURCES
AND ENERGY THIRD RESPONDENT
GENORAH RESOURCES (PTY) LIMITED FOURTH RESPONDENT
DIRECTOR-GENERAL, DMR FIFTH RESPONDENT
NKWE PLATINUM (SOUTH AFRICA)
(PTY) LIMITED SIXTH RESPONDENT
INTERNATIONAL GOLDFIELDS
LIMITED
SEVENTH RESPONDENT
MORUTHANE BEN SEKHUKHUNE N O EIGHTH RESPONDENT
BAUBA A HLABIRWA MINING
INVESTMENTS (PTY) LIMITED
NINTH RESPONDENT
NKWE PLATINUM LIMITED
TENTH RESPONDENT
Neutral citation: Rustenburg Platinum Mines Limited and Another v The
Regional Manager, Limpopo Region, Department of Mineral
Resources and Others (1109/2020) [2022] ZASCA 157 (18
November 2022)
Coram:
DAMBUZA ADP and VAN DER MERWE, NICHOLLS and
MBATHA JJA, and MEYER AJA
Heard:
1 March 2022
Delivered: 18 November 2022
Summary:
Administrative Law – review of decisions of Regional
Manager and Deputy Director General of the Department of Mineral resources
and Energy.
Interpretation of provisions of the Mineral and Petroleum Resources
Development Act 28 of 2002 (MPRDA) – refusal of application for prospecting
right under s 17(2) of the MPRDA considered – a prospecting right is not a pre-
requisite for a mining right under s 22 of the MPRDA.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Kollapen J,
sitting as court of first instance):
The appeal is dismissed with costs including the costs of two counsel, which costs
shall be paid by the second appellant.
JUDGMENT
Dambuza ADP (Van der Merwe, Nicholls and Mbatha JJA and Meyer AJA
concurring)
Introduction
[1] In this appeal the second appellant seeks an order reviewing and setting
aside seven decisions made by functionaries of the Department of Minerals and
Energy (DMRE).1 The decisions were challenged in an application for review
brought by the first appellant, Rustenburg Platinum Mines Limited (RPM), a
wholly owned subsidiary of Anglo Platinum Limited (Anglo Platinum), together
with the second appellant, ARM Mining Consortium Limited (ARM). That
application was dismissed by the Gauteng Division of the High Court, Pretoria,
Kollapen J (high court).2 This appeal, against the dismissal of the review
application, is with the leave of the high court.
1 When the review application was launched the Department was known as the Department of Mineral Resources
(DMR). On 29 May 2019, the name was changed to Department of Mineral Resources and Energy DMRE).
2 The separate applications by RPM and ARM challenging the granting of prospecting rights to Genorah and
Bauba were consolidated in November 2014.
[2] The first contested decision was the acceptance, by the first respondent,
DMRE’s Regional Manager in the Limpopo Region (Regional Manager), of a
prospecting application lodged by King Sekhukhune III and later ceded to the
ninth respondent, Bauba A Hlabirwa Mining Investments (Pty) Limited (Bauba).
The second was the acceptance, by the Regional Manager, of an application for a
prospecting right by the fourth respondent, Genorah Resources (Pty) Ltd
(Genorah), a Black Empowerment entity. The third decision was a refusal, by
DMRE’s Deputy Director-General, of RPM’s application for a prospecting right.
The fourth and fifth decisions were the granting of prospecting rights to King
Sekhukhune and Genorah. The sixth decision was the renewal of the Bauba
prospecting right. And the seventh was the granting of a mining right to Genorah.
Background
[3] The contested prospecting and mining rights related to eight farms
cumulatively known as the Modikwa Deeps Properties which are located in the
Magisterial District of Sekhukhune (Eastern Bushveld complex). The land is
adjacent to the Modikwa Platinum Mine which was operated by RPM and ARM
at the time of the events under consideration. It comprises rural farms known as
De Kom 252 KT (De Kom), the remaining extent of the farms Garatouw 282 KT
(Garatouw), Hoepakrantz 291 KT (Hoepakrantz), Portion 1 and the remaining
extent of the farm Eerste Geluk 322 KT (Eerste Geluk), Zwemkloof 283 KT
(Zwemkloof), Grootvygenboom 283 KT (Grootvygenboom), Genokakop 285 KT
(Genokakop), Houtbosch 323 KT (Houtbosch), and Portions 1 and 2 of the farm
Nooitverwacht 324 (Nooitverwacht).
[4] During the 1980’s the Anglo American Platinum Corporation Group
(Corporation Limited) concluded a number of agreements with the self-governing
territory of Lebowa through the Lebowa Minerals Trust (LMT) as the holder of
various mineral rights over land in the Limpopo Province. Flowing from these
agreements, Anglo Platinum and its subsidiaries conducted joint venture
prospecting activities for platinum and related minerals over the land.
[5] In December 2000 three joint venture agreements were cancelled following
negotiations with the third respondent, the Minister of Mineral Resources and
Energy (Minister), who perceived them to result in a concentration of mineral
rights in the hands of the ARM Group. At that time prospecting had already
occurred on the properties to varying degrees, and mines had been established.
The agreement with the Minister was that on cancellation of the joint venture
agreements in respect of some of the Modikwa Deeps Properties, twelve mineral
leases and two prospecting agreements would be concluded between the joint
venture entities and the Minister. In respect of twelve properties, the rights of
these entities would be limited to purchasing the platinum group and all
associated metals and minerals mined on the properties for a certain period.
[6] With regard to the prospecting agreements, RPM and ARM would form a
joint venture to prospect and operate platinum mining activities on a defined joint
venture area. RPM was to contribute the old order rights which it held over the
Modikwa Deeps Properties while ARM would contribute stipulated finance to
the joint venture.
[7] In line with that agreement, on 16 March 2004 RPM applied for a
prospecting permit for platinum metals and other minerals under s 6 of the
Minerals Act 50 of 1991 (the Minerals Act). On 1 May 2004, before the
Department had made a decision on RPM’s prospecting permit application, the
Minerals Act was repealed and replaced with the Mineral and Petroleum
Resources Development Act 28 of 2002 (MPRDA), which is still the applicable
legislation in respect of mining activities. In a letter dated 21 June 2004, the
Department advised RPM that because its application could not be finalized
before the MPRDA became effective, its application would be processed as a
pending application in terms of Item 3(1) of Schedule II to the MPRDA. In terms
of Item 3(1), applications for mineral rights made under ss 6, 8 and 9 of the
Minerals Act that had not been finalised when the MPRDA came into effect, had
to be regarded as having been lodged in terms of ss 13, 22, 27, 79 or 83 of the
MPRDA. Subsequent to the MPRDA coming into effect, RPM submitted
additional information as required thereunder.
[8] Bauba denies that when RPM lodged its application for a prospecting right
on 16 March 2004 it was a holder of a permit to prospect and to mine for platinum
group metals over the Modikwa Deeps Properties (which permit is referred to in
the MPRDA as an unused old order right).3 However, the Department does not
deny that RPM was a holder of such a right flowing from the agreements reached
with the Minister. In fact, the Department dealt with RPM as a holder of an
unused old order right. As will be discussed more fully in the paragraphs that
follow, as a holder of an unused old order right at the commencement of the
MPRDA, RPM became entitled to a one-year period of exclusivity in relation to
its application for a prospecting right.4 This meant that during that one-year
period no other application for a prospecting right over the relevant Modikwa
Deeps Properties could be accepted and considered by the Department. That
period of exclusivity expired on 30 April 2005.
[9] On 29 April 2005, before a decision on RPM’s application was made by
DMRE, King Sekhukhune Thulare, as the Kgosi of the Bapedi Community (King
Sekhukhune III), lodged an application for a prospecting right over some of the
3 Except over the property known as Nooitverwacht 324 KT.
4 Item 8 of Schedule II to the MPRDA.
Modikwa Deeps Properties.5 On 30 April 2005, a day after the lodgment of King
Sekhukhune’s application, the one year exclusivity period after the lodgment of
RPM’s application expired. On 12 May 2005, RPM addressed a letter to the
Regional Manager inquiring about progress in its application. It also informed the
Regional Manager that its application was made on the basis that if the
prospecting right was granted it would seek consent under s 11 of the MPRDA,
to have the right registered in favour of the Joint Venture between itself and ARM
Mining Consortium Limited, the BEE group with which it was already operating
the Modikwa Mine up-deep from the Modikwa Deeps Properties. In a letter dated
13 May 2005 addressed to King Sekhukhune III, the Regional Manager advised
that his application (lodged on 29 April 2005) in respect of the Modikwa Deeps
Properties would be ‘placed on hold’ pending the Minister’s decision on
applications that had already been accepted in respect of those properties.
[10] On 27 July 2005, the Regional Manager wrote to RPM confirming that its
application had been accepted in terms of s 16(2) of the MPRDA. Thereafter RPM
submitted further reports, including its report on consultations with the
landowners, its Environmental Management Plan and financial guarantee.
[11] On 6 February 2006, Genorah lodged a prospecting right application in
respect of five of the Modikwa Deeps Properties.6 On 20 February 2006, this
application was accepted by the Regional Manager and was duly processed. On
22 August 2006 the Deputy Director-General: Mineral Regulation (DDG) granted
Genorah’s application over three Modikwa Deeps Properties. This right related
to De Kom, Garatouw, and Hoepakrantz. On 7 June 2006, Prospecting Right
5 Grootvygenboom, Houtbosch and Genokakop, (The King also applied for a prospecting right over Dingaanskop
543 KS, Dsjate 249 KT, Fisantlaagte 506 KS, Hoogste Punt 290 KT, Indiё 474 KS, Malekskraal 509 KT,
Mecklenburg 112 KT, and Schoonoord 462 KS).
6 Genorah’s application was in respect of farms De Kom, Garatouw, Hoepakrantz, Nooitverwacht, and Eerste
Geluk.
256/2006 granted in favour of the King Sekhukhune III was notarially executed.
This right related to Dingaanskop 543 (Dingaanskop), Indie 474 KS (Indie), and
Fisantlaagte 506 and not the three Modikwa Deeps Properties in respect of which
King Sekhukhune III had applied for a prospecting right.
[12] On 7 July 2006, the Regional Manager recommended refusal of the RPM
prospecting right application. On 3 August 2006, the Regional Manager
recommended approval of Genorah’s prospecting right application. From 22 to
28 August 2006, various functionaries of the Department approved the
recommendation for approval of Genorah’s application in respect of De Kom,
Garatouw, and Hoepakrantz.
[13] On 24 August 2006 the second respondent, the Deputy Director-General:
Mineral Regulation (DDG), refused RPM’s application for a prospecting right in
terms of s 17(2)(b)(i) of the MPRDA, following the Regional Manager’s
recommendation. The refusal letter read as follows:
‘REFUSAL OF APPLICATION FOR A PROSPECTING RIGHT: THE MODIKWA DOWN-
DEEPS PROPERTIES: THE FARMS DE KOM 252 KT, GARATOUW 282 KT,
ZWEMKLOOF 283 KT, GROOTVYGENBOOM 284 KT, GENOKAKOP 285 KT,
HOEPAKRANTZ 291 KT, HOUTBOSCH 323 KT, NOOITVERWACHT 324 KT AND
EERSTE GELUK 327 KT; MAGISTERIAL DISTRICT OF SEKHUKHUNE
After careful consideration of your application for a new prospecting right, the Deputy
Director-General: Mineral Regulation in terms of section 17(2) has, by virtue of powers
delegated to him in terms of section 103(1) of the Mineral and Petroleum Resources
Development Act, 2002 decided to refuse to grant a prospecting right in respect of the above
mentioned properties for the following reasons:
Section 17(2)(b)(i) and (iii) as the granting of the right will result in the concentration
of the mineral resources in question under the control of the applicant and will also
result in an exclusionary act.’
RPM received the letter on 11 September 2006.
[14] On 12 September 2006, Genorah’s prospecting right was notarially
executed. On 14 September 2006, the tenth respondent, Nkwe Platinum Limited
(Nkwe), issued a media statement in which it announced that it had concluded an
agreement with Genorah to acquire the latter’s interest in the prospecting rights
over two of the Modikwa Deeps Properties.7 The agreement between Nkwe and
Genorah for the acquisition of the latter’s prospecting right was conditional upon
the granting of the prospecting right in respect of the two properties to Genorah.
[15] On 29 September 2006, the Regional Manager granted the prospecting
right applied for by King Sekhukhune III over the Modikwa Deeps Properties
Genokakop and Grootvygenboom. On 4 October 2006, the Regional Manager
wrote to the King advising of the grant to him of a prospecting right over
Genokakop, Grootvygenboom, Schoonoord, Zwitzerland and Houtbosch.
[16] On 5 October 2006, RPM lodged an appeal with the Minister in terms of
s 96 of the MPRDA against the refusal of its application for a prospecting right.
On the same day its attorneys wrote to the Regional Manager alleging that the
acceptance of Genorah’s prospecting application was irregular as it happened
prior to a decision on its (RPM’s) application, and prior to expiry of the period
determined in terms of the MPRDA for an internal appeal against the refusal of
its application, and a (possible) court review. No response was received to this
letter.
[17] On 5 March 2007, RPM launched the application for review of the refusal
decision and the decision to accept Genorah’s application. Thereafter
negotiations were held between RPM and DMRE in an effort to have the dispute
settled amicably. According to RPM, the DDG was unhappy with the institution
7 Farms Garatouw 282 KT and De Kom 252 KT.
of the review proceedings. In November 2007, the Bapedi community resolved
to cede its prospecting right to Bauba. On 19 December 2007, an amendment was
effected on Prospecting Right 256/2006 (King Sekhukhune’s right over
Dingaanskop,
Indie
and
Fisantlaagte)
to
include
Genokakop
and
Grootvygenboom.
[18] While settlement negotiations in relation to the review application were
underway, in February 2008 RPM became aware that a prospecting right was
granted to Genorah in August 2006. Correspondence was exchanged between
RPM and DMRE in relation to this matter. The DDG urged RPM to enter into
settlement negotiations with Genorah, which it did. On 3 March 2008, the DDG
consented to a cession of the prospecting right in terms of s 11(1) of the MPRDA
from King Sekhukhune III to Bauba.8 In terms of the cession, the prospecting
right in respect of Genokakop and Grootvygenboom were ceded to Bauba.
Negotiations between RPM and Genorah broke down in the same month.
[19] On 12 August 2008, the DDG, acting in terms of s 102 of the MPRDA,
granted consent for the addition of Houtbosch onto Bauba’s prospecting right. On
17 February 2010, RPM became aware from a media release, that a prospecting
right had been granted to Bauba. According to RPM its attempts to ascertain the
description of the properties in respect of which the right had been granted were
unsuccessful. On 19 December 2008, an amendment was effected to the review
application to add the grant of the Genorah prospecting right to the decisions that
were to be reviewed. ARM intervened and was joined as a second applicant in
RPM’s review application.
8 The King had since passed away in December 2006.
[20] On 22 April 2010, following the decision of this Court in Bengwenyama
Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd (Formerly Tropical
Paradise 427 (Pty) Ltd and Others,9 RPM lodged an appeal to the Minister
against the grant of a prospecting rights to Bauba and Genorah. In Bengwenyama
this Court held that the internal appeal provided for in s 96 of the MPRDA must
be exhausted as stipulated in s 96(3) before instituting review proceedings. On 28
April 2010, the variation by the DDG in respect of PR256/2006 to include
Genokakop and Grootvygenboom, was notarially executed. On 4 May 2010,
RPM obtained a copy of the notarial deed of amendment, and two days thereafter
it amended its internal appeal to include the decision to amend PR256/2006.
[21] RPM argues that the variations effected to the King Sekhukhune III
prospecting right 256/2006 to incorporate therein the Modikwa Deeps Properties
are invalid because the Minister had not delegated to the DDG his authority to
consent thereto. And even if there had been such delegation, the grant of new
rights over these properties by way of variation was an impermissible
circumvention of the requirements set in ss 16 and 17 of the MPRDA. On 29
September 2010 it instituted the application for review and setting aside of the
amendment decisions.
[22] On 4 April 2011, Bauba lodged an application for renewal of its
prospecting right. On 7 April 2011, RPM addressed a letter to the DDG, DG and
the Minister seeking an undertaking that no further rights would be granted in
respect of the Modikwa Deeps Properties until its internal appeal had been
determined. On 6 July 2011 Bauba’s prospecting right expired. On 11 September
2011, Genorah’s prospecting right also expired. On 10 February 2012, a mining
9 Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd (Formerly Tropical Paradise 427
(Pty) Ltd and Others [2010] ZASCA 50; [2010] 3 All SA 577 (SCA).
right was granted to Genorah over De Kom, Garatouw, Hoepakrantz and
Nooitverwacht. On 15 March 2012. RPM lodged an internal appeal against the
grant of the Genorah mining right.
[23] The internal appeals remained pending for years until the high court
(Basson J), in 2017, granted an order declaring, amongst other things, that RPM
had exhausted its internal remedies of appeal in respect of the acceptance and
refusal decisions. It should be noted that in terms of s 96(2)(a) of the MPRDA,
the internal appeal did not suspend the decisions as the DDG did not specifically
order suspension. The refusal and the grant of rights therefore continued to be
effective. However, in terms of s 96(2)(b) subsequent applications for the same
right on the same land were suspended pending the finalisation of the appeal.
[24] On 6 June 2012, Bauba’s prospecting right over Genokakop and
Grootvygenboom was renewed. On 10 August 2012, RPM lodged an internal
appeal against that renewal decision. On 9 July 2015 Bauba applied for a mining
right. Bauba’s renewed prospecting right expired on 17 July 2015. On 27 August
2014, the addition of Houtbosch onto the Bauba prospecting right was notarised.
On 23 November 2017, Bauba’s mining right application was accepted by the
Department. No decision had been made on that application when this appeal was
heard.
Litigation history
The review application
[25] In the review application RPM set out the events that preceded its
application for a prospecting right in 2004. It argued that its mineral leases and
prospecting agreements in respect of the Modikwa Deeps Properties had been
concluded in line with the agreements reached with the DDG (who had
represented the LMT Trust). By refusing its application for a prospecting right
the Minister was acting in bad faith, and contrary to the agreements which had
been concluded with her with the aim of avoiding a concentration of mineral
rights in the hands of RPM.
[26] RPM maintained that in principle, the granting of a prospecting right would
always have the effect of preventing or excluding others from obtaining the same
right in respect of the same mineral and land. Similarly, the granting of such a
right to an applicant who already holds a mining right in terms of the MPRDA
theoretically resulted in a concentration of the mineral resource in question under
the control of the approved applicant. It could never have been the intention of
the legislature to impose a blanket bar to the granting of a prospecting right to a
holder of a mining right. Consequently, the refusal was arbitrary and was taken
without good cause. It therefore fell to be set aside under the provisions of ss 5(3),
6(2)(e)(v), and/or 6(2)(h) of the Promotion of Administrative Justice Act 3 of
2000 (PAJA).
[27] In addition, the reference in s 17(2)(b)(iii) to concentration of mineral
resources was ‘perplexing’ because at the time of considering the application it
would be unknown whether there were any resources on the land. To avoid
potential absurdities in the interpretation of s 17(2)(b)(i) and (iii), a qualified
reading of the section was necessary – by interpreting s 17(2)(b)(iii) as intending
to prohibit ‘unreasonable’ concentration of rights in the hands of a particular
entity. In this case, because the DDG did not give adequate reasons for the refusal
and did not apply a qualified meaning to the section, but merely regurgitated the
provisions of the section, the refusal was arbitrary.
[28] RPM’s central argument, however, was that, in any event, the clear
transitional provisions of the MPRDA which provided security to a holder of old
order rights should take precedence over the provisions of s 17(2)(b). Because the
DDG had failed to interpret the provisions of s 17(2(b) to be subject to the clear
and specific transitional provisions of the MPRDA, which provided special
protection to a holder of an old order right in order to bring it within the provisions
of the MPRDA, the refusal fell to be set aside under s 62(d) of PAJA.
[29] In line with this argument it was submitted that the acceptance of Bauba’s
application for a prospecting right by the Department, on 29 April 2005, prior to
the expiry of its (RPM’s) exclusivity period was unlawful. Furthermore, the
acceptance of Genorah’s application in February 2006, prior to determination of
RPM’s application was in breach of the provisions of s 16(2) of the MPRDA
which prohibits the acceptance of a prospecting right where another entity holds
a prospecting right, mining right, or mining permit in respect of the same mineral
on the same land. The contention was that the applications by Genorah and Bauba
should not have been accepted before a decision was made on RPM’s application,
and before the internal appeal and the court review had been finalised. Because
both acts of acceptance were unlawful, all subsequent administrative action by
the Department granting renewals and further rights to Bauba and Genorah were
invalid.
[30] It was also contended that the refusal decision fell to be set aside because
the DDG failed to take into account numerous factors, including that the
Modikwa Deeps Properties are situated adjacent to and ‘down dip’ from the
Modikwa Platinum Mine on which RPM and ARM were already mining, which
rendered them best suited to access the minerals on those properties.
[31] The respondents, on the other hand, contended that the delay by RPM in
instituting and prosecuting the review applications (which were later
consolidated) was fatal to the proceedings. The review application in relation to
the refusal decision and the grant of the prospecting right to Genorah, which
decisions were taken in August 2006, was instituted in March 2007 (and amended
in December 2008). By the time the application was heard the prospecting right
had long lapsed and Genorah had been in possession of the mining right for eight
years. It had concluded all prospecting activities, and subsequent thereto, had
expended more than R1.2billion in the development of the Garatouw Platinum
Mine in the exercise of its mining right. The review application challenging the
2008 amendment decisions that resulted in the Bauba prospecting right over the
Modikwa Deeps Properties was initiated on 29 September 2010.
[32] The high court dismissed the consolidated review application based, in the
main, on unreasonable delay in instituting and prosecuting the review
proceedings. It found the delay to have been extraordinary and ‘inexplicable’. It
remarked that RPM and ARM could have been ‘more efficient and decisive’ in
prosecuting the application. Although the Learned Judge found that the grant of
the Genorah prospecting right was improper, he exercised his remedial discretion
in favour of Genorah by declining to declare it unlawful and setting the decision
aside.
On appeal
[33] The appeal was brought and prosecuted by ARM. The parties persisted in
the arguments they had advanced in the high court. ARM highlighted that in
refusing RPM’s application for a prospecting right, the DDG ignored the fact that
its joint venture partner (ARM), was a black company and a 100% shareholder in
ARM Platinum which, in turn, held 83% in AMCL. The balance of the 17%
shareholding was held by Mampudima and Matimatjatji communities residing
near the Modikwa Deeps Properties. Against this background, the suggestion that
granting a prospecting right to RPM would result in the concentration of mineral
resources and limitation of equitable access to it was unfounded, it was argued.
[34] It was also submitted that the delay in prosecuting the application could
not be attributed to any remissness on RPM’s part. Instead it was the State
respondents who caused the delay by refusing to provide documents and by
disobeying court orders. It was also pointed out that both Genorah and Bauba
delivered their answering papers more than two and six months out of time
respectively. Furthermore, the appellants contended that they should not be
punished because the respondents proceeded to expend huge expenditure on the
mines when they knew of the challenges to the approval of their prospecting
rights.
The Law
[35] In Minister of Mineral Resources and Others v Sishen Iron Ore Company
(Pty) Ltd and Another10 the Constitutional Court set out succinctly the
circumstances in which the MPRDA was passed and the objectives thereof. At
paragraph 10 the Court said:
‘In the discharge of its obligations to transform the mining industry, one of the major sectors
of our economy, Parliament passed the MPRDA. As its preamble proclaims, the MPRDA was
enacted in part to eradicate all forms of discriminatory practices in the mining and petroleum
industries and to redress the inequalities of past racial discrimination. Pivotal to achieving these
objectives was placing all mineral and petroleum resources in the hands of the nation as a whole
and making the state the custodian of the resources on behalf of the nation. This is one of the
fundamental changes brought about by the MPRDA. By vesting all mineral and petroleum
resources in the nation, the MPRDA dispensed with the notion of mineral rights or rights to
minerals which before 1 May 2004 were held by private persons.’
At paragraph 13 the Court held:
‘In view of the fact that black people did not own land because of dispossession and legal
instruments that prohibited ownership, drastic measures were necessary to open up
10 Minister of Mineral Resources and Others v Sishen Iron Ore Company (Pty) Ltd and Another [2013] ZACC
45; 2014 (2) BCLR 212 (CC); 2014 (2) SA 603 (CC).
opportunities in the mining industry for the previously excluded majority. This became one of
the primary objectives of the MPRDA.’
[36] These remarks by the Constitutional Court elucidate the purpose for which
the MPRDA was enacted. An overview of the relevant provisions will be helpful
for proper consideration of the contested decisions. The sections are set out below
as they read when the contested decisions were made, prior to the commencement
of the Mineral and Petroleum Resources Development Amendment Act, 49 of
2008, on 7 June 2013.11
[37] As a starting point s 2 of the MPRDA set out the following objectives of
the Act; to:
‘(a) recognize the internationally accepted right of the State to exercise sovereignty over all
the mineral and petroleum resources within the Republic;
(b) give effect to the principle of the State’s custodianship of the nation’s mineral and
petroleum resources;
(c) promote equitable access to the nation’s mineral and petroleum resources;
(d) substantially and meaningfully expand opportunities for historically disadvantaged persons,
including women, to enter the mineral and petroleum industries and to benefit from the
exploitation of the nation’s mineral and petroleum resources;
(e) promote economic growth and mineral and petroleum resources development in the
Republic;
(f) promote employment and advance the social and economic welfare of all South Africans;
(g) provide for security of tenure in respect of prospecting, exploration, mining and production
operations;
(h) give effect to section 24 of the Constitution by ensuring that the nation’s mineral and
petroleum resources are developed in an orderly and ecologically sustainable manner while
promoting justifiable social and economic development; and
(i) ensure that holders of mining and production rights contribute towards the socio economic
development of the areas in which they are operating.’
11 Although the wording of some of the provisions of the Act changed pursuant to the amendment, the substance,
structure and flow of the Act remains substantially the same post amendment.
[38] Chapter 3 of the Act regulated the administration of the MPRDA. In terms
of s 7, the Republic and the sea were divided into regions. Each region had a
regional manager designated by the Director-General to perform the functions
assigned to him or her under the Act or any other law.12 One such function was
the processing of mineral and petroleum reconnaissance applications.
[39] Section 9 regulated the sequence in which multiple applications for the
same mineral on the same land would be processed. If the Regional Manager
received more than one application for a prospecting or mining right in respect of
the same mineral and land on the same day, she had to regard the applications as
having been received at the same time.13 When processing the applications the
Minister had to then give preference to applications from historically
disadvantaged persons.14 Applications received on different dates had to be dealt
with in the order of receipt.15
[40] Sections 16 and 17 regulated the procedure and requirements for
processing prospecting rights applications. In terms of s 16(1), applications had
to be lodged in the office of the Regional Manager in whose region the land was
located, in the prescribed manner, with the prescribed, non-refundable application
fee. In terms of s 16(2), the Regional Manager had to accept an application for a
prospecting right if –
‘(a) the requirements contemplated in subsection (1) [were] met; and
(b) no other person [held] a prospecting right, mining right, mining permit or retention permit
for the same mineral and land.’
12 Section 8 of the MPRDA.
13 Section 9(1)(a).
14 Section 9(2).
15 Section 9(1)(b).
[41] As stated, when the MPRDA came into effect on 01 May 2004, a
transitional, arrangement was provided in the Act. Apart from Item 3 of Schedule
II to the Act, which kept applications that were pending under ss 6, 8, and 9 of
the Minerals Act16 alive, in addition, transitional arrangements were provided,
under Items 8(1) and (2) of Schedule II, to protect the security of tenure and to
give holders of old order rights opportunity to comply with the new Act. In terms
thereof, an unused old order right17 which was in force when the MPRDA came
into effect, continued to be valid subject to the conditions under which it was
acquired. The holder thereof was afforded an exclusive right for a period of a year
from 1 May 2004, to apply for a prospecting right or a mining right as the case
might be.
[42] Item 8 provided that:
‘Processing of unused old order rights
(1) Any unused old order right in force immediately before this Act took effect, continues in
force, subject to the terms and conditions under which it was granted, acquired or issued or was
deemed to have been granted or issued, for a period not exceeding one year from the date on
which this Act took effect, or for the period for which it was granted, acquired or issued or was
deemed to have been granted or issued, whichever period is shortest.
(2) The holder of an unused old order right has the exclusive right to apply for a prospecting
right or a mining right as the case may be, in terms of this Act within the period referred to in
item (1).
(3) An unused old order right in respect of which an application has been lodged within the
period referred to in subitem (1) remains valid until such time as the application for a
prospecting right or mining right, as the case may be, is granted and dealt with in terms of this
Act or is refused.
(4) Subject to the subitems (2) and (3), an unused old order right ceases to exists upon the
expiry of the period contemplated in subitem (1).’
16 Para 7 above
17 In terms of s1 of Schedule II an ‘old order right’ meant ‘an old order mining right, old order prospecting right
or unused old order right as the case may be’.
[43] Once an application for a prospecting right was accepted as provided in
s16(2), the Regional Manager had to notify the applicant, in writing, within 14
days, of the receipt of the application, if it did not comply with the requirements
set in s 16(1).18 Section 17(1) provided that the Minister had to grant the
application within 30 days if:
‘(a) the applicant [had] access to financial resources and [had] the technical ability to conduct
the proposed prospecting operation optimally in accordance with the prospecting work
programme;
(b) the estimated expenditure [was] compatible with the proposed prospecting operation and
duration of the prospecting work programme;
(c) the prospecting [would] not result in unacceptable pollution, ecological degradation or
damage to the environment;
(d) the applicant [had] the ability to comply with the relevant provisions of the Mine Health
and Safety Act, 1996 (Act No. 29 of 1996); and
(e) the applicant [was] not in contravention of [the] Act.’
[44] On approval of the application, the holder of the prospecting right became
entitled to an exclusive right to apply for renewal thereof in respect of the same
mineral, on the same land.19 It also had an exclusive right to remove and dispose
of the minerals to which the right related when found during prospecting
operations.20 On the other hand, it was obliged to commence with the prospecting
activities within 120 days from the date on which the prospecting right became
effective or any extended period granted.21 Prospecting operations had to be
conducted continuously and actively in accordance with the prospecting work
programme incorporated in the conditions of the prospecting right.22
18 Section 16(3).
19 Section 19(1)(a) read together with s18.
20 Section 19(1)(c) read together with s 20.
21 Section 19(2)(b).
22 S 19(2)(c).
[45] In terms of s 17(2) the Minister had to refuse an application for a
prospecting right where:
‘(a) the application [did] not meet all the requirements referred to in subsection(1);
(b) the granting of such right [would] –
(i) result in an exclusionary act;
(ii) prevent fair competition; or
(iii) result in the concentration of the mineral resources in question under the control of the
applicant.’
A refusal had to be communicated to the applicant in writing within 30 days
thereof, together with the reasons therefor.23
[46] Notably, after the amendment to the Act s 17(2) reads as follows:
‘(2) The Minister must, within 30 days of receipt of the application from the Regional
Manager, refuse to grant a prospecting right if —
(a) the application does not meet all the requirements referred to in subsection (1);
(b) the granting of such right will result in the concentration of the mineral resources in
question under the control of the applicant and their associated companies with the
possible limitation of equitable access to mineral resources.’ (Emphasis added)
[47] Sections 22 and 23 regulated the procedure and requirements in
applications for, and granting of, mining rights. The prescribed procedure and
approval requirements were substantially similar to those applicable to
prospecting right applications.24 Renewal of mining rights was regulated under s
24 in a procedure similar to renewal of prospecting rights.
[48] Prior to the amendment, alienation and encumbrance of prospecting and
mining rights were restricted under s 11(1) of the Act as follows:
23 Section 17(3).
24 Section 22 (1) & (2).
‘A prospecting or mining right or an interest in any such right or a controlling interest in a
company or close corporation, may not be ceded, transferred, let, sublet, assigned, alienated or
otherwise disposed of without the written consent of the Minister, except in the case of change
of controlling interest in listed companies.’
Discussion
[49] Much of the argument on behalf of the appellants centered around the
acceptance of the respondents’ (Bauba and Genorah) prospecting rights
applications and the effect thereof on the subsequent renewals, and the granting
of Genorah’s mining right. The respondents persisted in their contention that the
appeal should be dismissed based only on the unreasonable delay in the
prosecution of the review application.
[50] There was indeed evidence of intermittent attempts at settlement
negotiations between the RPM and DMRE’s functionaries from 2006 to the end
of 2013, to the extent that a draft settlement agreement was exchanged between
the DDG and Mr Mukoka of RPM on 17 December 2013. It is also correct that
the Department delayed, repeatedly, sometimes for long periods, in furnishing
RPM with requested information and documents. In addition, the Regional
Manager insisted that RPM enter into settlement negotiations with DMRE and
Genorah, even after the review proceedings had been instituted. Moreover, RPM
did not immediately become aware of and first had to verify the decisions that
preferred Bauba and Genorah on the competing applications. The Department
had to be compelled by court to furnish the information required to institute the
proceedings. RPM only became aware after almost two years that the King’s
application had been approved.
[51] Nevertheless there were long periods of unexplained inaction by RPM after
becoming aware of the Genorah approval decision and after the institution of the
review proceedings. Regarding the 10 month delay after becoming aware that the
Genorah prospecting right had been granted, the only explanation was that the
matter was taken up with the DDG who ‘never reverted to RPM about the matter’.
[52] Having become aware in 2008 that prospecting rights were granted in
2006, the appellants must have been aware that, by that time only three years of
the five-year lifespan of the rights remained. Importantly, under s19(2)(b) of the
MPRDA, once Bauba and Genorah were granted prospecting rights they became
obliged to commence with prospecting activities within 120 days from the date
on which the rights became effective. The appellants therefore had to institute
and prosecute their challenge to the relevant decisions diligently. Yet it was at
Bauba’s instance that there was progress in the prosecution of the review
application after a long period of inaction. Bauba instituted an application for the
dismissal of the review application. This led to ARM seeking the joinder that led
to the consolidation of the separate review applications that had been instituted
against Bauba and Genorah.
[53] The delays had the effect that by the time the application for review was
heard by the high court the original and renewed prospecting rights had long
expired. Genorah had secured a mining right and Bauba’s application for a mining
right was pending. All that was specified under s 22(2)(b) was that no application
for a mining right could be accepted if some other person held a prospecting right,
mining right, mining permit or retention permit for the same mineral and land.
There was no evidence of a holder of any such right or permit when Genorah and
Bauba applied for mining rights on the properties in question.
[54] Ultimately, a decision on the lawfulness of the applications for the
prospecting rights granted, including the rights that were granted by way of
variations, was of no practical effect. More so that a prospecting right was not a
pre-requisite for a mining right. Consequently it is not necessary to consider the
appeal on the granting of the prospecting rights. It is important to note, however,
that even if it were to be found that the granting of prospecting rights to Genorah
and Bauba was unlawful that would not mean that a prospecting right should have
been granted to the appellants. The refusal decision remains to be considered on
its own merits. In the paragraphs that follow I confirm, on the merits, the
lawfulness of the refusal of the appellants’ application for a prospecting right. It
is not necessary to reach any conclusion in this appeal on the effect of delays on
the institution and prosecution of the review application.
The refusal of RPM’S application for a prospecting right.
[55] The high court found that the refusal decision was neither unfair nor
irrational because of the reasons set out in the DDG’s recommendations. It found
that there was nothing improper about taking into consideration Anglo Platinum’s
2005 annual report which was an accurate public document. A further finding
was that the approach in s 17(2), prior to its amendment, was too restrictive and
did not account for the objectives of the MPRDA. The pre-amendment s 17(2)
had to be interpreted liberally to achieve these objectives, particularly the security
of tenure which RPM enjoyed based old order right, it was held.
[56] Of relevance at this point is that before the amendment, s 17(2) did not
extend the assessment of concentration of minerals to companies associated with
an applicant for a prospecting right.25 Possible limitation of equitable access
to mineral resources was also not a specified consideration. Importantly, the Act
had to be interpreted and applied to the facts of this case as it read before the
amendments. Such interpretation, however, could not ignore the context and
purpose for which the relevant provisions were enacted.
25 See pragraphs 45 and 46 above.
[57] It is trite that context is fundamental in the interpretation of all written
instruments. Statutes should be interpreted in accordance with the spirit, purport
and objects of the Bill of Rights. There is, inter alia, the context provided by the
entire enactment. Furthermore, the general factual background to the statute, such
as the nature of its concerns, the social purpose to which it is directed and, in the
case of statutes dealing with specific areas of public life or the economy, the
nature of the areas to which the statute relates provides the context for the
legislation.26
[58] Section 17 in its pre-amended form of the MPRDA must be interpreted to
give effect to its objectives and purpose. I have already set out the objectives of
s2 of the MPRDA.27 They included, giving effect to the State’s custodianship of
the nation’s mineral resources, the promotion of equitable access to such
resources to all the people of South Africa, substantial and meaningful expansion
of opportunities for historically disadvantaged persons to enter into and benefit
from the nation’s mineral and petroleum resources, and the promotion of
economic growth and mineral and petroleum resources development in the
Republic.28
[59] In In Minister of Mineral Resources v Sishen29 the Constitutional Court
said the following about the objectives of the MPRDA:
‘The promotion of equitable access by all South Africans to mineral resources, the expansion of
opportunities for historically disadvantaged persons to enter the mining and petroleum industries, and
the advancement of the social and economic welfare of all South African are cornerstones of that
transformation. The state is obligated to advance the realization of these goals. It is therefore vitally
important to heed the provisions of s 4 when interpreting the MPRDA.
26 Commissioner, South African Revenue Service v United Manganese of Kalahari (Pty) Ltd 2020 (4) SA 428
(SCA) paras 16-17.
27 See para 37 above
28 Section 2(b)(c)(d)(e) and (f) of the MPRDA.
29 Minister of Mineral Resources v Sishen Iron 2014 (2) SA 603 at 45-47.
This is not only because s 4 expressly says so, but also for the reason that the MPRDA was enacted to
eradicate the inequality embedded in all spheres of life under the apartheid order. Equality is at the heart
of our constitutional architecture. It is not only entrenched as a right in the Bill of Rights, but it is also
one of the values on which our democratic order has been founded.
[60] Given the context and objectives of the MPRDA I do not think the DDG
acted improperly in considering the factors which RPM complains about. They
were relevant for the determination that had to be made. In the recommendation,
RPM’s dominance in the platinum group mining sector was highlighted.30 It was
recorded that according to the Anglo Platinum (RPM’s holding company) 2005
Annual Report the Modikwa Platinum Mine, which RPM owns and operates, had
still not reached the target production levels of 240 000 tons per annum and
therefore if granted to RPM, the prospecting right would not be immediately put
to use to attain the objectives of the Act. The DDG’s assessment was that the
Modikwa Platinum Mine had ‘potential life-of-mine resources’ that would last
for over 100 years (presumably from the time of the memorandum). She reasoned
that granting the prospecting right applied for by RPM would result in ‘an
additional 150 m oz 4E, to a depth of 1000 m (approximately) to RPM’s existing
mineral resources on Modikwa Mining operation’. She stressed that:
‘Awarding the properties under the new application to RPM (and therefore to Anglo Platinum)
will certainly contradict the stated goals of the MPRD Act, namely: “To promote equitable
access of the nation’s minerals and petroleum resources to all the people of South Africa and
to expand opportunities for HDSA’s to enter the mineral industry and to benefit from the
exploitation of the nation’s mineral resources”’.
[61] The DDG reasoned that in granting the right applied for, the Department
would be entrenching the same position of locking-up the area as was the case in
the past. RPM’s dominant position would continue to be entrenched, thereby
frustrating the transformation objectives of the MPRDA. Her view, in other
30 See para 14 above.
words, was that, if the prospecting right for the Modikwa Deeps Properties was
granted to RPM, other potential miners, especially from the historically
disadvantaged communities would be excluded from accessing the concerned
market for a long period, whilst RPM still had vast amounts (potential life of mine
resources of up to 100 years) of unmined platinum at the Modikwa Platinum
Mine, and, either directly, or through related entities, already had considerable
access to the minerals in question in the country. That reasoning and the decision
reached was consistent with the purpose and objectives of the MPRDA.
[62] The DDG further referred to 17 old order mining rights held by Anglo
Platinum in the name of its wholly owned subsidiaries, and a further four with its
joint venture partners, which was more than all the other companies involved in
the South African PGM industry combined. She considered that not a single
historically disadvantaged entity held more than five mining rights in the Eastern
Limb or Western Bushveld.
[63] Even though associated companies were not expressly included in s 17(2)
prior to the amendment, there can be no dispute that they were always part of the
composition of the applicant entity. Ignoring the extent of the benefit derived
from that kind of association between companies would be contrary to the
objectives and purpose of s 17(2) even as it read pre-amendment. It was a relevant
factor in considering whether there would be concentration of the minerals in the
hands of RPM.
[64] RPM did not dispute the correctness of the contents of the Anglo Platinum
Annual Report. It also did not dispute that it (RPM) was a wholly owned
subsidiary of Anglo Platinum, one of the largest mining companies in the country.
On any reasonable approach this is the kind of information that is relevant in
determining whether the granting of a prospecting and mining right accords with
the transformation objectives of the MPRDA. As it was submitted on behalf of
Genorah, DMRE was obliged to consider this information once it came to the
attention of the relevant functionaries. It was an integral part of the determination
of the concentration of mineral rights as provided in s 17(2).
[65] The following reasoning by the Regional Manager gives even more insight
into her approach in considering RPM’s application:
‘The properties under application and their resource potential present a critical mass and an
ideal opportunity to serve as a base for a company controlled by HDSA persons to successfully
enter the South African PGM Industry. In view of RPM/Anglo Platinum’s dominant position
in the South African and world PGM Industry . . . its application for the new properties cannot
be supported. . .’
Again, this reasoning is consistent with the objectives of the MPRDA and in line
with the principles of interpretation of legislation. On the other hand, the
contention that the DDG ignored the fact that RPM would be going into a joint
venture with a historically disadvantaged entity was not substantiated. That entity
had been RPM’s associate in the industry for some time and would have already
benefited from that association.
[66] The refusal of the prospecting right to RPM can therefore not be faulted on
the basis of the approach she took in applying the provisions of s17(2) of the
MPRDA. It follows that there was no bar to granting a mining right to Genorah
In the end, I cannot find that the result reached by the high court was incorrect.
The following order is granted:
The appeal is dismissed with costs including the costs of two counsel, which costs
shall be paid by the second appellant.
___________________________
N DAMBUZA
ACTING DEPUTY PRESIDENT
Appearances:
For 1st appellants:
M Seape
Instructed by:
Norton Rose Fullbright Inc, Sandton
Webbers Attorneys, Bloemfontein
For 2nd appellants:
T Bruinders SC with E Webber
Instructed by:
Bowman Gilfillan Inc., Sandton
McIntyre
van
der
Post
Attorneys,
Bloemfontein
For 4th, 6th, 7th and 10th respondents: B Leech SC with F Hobden
Instructed by:
Werkmans Attorneys, Sandton
Matsepes Inc, Bloemfontein
For 8th and 9th respondents:
A Botha SC with A Saldulker
Instructed by:
Shaheed Dollie, Johannesburg
Matsepes Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL OFSOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED
FROM
The Registrar, Supreme Court of Appeal
DATE
18 November 2022
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part
of the judgment.
Rustenburg Platinum Mines Limited and Another v The Regional Manager, Limpopo
Region, Department of Mineral Resources and Others (1109/2020) [2022] ZASCA 157
(18 November 2022)
MEDIA STATEMENT
Today the Supreme Court of Appeal dismissed an appeal against an order of the Gauteng
Division of the High Court, Johannesburg which dismissed an application for review of certain
decisions of the Regional Manager of the Department of Mineral Resources and Energy,
Limpopo Region. The Regional Manager approved applications by Genorah Resources and
Bauba A Hlabirwa Mining for prospecting rights in respect of an area known as the Modikwa
Deeps Properties and refused an application by Rustenburg Platinum Mines Ltd (RPM) for the
same rights. In addition the Regional Manager approved an application by Genorah Resources
for mining rights.
The applications by Genorah and Bauba for prospecting rights were submitted to the
Department after RPM had submitted its application for the upgrading of its old order
(prospecting) right for the same minerals in respect of the Modikwa Deeps Properties. When
RPM’s application was refused and Genorah and Bauba’s were approved RPM challenged
these decisions saying the Deputy Director General should not have accepted the applications
by the other two entities because of the period of exclusivity that RPM had in respect of its old
order right application. RPM also argued that the unlawful grant of the prospecting rights all
subsequent rights, including renewal of the prospecting rights and the granting of the mining
right Genorah were also unlawful and should be set aside. Genorah and Bauba responded
disputing the unlawfulness of the approval decisions and arguing that RPM’s review
application should be dismissed based only on the delay in instituting the application for
review. The high court agreed with the latter argument and dismissed the review application
because of the unreasonable delay in instituting the review proceedings. It also made certain
findings on the merits; including that Bauba’s application should not have been accepted by
the Department and that RPM’s application had been correctly refused.
The SCA held that it was unnecessary to consider the lawfulness of the approvals of the
prospecting rights because those rights and subsequent renewals thereof had long expired by
the time the application for review was heard by the court. Furthermore a prospecting right was
not a pre-requisite for a mining right. Therefore the challenge on the grant of Genorah’s mining
right based on the alleged unlawfulness of the prospecting right failed. As to the refusal of
RPM’s application for a prospecting right the SCA found that that decision had to be evaluated
independently of the applications by the other two entities. The court found that the reasoning
of the Regional Manager, in considering the extent of participation of RPM and its partner
ARM, in the platinum mining sector, was in line with the provisions of the applicable sections
of the Mining and Petroleum Resources Distribution Act of 2002. Therefore RPM’s application
had been correctly refused.
--- ends --
|
3960
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1269/2021
In the matter between:
COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE SERVICE
APPELLANT
and
CORONATION INVESTMENT
MANAGEMENT SA (PTY) LTD
RESPONDENT
Neutral citation: Commissioner for the South African Revenue Service v
Coronation
Investment
Management
SA
(Pty)
Ltd
(1269/2021) [2023] ZASCA 10 (07 February 2023)
Coram:
MAKGOKA and NICHOLLS JJA and NHLANGULELA, SALIE
and MALI AJJA
Heard:
17 November 2022
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be at 11h00 on 07 February 2023.
Summary: Revenue – income tax – Income Tax Act 58 of 1962 – section 9D
exemptions – whether a ‘controlled foreign company’ is a ‘foreign business
establishment’ as defined – Tax Administration Act 28 of 2011 – understatement
penalties.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Tax Court, Cape Town (Hack AJ, with two assessors):
The appeal is upheld.
The order of the Tax Court is set aside and substituted with the following:
‘1
The appellant is directed to pay the additional tax imposed in respect
of the respondent’s additional assessment dated 23 March 2017, and the
interest imposed thereon in terms of section 89quat(2) of the Income Tax
Act 58 of 1962.
The appellant is to pay the respondent’s costs, including the costs of
two counsel.’
The respondent is to pay the appellant’s cost of appeal, including the costs
of two counsel.
________________________________________________________________
JUDGMENT
________________________________________________________________
Nicholls JA (Makgoka JA and Nhlangulela, Salie and Mali AJJA
concurring):
[1] The Coronation Group is one of South Africa’s most successful investment
companies. It has subsidiaries across the globe. Its ultimate holding company,
Coronation Fund Managers Limited, is listed on the Johannesburg Stock
Exchange (JSE) securities exchange in South Africa. It describes itself as ‘an
active investment manager following a long term valuation-driven investment
philosophy’.1
1 Coronation website, https://www.coronation.com.
[2] The respondent, Coronation Investment Management SA (Pty) Ltd
(CIMSA) is the holding company for the Coronation Group. It is registered and
tax resident in South Africa. During 2012, CIMSA was a 90% subsidiary of
Coronation Fund Managers Limited and the 100% holding company of
Coronation Management Company and Coronation Asset Management (Pty) Ltd
(CAM), both registered for tax in South Africa. CIMSA was also the 100%
holding company of CFM (Isle of Man) Ltd, tax resident in Isle of Man. CFM
(Isle of Man) Ltd, in turn, was the 100% owner of Coronation Global Fund
Managers (Ireland) Limited (CGFM) and Coronation International Ltd (CIL),
which were registered and tax resident in Ireland and the United Kingdom
respectively. CFM has since been de-registered in Isle of Man.
[3] The issue in this appeal is whether the net income of CGFM should be
included in the taxable income of its South African holding company, CIMSA,
or whether a tax exemption in terms of s 9D of the Income Tax Act 58 of 1962
(the Act) is applicable to the income earned by CGFM. This depends on what the
primary functions of CGFM in Dublin, Ireland are. If the primary operations are
conducted in Ireland, then the s 9D exemption applies. Of particular significance
is that CGFM has adopted an outsource business model and the attendant
ramifications that may have for its tax status. Aligned to this is whether the
primary business of CGFM is that of investment (which is not conducted in
Ireland), or that of maintaining its licence and managing its service providers
(which is conducted in Ireland).
[4] The appellant, the Commissioner for the South African Revenue Service
(SARS), assessed the tax liability of CIMSA for the 2012 tax year to include in
its income an amount equal to the entire ‘net income’ of CGFM. The Tax Court,
Cape Town (the tax court) upheld CIMSA’s objection and found that CGFM was
a ‘foreign business establishment’ (FBE) as defined in s 9D(1) of the Act and,
accordingly, qualified for a tax exemption. It set aside SARS’s additional
assessment against CIMSA and ordered it to issue a reduced tax assessment, in
which no amount was included in CIMSA’s income under s 9D of the Act
pertaining to CGFM’s income. Consequently, SARS was not entitled to claim (a)
understatement penalties in terms of s 222 of the Tax Administration Act 28 of
2011 (the TAA); (b) understatement penalties for provisional tax under paragraph
20 of the Fourth Schedule to the Act; and (c) interest in terms of s 89(2) of the
Act. SARS appeals this decision with the leave of the tax court.
Section 9D of the Income Tax Act 58 of 1962
[5] Prior to 2001, the South African tax regime was a source-based one. The
Revenue Laws Amendment Act 59 of 2000 changed this to a resident-based
system. Section 9D was introduced to address how South African tax payers
should be taxed on their income earned abroad, especially income earned by
South African owned foreign entities. A pure anti-deferral regime would
immediately deem back all the South African owned foreign company income.
As a result, no foreign income would receive any advantage over domestic
income. However, international law only allows South Africa to tax foreign
residents on their South African source income, not on their foreign source
income, even if the entity is completely owned by South African residents. To
address this, s 9D imposes tax on South African owners on the income earned by
their foreign entities as if those entities immediately repatriated their foreign
income when earned.2
[6] The section also provides for exemptions which allow certain foreign
companies to operate free from tax to the extent that an objective rationale exists
for maintaining operations abroad, and when such operations pose no threat to
2 National Treasury’s Explanation to Section 9D of the Income Tax Act, June 2002.
the South African tax base. The purpose of the exemption was to balance the
desire for horizontal equity (equity among South Africans earning income at
home versus those earning income abroad) against international competitiveness
(allowing South African owned subsidiaries to operate on the same level tax
fields as foreign owned rivals operating in the same low-taxed foreign countries).
The s 9D exemptions were, therefore, introduced as a balancing mechanism
between two competing interests: tax avoidance and competitiveness.3
[7] The exemption only applies to foreign entities that qualify as a ‘controlled
foreign company’, which is defined as:
‘[A]ny foreign company where more than 50 per cent of the total participation rights in that
foreign company are directly or indirectly held, or more than 50 per cent of the voting rights in
that foreign company are directly or indirectly exercisable, by one or more persons that are
residents other than persons that are headquarter companies . . .’4
[8] Section 9D(2) of the Act provides for the imputation of the ‘net income’ of
a controlled foreign company to a South African resident company holding
participation rights in that controlled foreign company, unless it falls within the
ambit of the FBE exemption. This provides that in determining such net income,
any amount ‘which is attributable to a foreign business establishment’ of that
controlled foreign company must not be taken into account.
[9] It is common cause that in the 2012 tax year of assessment CGFM was a
controlled foreign company as envisaged. Therefore, the income of CGFM would
be imputable to CIMSA, unless it fell within the ambit of the FBE exemption.
This, in turn, depends on whether CGFM is an FBE as defined.
3 National Treasury’s Explanation to Section 9D of the Income Tax Act, June 2002.
4 Section 9D(1)(a) of the Income Tax Act 58 of 1962.
[10] Section 9D(1) of the Act sets out the requirements of a FBE:
‘[F]oreign business establishment, in relation to a controlled foreign company, means –
(a)
a fixed place of business located in a country other than the Republic that is used or
will continue to be used for the carrying on of the business of that controlled foreign company
for a period of not less than one year, where –
(i)
that business is conducted through one or more offices, shops, factories,
warehouses or other structures;
(ii)
that fixed place of business is suitably staffed with on-site managerial and
operational employees of that controlled foreign company who conduct primary
operations of that business;
(iii)
that fixed place of business is suitably equipped for conducting the primary
operations of that business;
(iv)
that fixed place of business has suitable facilities for conducting the primary
operations of that business; and
(v)
that fixed place of business is located outside the Republic solely or mainly for
a purpose other than the postponement or reduction of any tax imposed by any sphere
of government in the Republic:
Provided that for the purposes of determining whether there is a fixed place of business as
contemplated in this definition, a controlled foreign company may take into account the
utilisation of structures as contemplated in subparagraph (i), employees as contemplated in
subparagraph (ii), equipment as contemplated in subparagraph (iii), and facilities as
contemplated in subparagraph (iv) of any other company –
(aa)
if that other company is subject to tax in the country in which the fixed place of
business of the controlled foreign company is located by virtue of residence, place of
effective management or other criteria of a similar nature;
(bb)
if that other company forms part of the same group of companies as the
controlled foreign company; and
(cc)
to the extent that the structures, employees, equipment and facilities are located
in the same country as the fixed place of business of the controlled foreign company.’
[11] The location of the ‘primary operations’, referred to in s 9D(1)(a)(ii)–(iv),
is pivotal in determining whether CGFM is an FBE as defined. This requires a
determination as to the nature of CGFM’s business in Ireland, and in particular,
whether the primary operations have been outsourced, and if so, whether an
exemption in terms of s 9D is applicable.
Pleadings and Evidence
[12] The undisputed evidence on behalf of CGFM was that it was incorporated
in Ireland during 1997 to provide opportunities for clients to invest in
South African and Irish domiciled collective investment funds (CIS). On
23 October 2007, CGFM applied to the Irish Financial Services Regulatory
Authority for authorisation of an Undertakings for Collective Investment and
Transferable Securities (UCITS). On 25 October 2007, it received its licence from
the Central Bank of Ireland (CBI) as a ‘management company’ in accordance
with the European Communities Regulations under Investment Services
Directive 93/22/EEC 2125.
[13] In its business plan, attached to its licence application, CGFM presented an
outsource business model where CGFM concentrates on being a ‘product
provider’. All non-core functions, such as investment, administration and
custodial functions, are outsourced. The provision of investment management
services and trading functions is outsourced to specialist investment managers,
CAM in South Africa and CIL in the United Kingdom. The fund administration
has been sub-contracted to JP Morgan Hedge Fund Services (Ireland) Limited
and JP Morgan Administration Services (Ireland) Limited. CGFM has outsourced
its distribution function to CIL and CAM, and its custodian function to JP Morgan
Bank (Ireland) Plc. According to the business plan, because these functions are
outsourced to independent third party service providers, CGFM is not subject to
South African Transfer Pricing rules.5
5 Transfer pricing refers to the prices of goods and services which are exchanged between companies under
common control. South African transfer rules are found in s 31 of the Act and practice note 7.
[14] CIMSA asserts that CGFM is not approved to perform investment
management, which it sub-contracts to service providers. These are conducted
under the oversight, direction and supervision of CGFM as the fund manager. It
does not abdicate responsibility for those functions, but exercises oversight and
supervision over the conduct of its service providers from Dublin. All this,
contends CIMSA, is consistent with the terms of its licence issued by the CBI.
Since the actual performance of investment trading functions is not envisaged as
part of CGFM’s business, nor has the CBI approved CGFM to perform these
functions, they cannot be ‘primary operations’ as contemplated in the FBE
definition. The primary business of CGFM, according to CIMSA is, therefore,
not the actual performance of investment management, but ‘the managed
outsourcing of the investment management functions in accordance with the
terms of the licence’.
[15] CIMSA’s primary functions, as pleaded, are:
‘26.1. ensuring compliance with all regulatory requirements of CBI and any other regulators
under any licence, including reporting to and responding to communications from the
regulator/s;
26.2. ensuring compliance by UCITS and other funds with all regulatory and constitutional
document (e.g. trust deed) requirements;
26.3. the appointment and ongoing supervision and monitoring of service providers,
including investment management service providers;
26.4. communication and reporting to investors in UCITS and other funds, including
management of complaints, disputes and investment reporting;
26.5. overall risk management of the business of CGFM and all funds for which it is
responsible;
26.6. compliance with all legal corporate requirements of the Republic of Ireland, including
corporate governance;
26.7. financial control and reporting for CGFM and all funds for which it is responsible; and
26.8. investment change management, i.e. informing the investment manager of relevant
changes to the investment objectives, policies and restrictions of any of the portfolios and
constitutional documents.’
[16] CIMSA denies that CGFM outsourced functions of ‘its business’ as
referred to in the FBE definition and contends that investment management
services are not a necessary part of a fund manager’s business. CIMSA states that
its position is bolstered by the fact that the outsourcing of investment functions is
common practice for fund managers in Ireland, Europe and South Africa. It is
also recognised as a legitimate practice for fund managers by the CBI.
[17] SARS accepts that CGFM met the FBE definition, in all respects but one:
economic substance.6 As at 2012, CGFM had offices in Dublin with a staff
component of four people, consisting of a managing director, two accounting
officers and a compliance officer. All the staff were resident in Ireland. It is not
disputed that CGFM had conducted its business for more than a year through one
or more offices in Dublin (s 9D(1)(a)(i)), or that it had ‘a fixed place of business’
in Ireland (s 9D(1)(a)(ii)) which was suitably staffed and equipped with suitable
facilities (s 9D(1)(a)(ii), (iii) and (iv)). SARS also accepts that the business was
located in Ireland for a reason other than the postponement or reduction of
South African tax (s 9D(1)(a)(iv)). However, it contends that CGFM does not
meet the economic substance requirements, as ‘the primary operations’ referred
to in s 9D(1)(a)(ii),(iii) and (iv) were not based in Ireland. Accordingly, the
Dublin office was not suitably staffed with employees, not suitably equipped, nor
did it have the suitable facilities to conduct ‘the primary operations’ of CGFM’s
business.
6 National Treasury’s Explanation to Section 9D of the Income Tax Act, June 2002 explains that the economic
substance must be demonstrated in terms of operations and in terms of its business purpose.
[18] SARS submits that the FBE definition requires each of the requirements
set out in s 9D(1)(a)(i) to (v) to be present in a fixed place of business in order
for a controlled foreign company to qualify as a FBE. If not, the business is not
entitled to a tax exemption under s 9D(1)(a). While it is permissible for a
controlled foreign company to outsource locational permanence and economic
substance, it must then comply with the proviso set out in s 9D, and each of the
discreet requirements in the subsections (aa), (bb) and (cc) of the proviso have to
be met. Whether CGFM qualifies as a FBE, notwithstanding the outsourcing of
these primary functions, must be answered with reference to the proviso.
[19] In this regard, SARS contends that CGFM does not meet the requirements
set out in the proviso. Had the investment functions been outsourced to a
company which is subject to tax in Ireland – where CGFM is located (subsec
(aa)), within the same group of companies (subsec (bb)), and to the extent that
the structures, employees and facilities are located in Ireland (subsec (cc)) – it
would have qualified as a FBE. But, because CGFM outsources its investment
management functions to CAM and CIL, neither of whom are subject to tax in
Ireland, the requirements of subsec (aa) and subsec (cc) have not been met.
[20] CIMSA places no reliance whatsoever on the proviso and denies that
outsourcing may only take place in accordance with the proviso. While CGFM
does not dispute that it did not have sufficient staff to conduct investment trading,
it states that its staff complement was sufficient to maintain the licence which is
a function of its primary business of a fund management.
[21] SARS’s position on the CBI licence is that CGFM elected to apply for a
licence whereby its investment functions are outsourced, as opposed to an in-
source model. This election, however, does not alter the nature of its business,
which remains that of investment. SARS points out that the revenue generated by
CGFM (as per its transfer pricing report) is percentage based and calculated on
the market value of the assets of the Irish fund. Other service costs, such as those
in respect of administration, custodial and distribution, are paid out of the fees
earned by CGFM.
Tax Court
[22] The distinction between investment management and fund management
found favour with the tax court, which held that fund management is multi-
faceted requiring the securing of the correct licences; ensuring compliance with
statutory, regulatory and other laws; making ‘broad’ decisions about where to
invest; and deciding the amounts and when to distribute profits to investors. On
the other hand, investment management is more one dimensional and ‘the actual
discretionary decisions of investment managers play a relatively minor role in the
overall picture of fund management’. The tax court relied on CGFM’s Transfer
Pricing Report, which states that CGFM is responsible for the overall
management of the Irish Funds, including but not limited to the investment
management function.
[23] The tax court found that the reason for creating CGFM was to generate
opportunities for its investors which it could not provide in South Africa. The tax
court was satisfied that CGFM has ‘economic substance and does not merely exist
on paper’, on the basis that its conduct did not amount to housing its activities in
a foreign company to avoid tax in the home country on the income it produced.
[24] While accepting that the assets under management consist of money which
investors invest in collective investment schemes, the tax court had the following
to say:
‘[T]he fee income of [CGFM] is based on the quantum of assets under management. Fees are
raised on the amounts invested by individuals and apportioned to various role players and a
portion is retained by [CGFM] and the balance paid to [CIMSA]. The relevant basis of
calculating the fees is on the globular amount under management. [CIMSA] submits, and I
agree, that the evidence is that the fee is based on the capital contributed by the investors which
occurs before any investment management takes place. Even therefore if raising fees were the
primary conduct of the company this would still not be as a result of investment management.
Fees are received as a result of the creation and managing of a fund. Investors’ money
comprises the assets under management. The fees are not based on the profitability of the
investments carried out by each individual person playing a role in the process of investment
managing. It is correct, as contended by [SARS] that investment performance does have some
impact on the quantum of the fee. But I agree with the submission of [CIMSA] that while
investment performance is an important part of the overall fund management business, its
relative contribution to the fund management fee is limited. As submitted by [CIMSA] it is the
confidence that investors place in the fund manager per se in placing its assets with the fund
manager that gives rise to the fee, rather than the investment management activity.’
[25] The tax court held that without the execution of the management function
by CGFM, none of the other functions could lawfully take place. The tax court
reasoned that without the existence of a licence to conduct the business of making
investments into the CIS, CGFM would not be able to conduct business and there
would be no other functions of investment management, administration, custody
or distribution:
‘[CGFM] is not an investment management company it is a Fund Management company – it
is a licensed fund management company. The licence states that it [is] licensed to conduct
collective portfolio management. One of the functions that are carried out by a fund
management company is investment management. In this instance that function is outsourced
on contract to others.’
[26] On this basis, the tax court was satisfied that the management function
performed by CGFM was the primary operation of the business of CGFM. It set
aside the additional assessment raised by SARS against CIMSA and directed
SARS to issue a reduced assessment for its 2012 year of assessment, in which no
amount was included in CIMSA’s income pertaining to the income of CGFM.
CBI Licence
[27] What is the precise nature of the business that CGFM’s license approves?
The licence, which is headed ‘Authorisation of a UCITS Management Company’,
provides for authorisation by the Irish Financial Services Regulatory Authority
of CGFM ‘as a management company in accordance with the provisions of the
European Communities (Undertakings for Collective Investment in Transferable
Securities) Regulations, 2003 as amended’. The accompanying letter sets out the
procedures with regard to anti-money laundering and terrorist financing.
[28] Schedule 1 of the licence reads:
‘Coronation Fund Managers (Ireland) Limited may not engage in activities other than the
management of UCITS authorised according to the Regulations and other collective investment
undertakings which are not covered by the Regulations and for which Coronation Fund
Managers (Ireland) Limited is subject to prudential supervision but which cannot be marketed
in another Member State under the Directive.
This authorisation does not include the provision of individual portfolio management services
or other non-core services as set down in Regulation 16(3)(b). Coronation Fund Managers
(Ireland) Limited must revert to the Financial Regulator seeking appropriate approval in the
event that it proposes to engage in these activities.’
[29] What is immediately apparent is that CGFM’s licence is limited to
collective investment management. It does not have the authority to engage in
individual portfolio management. However, the fact that it is licenced to perform
collective investment management is inconsistent with CIMSA’s assertion that it
is not licenced to perform any investment management. Instead, it appears that
investment management is integral to its licence as an authorised management
company.
[30] The UCITS Regulations, 20117 as amended (the regulations) define
collective portfolio management as ‘the management of UCITS and other
collective investment undertakings, and includes the functions specified in
Schedule 1’. The definition of a management company is one whose ‘regular
business . . . is the management of UCITS in the form of unit trusts, common
contractual funds or investment companies (or any combination thereof), and
includes the functions specified in Schedule 1’.
[31] Schedule 1 of the regulations deals with the functions. It reads as follows:
‘Functions included in Activity of Collective Portfolio Management
1.
Investment Management.
2.
Administration:
(a)
legal and fund management accounting services;
(b)
. . .
3.
Marketing.’
[32] The regulations specifically make provision for outsourcing or delegation.
Clause 23 of the regulations provides:
‘(1)
A management company may delegate activities to third parties for the purpose of the
more efficient conduct of the company’s business provided that –
(a)
the management company has informed the Bank in an appropriate manner (whereupon
the Bank shall, without delay, transmit the information to the competent authority of the home
Member State of a UCITS managed by that management company),
(b)
the delegation mandate does not prevent the effectiveness of supervision over the
management company, and in particular it shall not prevent the management company from
acting, or the UCITS from being managed, in the best interests of its investors,
(c)
when the delegation concerns investment management, the mandate is only given to
undertakings which are authorised or registered for the purpose of asset management and
subject to prudential supervision; the delegation shall be in accordance with investment-
allocation criteria periodically laid down by a management company,
7 European Communities (Undertakings for Collective Investment and Transferable Securities) Regulations, 2011.
(d)
where the mandate concerns investment management and is given to a third country
undertaking, cooperation between the Bank and the supervisory authorities of the third country
concerned is ensured,
(e)
a mandate with regard to the core function of investment management is not given to
the trustee or to any other undertaking whose interests may conflict with those of the
management company or the unit-holders,
(f)
measures are put in place which enable the persons who conduct the business of the
management company to monitor effectively at any time the activity of the undertaking to
which the mandate is given,
(g)
the mandate does not prevent the persons who conduct the business of the management
company either from giving at any time further instructions to the undertaking to which
functions are delegated or from withdrawing the mandate or both with immediate effect when
this is in the interest of investors,
(h)
having regard to the nature of the functions to be delegated, the undertaking to which
functions will be delegated is qualified and capable of undertaking the functions in question,
and
(i)
the prospectuses issued by a UCITS list the functions which a management company
has been permitted to delegate in accordance with this Regulation.
(2)
Neither the management company’s nor the trustee’s liability shall be affected by the
fact that the management company delegated any functions to third parties, nor shall the
management company delegate its functions to the extent that it becomes a letterbox entity.’
(My emphasis.)
[33] From the above, two points are apparent. First, collective portfolio
management, which CGFM has been authorised to conduct, includes investment
management, administration and marketing. That fund management included
investment management, administration and marketing was confirmed by
Tara Doyle (Ms Doyle), the Irish solicitor with expertise in the legal and
regulatory aspects of investment services in Ireland. This was also the evidence
of Alan West King (Mr King), the managing director of CGFM since 2008.
John Ashley Snalam (Mr Snalam), one of the founders of the Coronation Group,
now retired, testified that the licence permitted investment management of
collective investment schemes and this was one of the ‘core functions’ which the
company ‘elected to outsource as it did with administration and distribution and
trusteeship by custody’.
[34] Second, the regulations indicate that the purpose of delegation is to
enhance the efficiency of the company’s business. It does not detract from the
business of the company, nor is it possible for delegation to alter that business. It
merely entails supervision of the core business which, in terms of regulation
23(1)(e), is recognised as investment management. In terms of regulation
23(1)(b) the management company acts in the best interest of the investors. The
liability of the management company is also not affected by the fact that it has
delegated its core function. All CIMSA’s witnesses were unequivocal that the
delegation of trading activities did not relieve CGFM of its responsibilities to the
CBI.
[35] This is entirely consistent with the fact that CGFM is authorised as a
UCITS management company pursuant to the Investment Intermediaries Act,
1995 in Ireland. This Act is aimed at ‘investment business firms’, and its purpose
is ‘to make provision in relation to investment business firms and investment
product intermediaries and for the authorisation and supervision of investment
business firms and investment product intermediaries by the Central Bank of
Ireland . . .’.8
[36] The evidence given by the witnesses for CIMSA was that the regulatory
functions were incidental. Mr King testified that the licence largely looked after
itself. Ms Doyle went so far as to state that it was unnecessary to have employees
in Ireland, as the board members could have carried out the function of fund
8 Investment Intermediaries Act 11 of 1995 (Republic of Ireland).
management at their quarterly meetings. That managerial functions are ancillary
to the investment function is also evidenced by the appendix to the application
for the authorisation, in which ‘managerial functions’ are listed. These are
decision-taking, monitoring compliance, risk management, monitoring of
investment performance, financial control, monitoring of capital, internal audit
and supervision of delegates.
[37] The ‘delegate oversight’ guidance of the CBI deals with ‘delegated’ and
‘retained tasks’ and provides that a fund management company may delegate ‘in
whole or in part certain specific tasks which form part of the fund management
company’s management functions’.9 It goes on to state that delegation is
permitted but responsibility is retained and that the company should ‘take all
major strategic and operational decisions affecting the fund management
company and any investment funds it manages’.10 The reference to the investment
funds it manages in the CBI guidance is yet another indication that the
authorisation by the CBI was for fund management, which comprises investment
management, administration and marketing.
[38] CIMSA has conflated the role of a management company with its
outsourcing or delegation of its investment and other functions. By so doing, it
has impermissibly elevated the management role. The licence granted to CGFM
was for fund management, which includes investment management,
administration and marketing. That it elected to outsource these functions and
merely manage these functions, does not change the nature of the licence or
elevate the managerial role into any other than an ancillary one.
9 Section 14, Part 1 ‘Delegate Oversight’ of web-based guidance issued by the Central Bank of Ireland in
November 2015 titled ‘Fund Management Companies – Guidance’ and in relation to which UCITS management
companies are expected to comply.
10 Ibid, s 15.
[39] Therefore, CIMSA’s pleaded case that CGFM ‘has not been approved by
the CBI to perform investment functions’ is incorrect, nor is it borne out by its
own witnesses. The fact that CGFM did not obtain approval for individual
portfolio management, or other core services, does not mean that the licence
‘expressly excluded investment management from its ambit’. Indeed, the contrary
is true, as the CBI licence authorised ‘collective investment management’ and if
it were to engage in individual portfolio management, then it was required to
apply for ‘appropriate approval’.
The Primary Operations of CGFM
[40] Having established that the CGFM’s licence entails investment
management, it must be determined whether the nature of CGFM’s business in
Ireland is that of an investment company or a management company with ‘the
managed outsourcing of the investment management functions in accordance
with the terms of the licence’. It is common cause that the investment function is
not located in Ireland. Therefore, if its primary business is that of investment,
then its net income as a controlled foreign company will be imputable to CIMSA.
[41] Outsourcing is a commercial reality, particularly in Ireland where,
according to Ms Doyle, 70-80% of the businesses operate on an outsourcing
basis. CGFM’s rationale for setting itself up as a fund manager in Ireland, was to
exercise its right to grow internationally and appoint the ‘best in the class’
investment managers, thereby advancing the best interests of its investors.11
[42] De Koker and Williams12 had the following to say on outsourcing:
11 On 5 October 2015, the OECD released its final report on the strengthening of CFC rules and stated that ‘[a]
substance analysis looks at whether the CFC engaged in substantial activities in determining what is CFC income’.
It pointed out that many member states of the EU combine a categorical approach with some carve-out for genuine
economic activities. Substance analyses use a variety of proxies to determine whether the CFC’s income was
separated from the underlying substance, including people, premises, assets and risks. ‘Regardless of which
proxies they consider, the substance analyses are generally asking the same fundamental question, which is
whether the CFC had the ability to earn the income itself’.
12 A de Koker and R Williams Silke on South African Income Tax at 5.44, 5-63.
‘Few companies function completely independently, and businesses form partnerships with
suppliers as well as outside contractors. Working with outside contractors, or outsourcing,
enables companies to conduct their activities more effectively and more efficiently. Although
it would be contrary to the definition of a FBE for all the activities of a business establishment
to be out-sourced to third party suppliers, some outsourcing activity is possible. To the extent
that it is provided by a group company, this is expressly recognised subject to certain
conditions. But which functions may be outsourced to other parties must always depend on the
particular facts and, to some extent may vary according to the nature of the industry. Where
outsourcing does occur, a manager should possess experience, knowledge and skills in relation
to the primary business operations and must also have the authority to dismiss an
underperforming outsourced service provider. Clearly the personnel, equipment and facilities
for the critical “primary operations” of a business cannot be outsourced, but the secondary
operations are presumably determined in accordance with reference to turnover, profitability
or assets employed, need not necessarily require dedicated personnel, equipment and facilities.’
[43] CIMSA argues that the business13 of the foreign controlled company must
be determined first, since it must have ‘a fixed place of business . . . for the
carrying on of the business of the foreign controlled company for a period of not
less than one year’. This should be determined by what that entity actually does,
the normal commercial activity which it undertakes on a day-to-day basis. Here
the daily business is that of fund management, entailing the active management
of its service providers, plus regulatory compliance.
[44] According to CIMSA, the ‘primary operations’ referred to in s 9D(1)(a)
(ii)-(iv) are practical actions required to operate that particular business. On this
interpretation CGFM is suitably staffed, equipped and resourced to carry out its
primary operations which are conducted in Ireland. In short, CIMSA contends
that the functions which CGFM outsourced are not functions of the business that
13 The word ‘business’ is not defined in the Act, but the dictionary meaning of ‘business’ is ‘one’s regular
occupation, profession, trade, task or duty’.
it actually conducts in Ireland on a daily basis, but of the larger fund management
service provided to investors in conjunction with the investment manager.
[45] This argument cannot hold water. The meaning to be ascribed to ‘primary
operations’ and ‘business’ must be contextual, relative to the definition of a FBE,
where the words are found. The FBE definition refers to the ‘primary operations
of that business’, which is a direct reference to the business of the controlled
foreign company. The phrase ‘primary operations’ is not defined in either the Act
or the Tax Administration Act14 (TAA). The dictionary definition of the word
‘primary’ is, inter alia, ‘first in importance, chief, leading, main . . .’.15
‘Operations’ means, inter alia, ‘working activity, the exertion of force or
influence, the way in which a thing works’.16
[46] In the Memorandum of Association the objects of CGFM are described as:
‘(a)
To carry on the business of establishing, either on the Company’s own behalf or on
behalf of other persons or bodies, specified collective investment undertakings, defined in
Section 18 of the Finance Act, 1989 (“Collective Investment Undertakings”) and to provide for
such undertakings investment management services including but not limited to financial
advisory services, administration services, marketing services, placement services, brokerage
services, agency services and all other services of a financial nature and generally to deal in
units of the undertakings managed by the Company.
(b)
. . .
(c)
To carry on the business of investment and financial management including venture
and development capital investment, corporate treasury management, fund management and
fund administration for individuals, investment schemes or undertakings other than Collective
Investment Undertakings international corporate bodies, governments or other authorities both
as principals and agents and to transact and do all matters and things incidental thereto which
may be usual in connection with the business of financing or dealing in monies. PROVIDED
14 Tax Administration Act 28 of 2011.
15 Collins English Dictionary https://www.collinsdictionary.com/dictionary/english/primary, accessed on
30 January 2023.
16 Oxford English Online Dictionary.
THAT the Company shall not act as or accept any appointment as a fund manager for any
investment scheme or undertaking other than a Collective Investment Undertaking without the
prior approval of the Irish regulatory authority but for the avoidance of doubt the Company
may provide fund administration, investment advisory or management services to any fund
manager appointed to an investment scheme or undertaking other than a Collective Investment
Undertaking.’
[47] The notion that investment management is not CGFM’s core business is at
odds with what is stated in its memorandum of association. The stated objects of
CGFM are to carry on the business of establishing specified collective investment
undertakings; to promote, establish, manage, regulate and carry on any
investment, unit or other trust or fund; and to carry on the business of investment
and financial management.
[48] What then constitutes the core function of the business that CGFM operates
in Ireland? It obtained its licence in terms of the relevant legislation under the
Investment Intermediaries Act in Ireland. Investment management is a function
integral to the fund management licence. The UCITS regulations refer to
investment management as a core function of a management company.
Mr Snalam testified that investment management, administration and marketing
are ‘core functions’ for which CGFM is responsible. This sentiment was echoed
by Mr King.
[49] In addition, CGFM pays a fee to CAM and CIL out of the fees derived
from investment management in terms of the investment management agreements
it entered into between CAM and CIL, respectively. In terms of the agreements,
CAM and CIL receive a fee amounting to ‘50% of the net fund management fee
received by CGFM Ireland for the fund management services that it performs to
the Irish funds, plus any net performance fees, where applicable’.17
Notwithstanding the delegation of the investment management to CAM and CIL,
the fees in respect of investment was earned by CGFM. Mr King and Mr Snalam
testified that CGFM derives its fees from the assets under management, which
are essentially the monies of investors in the collective investment schemes. That
GCFM’s primary source of income is from investment is another indication that
CGFM’s core function is investment management. Having found that CGFM is
licensed as an investment management company, the business of the controlled
foreign company (in this instance, CGFM) is unquestionably that of investment,
as is also evidenced from the source documents.
[50] The fact that CGFM was permitted to outsource functions does not mean
that the scope of its business is confined to supervision of the functions which it
has outsourced, together with regulatory compliance. Its operations are
determined by those activities for which it sought, and was granted, a licence.
That it elected to outsource these functions, does not exclude these functions from
the scope of its business. On the contrary, these functions had to fall within the
ambit of its business in order to be outsourced. An agent cannot perform a
function which does not form part of the business of the principal. In other words,
CGFM could not outsource a function that it did not possess in the first place.
[51] The function of investment management is, per the licence, a component
of fund management, irrespective as to whether it is outsourced or not. The choice
of a particular business model cannot alter the primary operations of a company.
The nature of CGFM’s business was not transformed from an investment business
to a managerial one by outsourcing its investment functions. Put differently, the
true business of investment management cannot be transformed into ‘managed
17 Transfer Pricing Report.
outsourcing of investment management funds’, simply because it elected a
business model of outsourcing in which the function of investment management
is outsourced.
[52] If the key operations of the business have been outsourced (here,
investment management), then the fixed place of business in Ireland lacks the
staff and facilities to conduct those operations. If these operations are central to
the business of CGFM, because they go to the very nature of what this business
does, then CGFM does not conduct its primary operations in Ireland. Without the
investment management operations, can it be said to conduct its primary
operations in Ireland? The answer must be, ‘no’.
[53] The FBE definition is not aimed solely at advancing international
competitiveness for offshore businesses. Nor is the legislation concerned only to
prevent diversionary, passive or mobile income18 eroding the South African tax
base. It is also to limit a situation where an exemption is obtained over earnings
in a low tax jurisdiction when the primary operations for the business are not
conducted there.
[54] The essential operations of the business must be conducted within the
jurisdiction in respect of which exemption is sought. While there are undoubtedly
many functions which a company may choose to legitimately outsource, it cannot
outsource its primary business. To enjoy the same tax levels as its foreign rivals,
thereby making it internationally competitive, the primary operations of that
company must take place in the same foreign jurisdiction.
18 Diversionary income relates to tax schemes which artificially shift income off-shore; passive income includes
dividends, interest and royalties; and mobile income is that from a shell business which merely retains a post-box
address and has no non-tax reason for its existence.
[55] On these particular facts, I conclude that the primary operations of
CGFM’s business (and, therefore, the business of the controlled foreign company
as defined) is that of fund management which includes investment management.
These are not conducted in Ireland. Therefore, CGFM does not meet the
requirements for an FBE exemption in terms of s 9D(1). As a result, the net
income of CGFM is imputable to CIMSA for the 2012 tax year in terms of
s 9D(2).
Understatement Penalty and Under-Estimation of Provisional Tax
[56] SARS imposed an understatement penalty in respect of the imputed net
income of CIMSA’s 2012 tax year of assessment, in terms of s 222(1) read with
s 223 of the TAA, on the basis that there had been a ‘substantial understatement
resulting in a penalty of 10% of the tax that would otherwise have been paid’.19
[57] In the event of an understatement, the taxpayer must, in addition to the
proper tax that should have been paid, pay an understatement penalty, unless it is
the consequence of a ‘bona fide inadvertent error’.20 SARS bears the onus of
proving the facts upon which the penalty was imposed.21 A substantial
understatement as defined is where the prejudice exceeds 5% of the proper
amount that should have been paid, alternatively, exceeds R1 million. Clearly,
the threshold has been met in the present case – none of the net income of CGFM
was taxed in the hands of CIMSA. This exceeds 5% of the tax otherwise payable.
19 Section 221 of the TAA defines ‘understatement’ as ‘any prejudice to SARS or the fiscus as a result of – (a)
failure to submit a return required under a tax Act or by the Commissioner; (b) an omission from a return; (c) an
incorrect statement in a return; (d) if no return is required, the failure to pay the correct amount of “tax”; or (e) an
“impermissible avoidance arrangement”’.
20 Section 222 of the TAA.
21 Sections 102(2) and 129(3) of the TAA.
[58] CIMSA stated that it relied on a tax opinion procured from a leading tax
expert in the country.22 However, it did not disclose the contents thereof, or make
the opinion available to SARS. SARS relies on this non-disclosure to draw a
negative inference that the tax opinion did not support CIMSA’s claim for an FBE
exemption and that a deliberate and conscious decision was taken to exclude the
net income of CGFM. It is contended that this was not an inadvertent error.
[59] Similar reasoning is applied to the underestimation of provisional tax for
the 2012 year of assessment. In the case of an underestimation of provisional tax,
SARS has a discretion to impose additional tax of up to 20% where CIMSA’s
income is more than R1million and the provisional tax was estimated at less than
80% of the actual amount taxable.23 In such an instance, SARS must have due
regard to the factors bearing thereon. Once again, SARS calls upon this Court to
draw an inference from the non-disclosure of the tax opinion that it did not
support CIMSA’s position on the FBE exemption.
[60] There is nothing to gainsay CIMSA’s evidence that it prepared and
submitted all its tax returns under the guidance of PricewaterhouseCoopers, and
that Ernst & Young were the external auditors of CGFM. Nor is there anything
to suggest that CIMSA’s tax returns were not submitted in the bona fide belief
that CGFM may be eligible for a s 9D exemption. The fact that this Court has
now found that this course is not open to it, does not in any manner reflect on the
bona fides of CIMSA, any more than it reflects on the bona fides of any losing
party in litigation. Insofar as the tax opinion is concerned, it was not incumbent
on CIMSA to disclose a tax opinion that it had obtained, any more than it would
be on any other party which litigates on the basis of a procured legal opinion.
22 The tax opinion was referred to in Mr Snalam’s evidence.
23 Paragraph 20(1)(a) of the Fourth Schedule to the Income Tax Act.
[61] In Commissioner for the South African Revenue Service v The Thistle
Trust,24 an argument was presented on behalf of SARS that the taxpayer in that
matter had consciously and deliberately adopted a certain position when it elected
to distribute the capital gains. This Court held that it was correctly conceded that
the understatement was a bona fide error and that SARS was not entitled to
impose the understatement levy.
[62] Although dealing with the raising of an additional assessment, in
Commissioner, SARS v Pretoria East Motors (Pty) Ltd,25 this Court said that there
must be proper grounds for believing that there is undeclared income or that a
claim for a deduction or allowance is unjustified. It is only in this manner that
SARS can engage the taxpayer in an administratively fair manner, as it is obliged
to do.
[63] To speculate that a tax opinion must have gone against CIMSA merely
because it was not produced to SARS, is simply speculative. It is not sufficient to
attribute male fides on the part of CIMSA.
[64] For these reasons, the claim for understatement penalties and
underestimation penalties must fail.
[65] All that remains is s 89quat(2) of the Act, which provides for interest to be
charged on the underpayment of provisional tax. Interest is payable in terms of
this section if the ‘normal tax’ payable by a tax payer in respect of its taxable
income exceeds the credit amount in relation to such year. Normal tax includes
any additional amounts payable in terms of s 76 of the Act and paras 20 and 20A
24 Commissioner for the South African Revenue Service v The Thistle Trust [2022] ZASCA 153 (SCA) para 29.
25 Commissioner, SARS v Pretoria East Motors (Pty) Ltd [2014] ZASCA 91; [2014] 3 All SA 266 (SCA); 2014
(5) SA 231 para 11.
of the Fourth Schedule thereto. Here, there has been an underpayment on the
normal tax and, accordingly, interest is payable in terms of s 89quat(2).
[66] In the result, the following order is made:
The appeal is upheld.
The order of the Tax Court is set aside and substituted with the following:
‘1
The appellant is directed to pay the additional tax imposed in respect
of the respondent’s additional assessment dated 23 March 2017, and the
interest imposed thereon in terms of section 89quat(2) of the Income Tax
Act 58 of 1962.
The appellant is to pay the respondent’s costs, including the costs of
two counsel.’
The respondent is to pay the appellant’s cost of appeal, including the costs
of two counsel.
____________________
C HEATON NICHOLLS
JUDGE OF APPEAL
Appearances
For appellant:
R T Williams SC (with her H Cassim)
Instructed by:
State Attorney, Cape Town
State Attorney, Bloemfontein
For respondent:
M W Janisch SC (with him C M Rogers and V M Jere)
Instructed by:
Bowmans, Cape Town
Matsepes 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:
07 February 2023
Status: Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
Commissioner for the South African Revenue Service v Coronation Investment Management SA (Pty) Ltd
(1269/2021) [2023] ZASCA 10 (07 February 2023)
Today, the Supreme Court of Appeal (SCA) delivered a judgment in which it upheld with costs an appeal by the
Commissioner for the South African Revenue Service (SARS) against the decision of Western Cape Division of
the High Court, Cape Town, sitting as a tax court (the tax court) which found in favour of Coronation Investment
Management SA (Pty) Ltd (CIMSA).
The respondent, CIMSA, is the holding company for the Coronation Group which is registered and tax resident
in South Africa. During 2012, CIMSA was a 90% subsidiary of Coronation Fund Managers Limited and the 100%
holding company of Coronation Management Company and Coronation Asset Management (Pty) Ltd (CAM),
both registered for tax in South Africa. CIMSA was also the 100% holding company of CFM (Isle of Man) Ltd,
tax resident in Isle of Man. CFM (Isle of Man) Ltd, in turn, was the 100% owner of Coronation Global Fund
Managers (Ireland) Limited (CGFM) and Coronation International Ltd (CIL), which were registered and tax
resident in Ireland and the United Kingdom respectively.
The central issue in the appeal was whether the net income of CGFM should have been included in the taxable
income of its South African holding company, CIMSA, or whether a tax exemption in terms of s 9D of the Income
Tax Act 58 of 1962 (the Act) was applicable to the income that had been earned by CGFM. The answer, said the
SCA, was dependent on what the primary functions of CGFM in Dublin, Ireland were. If it were found that the
primary operations were conducted in Ireland, then the s 9D exemption would apply. CGFM had adopted an
outsource business model where its investment management function was conducted by CAM in South Africa
and CIL in the United Kingdom.
SARS assessed the tax liability for the 2012 tax year to have included in its income an amount equal to the entire
‘net income’ of CGFM. The tax court upheld CIMSA’s objection and found that CGFM was a ‘foreign business
establishment’ (FBE) as defined in s 9D(1) of the Act and, accordingly, qualified for a tax exemption. The
exemption only applies to foreign entities that qualify as a ‘controlled foreign company’. It set aside SARS’s
additional assessment against CIMSA and ordered it to issue a reduced tax assessment, in which no amount was
included in CIMSA’s income under s 9D of the Act pertaining to CGFM’s income. Consequently, SARS was not
entitled to claim (a) understatement penalties in terms of s 222 of the Tax Administration Act 28 of 2011
(the TAA); (b) understatement penalties for provisional tax under paragraph 20 of the Fourth Schedule to the Act;
and (c) interest in terms of s 89(2) of the Act.
The location of the ‘primary operations’, referred to in s 9D(1)(a)(ii)–(iv), was pivotal in determining whether
CGFM was an FBE as defined. Thus, it was imperative to determine whether the primary operations had been
outsourced, and if so, whether an exemption in terms of s 9D exemption was applicable. SARS submitted that the
FBE definition requires each of the requirements set out in s 9D(1)(a)(i) to (v) to be present in a fixed place of
business in order for a controlled foreign company to qualify as a FBE. If not, the business is not entitled to a tax
exemption under s 9D(1)(a). SARS submitted that while it is permissible for a controlled foreign company to
outsource locational permanence and economic substance, it must comply with the proviso set out in s 9D and
each of the discreet requirements in the subsections (aa), (bb) and (cc) of the proviso have to be met.
In October of 2007, CGFM applied to the Irish Financial Services Regulatory Authority for authorisation of an
Undertakings for Collective Investment and Transferable Securities a (UCITS) and received its licence from the
Central Bank of Ireland (CBI) as a ‘management company’ in accordance with the European Communities
Regulations under Investment Services Directive 93/22/EEC 2125. In its business plan, that was attached to its
licence application, CGFM presented an outsource business model where CGFM concentrates on being a ‘product
provider’. All non-core functions, such as investment, administration and custodial functions, are outsourced.
According to the business plan, because these functions are outsourced to independent third party service
providers, CGFM is not subject to South African Transfer Pricing rules. CIMSA denied that CGFM outsourced
functions of ‘its business’ as referred to in the FBE definition and contended that investment management services
were not a necessary part of a fund manager’s business.
The SCA held that CGFM’s licence entails investment management, and turned to determine whether the nature
of CGFM’s business in Ireland was that of an investment company or a management company with ‘the managed
outsourcing of the investment management functions in accordance with the terms of the licence’. The SCA held
that it was common cause that the investment function was not located in Ireland. Therefore, if its primary business
is that of investment, then its net income as a controlled foreign company should be imputable to CIMSA. CIMSA
argued that the ‘primary operations’ referred to in s 9D(1)(a) (ii)-(iv) are practical actions required to operate that
particular business. CIMSA further argued that the functions which CGFM outsourced were not functions of the
business that it actually conducts in Ireland on a daily basis. The SCA rejected this argument and held that the
meaning to be ascribed to ‘primary operations’ and ‘business’ must be contextual, which is relative to the
definition of a FBE, where the words are found. The FBE definition refers to the ‘primary operations of that
business’, which is a direct reference to the business of the controlled foreign company. The SCA examined
CGFM’s objects as recorded in its Memorandum of Association and held that the notion that investment
management is not CGFM’s core business was at odds with what is stated in its memorandum of association. The
stated objects of CGFM are, inter alia, to carry on the business of establishing specified collective investment
undertakings; to promote, establish, manage, regulate and carry on any investment, unit or other trust or fund; and
to carry on the business of investment and financial management. The SCA concluded that the primary operations
of CGFM’s business (and, therefore, the business of the controlled foreign company as defined) was that of fund
management which comprises of investment management. These are not conducted in Ireland, said the SCA.
Therefore, CGFM did not meet the requirements for an FBE exemption in terms of s 9D(1). As a result, the SCA
held that the net income of CGFM is imputable to CIMSA for the 2012 tax year in terms of s 9D(2).
SARS had imposed an understatement penalty in respect of the imputed net income of CIMSA’s 2012 tax year of
assessment, in terms of s 222(1) read with s 223 of the TAA, on the basis that there had been a ‘substantial
understatement resulting in a penalty of 10% of the tax that would otherwise have been paid’. In this regard,
CIMSA stated that it relied on a tax opinion procured from a leading tax expert. However, it did not disclose the
contents of the opinion, nor make the opinion available to SARS. SARS claim for understatement penalties failed
as the SCA held that CIMSA was not obligated to disclose the tax opinion to SARS and that not making the
opinion available to SARS was not sufficient to attribute male fides on the part of CIMSA.
~~~~ends~~~~
|
513
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No:107/2016
In the matter between:
AMBROSE MONYE
FIRST APPELLANT
ANDRE GOUWS
SECOND APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Monye v S (107/16) ZASCA 111 (02 September 2016)
Coram:
Bosielo, Zondi and Van der Merwe JJA and Schoeman
and Potterill AJJA
Heard:
18 August 2016
Delivered:
02 September 2016
Summary: Sentence - Appeal against sentence of life imprisonment for
murder - appellants the middlemen in contract killing - only co-operated
with police and admitted guilt after conviction - no true remorse - no
substantial and compelling circumstances to depart from minimum sentence
- sentences confirmed on appeal.
_____________________________________________________________________
ORDER
On appeal from: Gauteng Division, Pretoria (Kruger AJ sitting as court
of first instance)
The appeals of both appellants are dismissed and the sentences of life
imprisonment of both appellants are confirmed.
___________________________________________________________
JUDGMENT
Schoeman AJA (Bosielo, Zondi and Van der Merwe JJA and
Potterill AJA concurring)
[1] The two appellants, Messrs Ambrose Monye and Andre Gouws,
were charged with the murder of Ms Chanelle Henning (the deceased) as
well as offences related to the possession of unlicensed firearms. The
murder was committed on 8 November 2011. Both appellants pleaded not
guilty and after a trial they were convicted of murder and acquitted of the
other crimes.
[2] During the sentencing proceedings both admitted to their
respective roles in the murder of the deceased and conceded their guilt.
They were subsequently sentenced to life imprisonment. Their appeal
against sentence only is with the leave of the trial court.
The facts
[3] On the morning of 8 November 2011 two men, Messrs Martin
Pieterse and Petrus Gerhardus du Plessis, followed the deceased’s motor
vehicle on a motorcycle from her home to the crèche which her four year
old son attended. Pieterse was the driver of the motorcycle while
du Plessis was his passenger. Having left her son at the crèche the
deceased started to drive off in her motor vehicle; du Plessis approached
her and shot her twice at point blank range. Pieterse and du Plessis left
the scene on the motorcycle. The deceased died as a result of the wounds
inflicted on her.
[4] Five people were arrested for the deceased’s murder viz Pieterse,
du Plessis, Monye, Gouws and a person who supplied the firearm. The
murder charge against the latter was withdrawn. The other four were
charged with the murder of the deceased. Pieterse and du Plessis entered
into plea and sentence agreements with the state in terms of the
provisions of section 105A of the Criminal Procedure Act 51 of 1977.
They were each sentenced to undergo 18 years’ imprisonment in terms of
the plea bargain. Both Pieterse and du Plessis testified in the trial against
the appellants.
[5] After the appellants’ change of stance during the sentencing
proceedings, it became common cause that Gouws instructed Monye to
find someone to kill the deceased. Monye arranged with Pieterse and
du Plessis to execute the contract killing. Gouws thereafter pointed out to
Pieterse and du Plessis (a) the deceased’s security complex; (b) the
deceased’s son’s crèche; and (c) the school where the deceased worked.
Gouws provided the registration number of the deceased’s motor vehicle
to them and warned them not to shoot the deceased while her son was
with her in the motor vehicle. It is clear from the post-conviction
statements of Gouws and Monye that both Monye and Gouws worked as
middlemen to have the deceased killed and the roles of both were pivotal
in the eventual death of the deceased.
[6] This was clearly a premeditated murder. In terms of the provisions
of s 51(1) of the Criminal Law Amendment Act 105 of 1997 (s 51(1)(a)
read with Part I of Schedule 2) the trial court was obliged to impose life
imprisonment
unless
there
were
'substantial
and
compelling
circumstances' present, in which event, in terms of s 51(3)(a), a lesser
sentence could be imposed. Furthermore if:
‘[T]he 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.’1
[7] In Malgas it was set out that the circumstances expressed by the
phrase ‘substantial and compelling’ need not be exceptional but must
provide ‘truly convincing reasons’2 or ‘weighty justification’3 for
deviating from the prescribed sentence and imposing less than life
imprisonment. Furthermore, the specified sentences should not be
departed from for flimsy reasons4 and should ordinarily be imposed.
[8] Therefore, to determine whether there are substantial and
compelling circumstances it is necessary to analyse the facts with
reference to the criminals, the crime and the interests of society.
1 S v Malgas [2001] ZASCA 30; 2001 (2) SA 1222 (SCA) para 25.
2 Paras 8 and 25.
3 Paras 18 and 25.
4 Para 25(D).
The first appellant’s circumstances
[9] The personal circumstances of Monye were the following at the
time of passing of sentence. He was 39 years old and had two unrelated
previous convictions, which were not taken into consideration when
sentencing him. Monye matriculated in Nigeria. He was an accomplished
sportsman
who
represented
Nigeria
at
the
World
Athletics
Championships in 1993. His parents and siblings still reside in Nigeria.
He came to South Africa in 2001 and has a son who was nine years old
when sentence was passed. Monye owned a security company and earned
an income of between R40 000 and R50 000 per month.
[10] Monye’s personal circumstances were presented to the court from
the bar, during sentencing proceedings, after which Gouws testified in
mitigation and exposed Monye’s role in the death of the deceased. Only
after an adjournment did Monye change his version and admitted his
complicity in the death of the deceased. In a written affidavit by Monye,
which his counsel handed in on his behalf, it transpired that Gouws
informed him that he would be paid an amount of R50 000 immediately
after the ‘job is done’ and further amounts later on. Monye’s affidavit
concluded with the following:
‘Today, as I look back, I am ashamed of what I did, having been part of all this, I
regret it and am sorry. In the rough world where I was working, I lost sight of reality’.
The second appellant’s circumstances
[11] At the time of sentencing Gouws was a 49 year old first offender.
He matriculated and was a member of the South African Police Services
for a period of five years. Thereafter, he inter alia worked as an insurance
broker and in transport. He also worked in the United States of America
for some time and returned to South Africa in 2007. Since his return he
had worked as a debt collector and also owned a guesthouse. He has a son
who was 10 years old at the time of sentencing.
[12] From Gouws’ affidavit that was handed in, and his testimony, it
transpired that according to Gouws, Mr Nico Henning, the husband of the
deceased, and the deceased were embroiled in an acrimonious divorce.
Initially Henning asked Gouws, his friend of 24 years, to follow the
deceased and see what information he could gather that would reflect
badly on the deceased as Henning feared that he would not be granted
custody of their son. Later, he asked Gouws to plant drugs on the
deceased and have her arrested. These plans did not materialise. In the
end Henning promised to pay Gouws R1 million to have the deceased
killed and asked Gouws whether he would be prepared to shoot the
deceased. Gouws was unwilling to do it himself, but unbeknown to
Henning, he instructed Monye to get somebody to do the killing. In turn,
Monye contracted with Pieterse and du Plessis. Thereafter Gouws pointed
out the deceased’s security complex to du Plessis and Pieterse.
[13] The main contention regarding the personal circumstances of the
appellants advanced in their heads of argument, although not persisted
with in argument, is that they have shown remorse for their actions and
through owning up to their complicity have started the process of
rehabilitation. Due to the argument that the volte-face of the appellants
amounted to a substantial and compelling factor in respect of the interests
of the community, I am of the view that their complete change of
direction should be examined in all its facets.
[14] Whether the accused has true remorse is a question of fact.5 In S v
Matyityi6 the following was said:
‘There is, moreover, a chasm between regret and remorse. Many accused persons
might well regret their conduct, but that does not without more translate to genuine
remorse. Remorse is a gnawing pain of conscience for the plight of another. Thus
genuine contrition can only come from an appreciation and acknowledgement of the
extent of one's error. Whether the offender is sincerely remorseful, and not simply
feeling sorry for himself or herself at having been caught, is a factual question. It is to
the surrounding actions of the accused, rather than what he says in court, that one
should rather look. In order for the remorse to be a valid consideration, the penitence
must be sincere and the accused must take the court fully into his or her confidence.
Until and unless that happens, the genuineness of the contrition alleged to exist cannot
be determined.' (footnotes omitted)
[15] The only expression of remorse by Monye is the statement he made
in the affidavit referred to above. It is necessary to set out how and when
his remorse was first mentioned. This only came after a trial where he
pleaded not guilty and testified under oath. According to his testimony in
the trial prior to his conviction his interaction with Pieterse and du Plessis
was mainly to supply them with drugs and their employment by him as
bouncers. When he was in their presence and with Gouws, the latter three
would converse in Afrikaans and he did not understand what was being
discussed. Although they were in each other’s company on the day of the
deceased’s murder, he was not told that Pieterse and du Plessis were
involved in the killing. Monye attempted to exonerate himself and to
justify his actions while placing as much space between him and the
murder as possible. After his conviction and before sentence his counsel
intimated to the trial judge that he was going to appeal his conviction.
5 S v Volkwyn [1994] ZASCA 175; 1995 (1) SACR 286 (A) at 289h.
6 S v Matyityi [2010] ZASCA 127; 2011 (1) SACR 40 (SCA) para 13.
[16] I am of the view that the surrounding actions of Monye point to the
fact that he has shown no real remorse: he failed to reveal his complicity
to the police in the whole year before the trial commenced; and during the
trial, for a further period of a year, he persisted with his denial of any
involvement. After the sentencing proceedings had commenced he placed
his personal circumstances on record from the bar. It was only after
Gouws subsequently revealed the extent of Monye’s role in the
commission of the crime, that the latter changed his version. Even after
that he failed to testify under oath and subject himself to cross-
examination to enable the State to test whether he has shown true
remorse. This failure must be seen in light of the fact that his role was not
peripheral to but essential and central to the tragic end result. Through his
planning and intervention the shooter was brought into the conspiracy.
The ineluctable inference is that Gouws’ damning evidence was the
motivation for his change of heart
[17] Gouws agreed to change his version after he came to an agreement
with the State that he would reveal the whole plot, on condition that the
State would ask for 20 years’ imprisonment. He displayed no remorse in
the affidavit he presented to court, while his testimony during sentencing
was also devoid of any mention of remorse. His change of heart did not
constitute remorse if the surrounding facts are taken into consideration.
As with Monye, he did not demonstrate any remorse for the duration of
the period prior to the commencement of the trial and for the year of the
trial. In his testimony prior to conviction he emphatically denied
instructing anybody to kill the deceased. It was only after conviction that
he capitulated.
The crime
[18] The deceased was an innocent young woman who was killed
because she allegedly insisted on the custody of her son in divorce
proceedings. Due to her death her child is without a mother and her
parents have also lost a daughter. The murder by the two appellants in
this instance was a callous and cruel deed, committed purely for greed.
Monye agreed to become involved when he was promised an amount of
R50 000 while Gouws was swayed by his friendship with Henning and
the promise of an amount of R1 million. The trial court found that
without the monetary carrot it was unlikely that Gouws would have
agreed to the killing of the deceased.
[19] Due to the nature of the crime of assassination, or contract killing,
the objectives of deterrence and retribution emerge in the forefront of the
process in imposing punishment for such crimes.
Interests of society
[20] In S v Karg7 Schreiner JA emphasised the interest of the
community when he said:
‘It is not wrong that the natural indignation of interested persons and of the
community at large should receive some recognition in the sentences that
Courts impose, and it is not irrelevant to bear in mind that if sentences for
serious crimes are too lenient, the administration of justice may fall into
disrepute and injured persons may incline to take the law into their own hands.
Naturally, righteous anger should not becloud judgment.’
[21] The community interests are of paramount importance when
sentencing hired killers. Our Courts have in a whole series of judgments
7 S v Karg 1961(1) SA 231 (A) at 236B-C.
sentenced contract killers and persons who acted in concert with them
severely. In S v Mlumbi en 'n Ander8 it was stated that it is uncertain
which is the worse, a contracted killer who kills someone else for money
as he does it for greed or the contracted killer who kills another without
payment as he is clearly without a conscience. I quote from the headnote
where the following translation from the judgment is found:
‘[A] contract assassination was a heinous offence which has from early times filled
people with horror. It was also the kind of offence which held deadly danger for any
community and was in fact the kind of atrocity which gave a particularly sombre
meaning to the age-old expression 'homo homini lupus' [a man is a wolf to another
man] . . . [T]he present South African society was seriously threatened by such
conduct, and dared not tolerate it.’
In S v Dlomo9 Goldstone JA said that offenders must be made aware that,
except in exceptional cases, the courts will impose severe sentences on
them.
[22] In S v Kgafela 10 Friedman JP said (paras 83 and 84) that:
‘Assassination contracts contain profound dangers and are a type of atrocity to
be combatted, and the Courts have a duty in the discharge of its function to visit such
perpetrators with the severest punishment. . .
In consequence of the aforegoing, the hiring of assassins has been treated as a serious
aggravating factor.’
In S v Ferreira and Others11 the court said when confirming the
imposition of life sentence:
‘Having regard to the nature of the crime they committed - killing for money - and the
limited extent of the mitigating factors referred to, the condemnation expressed in
previous cases of contract killing applies unrestrictedly to them. There are, on the
8 S v Mlumbi en 'n Ander [1990] ZASCA 153; 1991 (1) SACR 235 (A).
9 S v Dlomo & others [1991] ZASCA 94; 1991 (2) SACR 473 (A) at 477h to 478b.
10 S v Kgafela 2001 (2) SACR 207 (B).
11 S v Ferreira and Others [2004] ZASCA 29; 2004 (2) SACR 454 (SCA) para 53.
Malgas test, no substantial and compelling circumstances which justify a lesser
sentence in their cases.’
There, the hired killers were 22 and 20 years old respectively and they
pleaded guilty.
[23] It was argued that the fact that the appellants were willing to testify
against the alleged instigator of the murder was in itself a substantial and
compelling circumstance and therefore the prescribed sentence of life
imprisonment was unjust in the circumstances of this case. However,
Pieterse and du Plessis demonstrated when and how co-operation with the
relevant authorities should have taken place to derive the benefit from
such co-operation. The actions of the appellants smack of opportunism. It
was only when the writing was on the wall for both of them that they
made an about-turn. It was not to benefit society or to enable the
deceased’s family to have closure and not relive their trauma, but to
benefit themselves.
[24] I am of the view that it would not be in the interests of society that
the appellants be allowed to use such a volte-face as an escape route to
avoid a sentence peremptorily prescribed by the Legislature. That would
send out a wrong message and ignore the elements of deterrence and
retribution that are so important in cases of this kind. I am not satisfied
that in the circumstances of this case their about-turn is so weighty as to
qualify as a substantial and compelling circumstance and to justify a
sentence less than imprisonment for life.
[25] The trial judge did not misdirect himself. Therefore there are no
reasons to interfere with the imposed sentence.
The appeals of both appellants are dismissed and the sentences of life
imprisonment of both appellants are confirmed.
______________________
I Schoeman
Acting Judge of Appeal
APPEARANCES
For Appellants:
J van Wyk (Heads of argument prepared by D
H Mostert)
Instructed by:
Pretoria Justice Centre
Bloemfontein Justice Centre, Bloemfontein
For Respondent:
G C Nel (and A Rossouw) (Heads of argument
prepared by G C Nel)
Instructed by:
Director of Public Prosecutions, Pretoria
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
2 September 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Monye v S (107/16) ZASCA 111 (02 September 2016)
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) dismissed an appeal by Mr Ambrose Monye and Mr
Andre Gouws, against sentences of life imprisonment handed down by the Gauteng Division,
Pretoria, following on a conviction of murder.
The issue before the SCA was whether the court a quo was correct in applying the minimum
sentence of life imprisonment, or whether it should have found that substantial and compelling
circumstances existed justifying a departure from that minimum sentence.
The appellants, along with two others, were convicted of the murder of Ms Chanelle Henning, who
was shot dead in 2011, outside the crèche which her four year old son was attending at the time. The
appellants were convicted on the basis that the killing was a contract killing, and they had acted as
the middlemen who had planned, negotiated and arranged the murder.
As this was a premeditated murder, the minimum sentence was life imprisonment. However, the
appellants argued before the SCA that the court a quo had erred, and should have departed from the
minimum sentence on the basis that substantial and compelling circumstances existed. These were
primarily that the appellants had shown remorse, admitted their guilt, and were willing to co-operate
with the police in their investigations and to testify in the anticipated trial of the alleged true instigator
of the murder, being the husband of the deceased.
The SCA rejected this argument. The appellants had both pleaded not guilty to the charge of murder,
the trial was conducted on that basis at all times, and it was only after they were convicted that they
changed their version of events. The SCA held that their about turn was not a sign of remorse, but
merely an opportunistic attempt to avoid the minimum sentence. Their approach in this regard also
differed markedly from the other two persons who were convicted, who had co-operated with the
State from the start and entered into plea and sentence agreements.
The SCA accordingly upheld the sentences imposed, concluding that departing from the minimum
sentence would:
‘send out a wrong message and ignore the elements of deterrence and retribution that are so important in cases
of this kind. I am not satisfied that in the circumstances of this case their about-turn is so weighty as to qualify as
a substantial and compelling circumstance and to justify a sentence less than imprisonment for life.’
--- ends ---
|
60
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 811/2016
In the matter between:
MINISTER OF SAFETY AND SECURITY
APPELLANT
and
RAYMOND AUGUSTINE
1ST RESPONDENT
BASHNEE SHARON AUGUSTINE
2ND RESPONDENT
JARRED SHELDON AUGUSTINE
3RD RESPONDENT
CELINE JANINE AUGUSTINE
4TH RESPONDENT
Neutral citation: Minister of Safety and Security v Augustine (811/2016)
[2017] ZASCA 59 (24 May 2017)
Coram:
Shongwe ADP, Lewis, Petse and Mbha JJA and Gorven
AJA
Heard:
4 May 2017
Delivered:
24 May 2017
Summary: Delict: General damages: appeal against quantum: test: damages
awarded not disproportionate: appeal against punitive costs order: order
warranted: appeal dismissed.
___________________________________________________________________________
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Makgoka,
Tolmay and Tuchten JJ sitting as court of appeal):
The appeal is dismissed with costs.
JUDGMENT
Gorven AJA (Shongwe ADP, Lewis, Petse and Mbha JJA concurring):
[1] This appeal is directed at the amount of general damages awarded to the
four respondents by the full court of the High Court, Gauteng Division, Pretoria
(the full court) and the punitive costs order which accompanied that award. The
full court was hearing an appeal from the decision of Mali AJ, sitting as a judge
of first instance (the trial court).
[2] The claim related to damages arising from the unlawful entry into the
home of the respondents without their permission or lawful warrant, for the
unlawful damage to one or more of the doors of their home and the lock of a
security gate, for the unlawful pointing of firearms at the respondents, for
insulting, assaulting, humiliating and intimidating the respondents. The trial
court awarded each of the respondents general damages in the sum of R25 000
and costs on the Magistrates’ Court scale.
[3] This prompted an appeal by the respondents to the full court. It was
directed against the failure to award damages for future medical costs, the
quantum of general damages, the rate of interest and the date from which
interest ran as well as the failure to award attorney and client costs, taxed on the
high court tariff.
[4] The full court was unanimous in its view that the appeal should succeed,
that damages for future medical expenses should be awarded and on the interest
rate and the date from which interest should run. However, the court divided as
to the quantum of general damages and the costs to which the respondents were
entitled.
[5] The majority judgment was that of Tolmay J in which Tuchten J
concurred. It ordered the appellant to pay each of the first to third respondents
general damages in the sum of R200 000 and the fourth respondent general
damages in the sum of R250 000. It also ordered the appellant to pay both the
trial and appeal costs on the scale as between attorney and client, taxed on the
high court tariff.
[6] The minority judgment was that of Makgoka J. He held that he would
have awarded all four respondents general damages in the sum of R100 000 and
granted party and party costs, taxed on the high court tariff. It is against the
order of the full court that the appellant appeals, with the leave of this court.
The appeal is limited to the issues of the quantum of general damages and the
costs award.
[7] The background to the claim is as follows. The first respondent was
employed as a quality supervisor for a vehicle tracking company. His family
comprised his wife who was employed as a credit controller (the second
respondent), their 16 year old son (the third respondent), their 15 fifteen year
old daughter (the fourth respondent) and their two-and-a-half year old baby boy.
They resided at 12 Mowbray Avenue, Benoni, in a semi-detached house
adjoining the house at 12B Mowbray Avenue. The two houses had separate
entrances and separate numbers. Each number was displayed outside. The two
houses shared a common internal wall with no interconnecting door.
[8] At approximately 02h00 on 16 June 2009, the first respondent was woken
by the frantic barking of his dogs. He investigated by opening the bathroom
window which looked onto the area in which the dogs were confined. They
quietened down when they saw him and he left. Soon thereafter, the dogs began
to cry in a way he had never heard before. He returned to the bathroom window
and that is when he saw people inside the dining area pointing torches and red
laser lights in his direction. He responded by screaming at them. Thinking that
they were housebreakers, he shouted for his son and set off for the bedroom in
which his wife and two and a half year old baby were sleeping.
[9] Before he could step out of the bathroom door, he felt a rifle barrel held
against him. He was ordered not to look or talk and to lie down. He obeyed. He
heard footsteps on the wooden stairs ascending to the loft. He initially saw three
to five people but later realised that there were more. It transpired that there
were between 30 and 45 intruders in the house and yard. None of them
identified themselves. He feared that his wife or 15 year old daughter would be
raped and felt helpless to prevent it. He politely requested the intruder holding
the rifle against him to take whatever he wanted but not to harm him. He told
him where the vehicle keys and his wallet were located invited him to take
them. He heard his daughter scream and one of the intruders ordering her to be
quiet. She was, however, too hysterical to be able to desist. He also heard his
son running towards the room where his mother had been sleeping but then
heard the son cry out that he was being hurt. His son had been pinned to the
floor under the boot of an intruder. He heard his wife telling an intruder that she
wanted to go into the bedroom to attend to the baby but her request was refused.
[10] After he had requested the intruder to take the valuables and car keys, the
person was quiet for about two minutes and then said to him, ‘My friend, we are
not here to rob you, we are the police.’ This was about 30 minutes after the
house was entered. The first respondent became angry and tried to push the rifle
aside. He asked why, if they were the police, they were hurting the family they
were employed to protect. The response was that the intruder could not give him
any information and he should wait for the captain. During this period, he heard
cupboards being searched and, after a while, one of the intruders said ‘clear’.
The intruders then began to leave the property. He could observe that they were
wearing what he referred to as combat uniforms but, since they were wearing
balaclavas, could not make out any of their faces. He could not see any
nametags or other form of identification and also saw no police uniforms.
During the period of the incident, the only electric light burning in the house
was the one in the bathroom which the family left burning overnight. The
intruders had used only torchlight.
[11] As they were leaving through the front door, he noticed that the side door
had been broken in order to gain access. He became angry, stopped some of
them and told them that they could not simply do something like that and then
walk away. He required an explanation as to their conduct. He was told that
Inspector Van Zyl would be there to talk to him but, for the rest, his request was
ignored. After insisting on an explanation, one of the young intruders told him
that they were looking for a person called Eugene, who had robbed a casino a
few days before. He responded that there was no Eugene staying there but that
there was a Eugene staying in the next door semi-detached house at
12B Mowbray Avenue.
[12] On receiving this information, the intruders began to assault a non-
uniformed, handcuffed person, accusing him of having brought them to the
wrong house. They then left, went to the next door house, broke the gate down,
booted in the door and entered. After a while, the police left in vehicles.
Nobody came to him to explain what had happened, including anyone named
Inspector Van Zyl. He had noticed that the neighbours had witnessed the police
leaving his home and felt humiliated by this.
[13] After the intruders had left their home and he had seen them enter the
next door house, he went inside. When he was asked what had happened next,
he said: ‘We were in a situation. We were distraught. We were trying to figure
out what was going on, why this had happened and, you know, comforting each
other. My daughter was a mess. My wife was a mess. They were all traumatised
by this. Luckily the baby did not experience any of this. He was asleep. My son
was complaining that the guy actually trampled on him. We were having a look
at his back and we just could not sleep. We were scared. We were scared. We
were shaken.’
[14] The intruders had cut a lock in order to enter the driveway gate. The lock
of a door to the house was broken as was the sliding gate lock. Two panes of
glass on the front door were broken. All of these items had to be replaced.
[15] That morning, the first and second respondents went to the Benoni Police
Station to lay a complaint against the police that had come to his property. They
also wanted to seek counselling for their family to address the trauma which
they had experienced. At the police station they were taken into a private room
where the station commander joined them. He was very helpful until he heard
that they were alleging that it was the police who had acted like this. He then
left the room and, on his return, told them that they did not have a case and were
wasting their time. The second respondent began talking to a female police
counsellor at that stage. She was being very helpful and told them that they
were entitled to lay a charge and should contact the Independent Police
Investigative Directorate (IPID) to do so. The station commander then called the
counsellor aside and, after he had spoken to her, she said that she was unable to
assist them any further. The second respondent later begged her for her mobile
number which she gave but, when she was phoned, she said that she did not
have the number of the IPID.
[16] The respondents finally laid a criminal charge. However, despite their
mention that Inspector Van Zyl was supposedly in charge of the operation, the
docket later recorded that there had been a decision not to prosecute because the
identity of the suspects was not known. The respondents also brought this action
which has led to this appeal.
[17] It is of some importance to note the manner in which the appellant
conducted the litigation in this matter. The appellant denied liability in toto. Not
only that, but the plea denied that any member of the South African Police
Service entered the house of the respondents. It also denied that any such
member pointed a firearm, assaulted, intimidated or humiliated any of the
respondents. It further denied that any of the persons referred to by the
respondents were employees of the South African Police Service or had acted in
the course and scope of their employment as such. At a later stage, on a date
which is not clear from the record, the appellant amended the plea. It alleged
that, in search of a suspect in an armed robbery and on reliable information that
this person resided at 12 Mowbray Avenue, members of the South African
Police Service arrived at that address, knocked on the door, identified
themselves as police officers, explained the reason for their presence at the
premises and requested permission to search. Thereupon, the person who had
answered the knock opened the door and allowed them to search the premises.
The police then found some documents displaying the names of the suspect in
one of the rooms in the house. The appellant went on to plead that the search
was conducted decently and in an orderly fashion, denying that there was any
forced entry or any assault or intimidation or humiliation of any of the
occupants of the house or that any firearm was pointed at any of the occupants
or that anyone was detained. In the alternative it was pleaded that if it was found
that any of the occupants had been intimidated, such intimidation was necessary
in the circumstances.
[18] At the commencement of the trial, the appellant had refused to furnish the
respondents with copies of the discovered documents. A formal application to
compel production had to be brought. This finally resulted in an undertaking to
provide what was termed ‘the docket’ to the respondents. The version set out in
the amended plea was persisted in at the trial. It was correctly found by the trial
court that this version was false. In addition, employees of the appellant testified
falsely that the semi-detached houses were in fact a single house. It was also
falsely persisted in that a document, as opposed to documents as was pleaded,
bearing the names of the suspect was found in the home of the respondents. The
full court correctly found that the members of the South African Police Service,
by giving false evidence, were simply attempting to defeat the claim of the
respondents.
[19] After the incident, the family experienced sleepless nights and flashbacks.
The children were scared to sleep in the dark. They were scared to go out of the
home at night. They visited the family doctor and explained the whole situation.
He prescribed medication to assist but that did not resolve their problems. The
work done by the first respondent required his leaving home at night in order to
work on night shifts. His family was scared to stay alone. He therefore started to
work a normal shift and no longer do weekend or night shift work. The trauma
associated with their house reached a point where they relocated to another
property. The first respondent had a heart attack which he attributed to the stress
caused by the incident. When he testified, on 18 August 2014, the incident was
still affecting his performance at work. This was more than five years later. The
fourth respondent’s academic performance deteriorated. Whereas before she
was a bright student, afterwards she even had to repeat one of her grades. She
refused to sleep in her bed and insisted on sleeping in the same room as the first
and second respondents. The third respondent became aggressive. At the time of
the trial, he was still struggling to sleep at night.
[20] The expert evidence of Dr Swanepoel was led. He was a clinical
psychologist who testified about the psychological sequelae suffered by the
respondents. None of his evidence was countered. He conducted a series of tests
on each of the respondents as well as interviewing each of them extensively. He
testified that, because the incident took place in the home of the respondents,
they were no longer able to view it as their place of safety or protection, comfort
or rest. This caused severe psychological distress. Likewise, for the first two
respondents, their inability to protect their children from being threatened
created psychological distress and had a severe effect on their level of
functioning. The psychological trauma was exacerbated by their experience at
the police station when the persons employed to serve and protect refused to
entertain their complaint. He went on to deal in detail with each of the
respondents in turn. I will summarise aspects of his evidence.
[21] The first respondent suffered from post-traumatic stress disorder arising
from the incident. This goes far beyond the need to be assisted after a traumatic
situation which could be done by a counsellor. It is a psychiatric disturbance
and requires specialised treatment. Where post-traumatic stress disorder is
untreated, it will lead to major depression. Once that exists, there are
occupational problems, general functioning problems and possibly even suicidal
thoughts and attempts. In addition, he suffered from dysthymia which includes a
chronic feeling of ill-being and lack of interest in activities that were formerly
enjoyable. This was diagnosed as falling short of depression but causes a person
to live ‘a life of depression’ and function at a low level. This is only diagnosed
after symptoms have persisted for two years or more. The first respondent also
suffered from sleeplessness and anxiety.
[22] The second respondent suffered from post-traumatic stress disorder
arising from the incident. She also suffered from insomnia and anxiety. Her
inability to attend to her youngest child resulted in feelings of guilt and self-
blaming. Her trauma was such that she did not even hear the hysterical
screaming by the fourth respondent during the incident. The fact that the
intruders refused to respond to the enquiries from the first respondent led to a
feeling that their existence was negated. This can lead to psychotic behaviour. It
was understandable that she was looking for an apology so that her existence
could be confirmed. It was clear when she gave evidence that she was still
emotionally affected.
[23] The third respondent, who had a booted foot placed on his back and a
rifle pointed at his head, also suffered from post-traumatic stress disorder,
dysthymia and anxiety. This would have been caused by his own trauma and by
seeing his father lying on the ground, powerless and with a rifle to his head. It
would have been exacerbated by his inability to protect his sister. He even
attempted to crawl to her when the boot was on his back and the rifle at his
head. He could not sleep for months after the intrusion. He had lost respect for
the South African Police Service. His academic performance deteriorated as a
result of his concentration being impaired after the incident. He had aggressive
impulses.
[24] The fourth respondent suffered from post-traumatic stress disorder which
resulted from the incident. For months after the incident she could not sleep
properly and every time she closed her eyes she saw the flashlights and heard
men screaming at her. She became too afraid to sleep on her own and had to
sleep with her mother. She was unable to sleep with the lights off. Her friends
informed her that she had become short tempered and irritable. She lost trust in
and respect for members of the South African Police Service. She also suffered
from severe traits of paranoia and a sense of self-importance. The latter could be
a defence mechanism employed to deal with anxiety. Hers was clearly the worst
case in the family and Dr Swanepoel expressed particular concern for her
wellbeing. Dr Swanepoel recommended certain therapy for each of the
respondents in an effort to prevent a degeneration into permanent depression.
[25] The approach for arriving at the quantum of general damages is well
established. A court attempts to arrive at a fair award to compensate for the
negative impact of the delict on the life of the injured party. The amount of this
award is therefore not susceptible of precise calculation.1 It is arrived at in the
exercise of a broad discretion.
[26] The test for interference on appeal is:
‘[S]hould an appellate Court find that the trial Court had misdirected itself with regard to
material facts or in its approach to the assessment, or, having considered all the facts and
circumstances of the case, the trial Court's assessment of damages is markedly different to
that of the appellate Court . . .’.2
The first of these requires analysis of the judgment to establish whether there
have been misdirections regarding either the proper approach or the facts taken
into account. The second requires the appeal court itself to broadly assess what
it would have awarded had it been sitting as a court of first instance.3 An appeal
court must interfere if ‘the damages are so high [or low] as to be manifestly
unreasonable.’4 The underlying principle for this latter approach must be that
the award is so disproportionate that the appeal court can infer that the
discretion accorded the trial court was not properly exercised.
[27] The appellant’s counsel accepted that the full court was entitled to
interfere with the award of the trial court. He was, however, unable to point to
any misdirection in the judgment of the full court in the approach to the
assessment or the material facts taken into account. Nor can I find any. His
submission was that the award itself warranted interference because it was
1 Minister of Safety and Security v Seymour 2006 (6) SA 320 (SCA) para 20.
2 Per Mokgoro J, in Dikoko v Mokhatla 2006 (6) SA 235 (CC); 2007 (1) BCLR 1; [2006] ZACC 10 para 57,
summarising and approving the approach of this court in Sandler v Wholesale Coal Suppliers Ltd 1941 AD 194
at 200.
3 Dikoko para 95. See also; Sutter v Brown 1926 AD 155 at 171 and Salzmann v Holmes 1914 AD 471 at 480.
4 Per Wessels JA in Black & others v Joseph 1931 AD 132 at 150.
outrageously high. In this regard, he submitted that the court a quo did not pay
due regard to the following dictum of Holmes J:
‘[T]he Court must take care to see that its award is fair to both sides – it must give just
compensation to the plaintiff, but it must not pour out largesse from the horn of plenty at the
defendant’s expense.’5
[28] This submission requires a consideration of whether the award is
egregiously disproportionate. If not, there is no basis on which we can interfere.
Both counsel pointed to a number of previously decided matters which, they
submitted, should guide this exercise. It is worth remembering the part played
by previous awards in comparable cases. This was clearly expressed by
Potgieter JA:6
‘It should be emphasised . . . that this process of comparison does not take the form of a
meticulous examination of awards made in other cases in order to fix the amount of
compensation; nor should the process be allowed so to dominate the enquiry as to become a
fetter upon the Court's general discretion in such matters. Comparable cases, when available,
should rather be used to afford some guidance, in a general way, towards assisting the Court
in arriving at an award which is not substantially out of general accord with previous awards
in broadly similar cases, regard being had to all the factors which are considered to be
relevant in the assessment of general damages. At the same time it may be permissible, in an
appropriate case, to test any assessment arrived at upon this basis by reference to the general
pattern of previous awards in cases where the injuries and their sequelae may have been
either more serious or less than those in the case under consideration.’7
And, while a court should also take into account a significant reduction in the
value of money, the mechanical application of the increase in the consumer
price index between the date of the award and the present case should likewise
be guarded against.8 Some effect should, however, be given to it.9
5 In Pitt v Economic Insurance Co Ltd 1957 (3) SA 284 (D) at 287E-F.
6 Protea Assurance Co Ltd v Lamb 1971 (1) SA 530 (A) at 535H-536B.
7 See also De Jongh v Du Pisanie NO 2005 (5) SA 457 (SCA) para 63.
8 AA Onderlinge Assuransie Assosiasie Bpk v Sodoms 1980 (3) SA 134 (A) at 141G-H.
9 Norton & others v Ginsberg 1953 (4) SA 537 (A) at 541C-E; Seymour note 1 para 16.
[29] Both counsel accepted that there were no previous matters which were
directly comparable to the present one. Both referred to the matter of Pillay v
Minister of Safety and Security,10 which influenced the full court in its decision.
In this matter, the police purported to act under an authorisation to search the
home of the 62 year-old plaintiff. They broke through two security gates as well
as the entrance door in order to obtain access. They damaged certain interior
doors, door frames, door locks and cupboard door locks and scattered goods and
belongings of the plaintiff around the house. The plaintiff was scared and called
the flying squad to assist her. She was body searched but how this was
conducted was disputed. She suffered PTSD involving ‘flash-backs and reliving
the traumatic event, anxiety, mood disturbances, upsetting dreams, persistent
avoidance, sleep disturbances, impaired concentration, memory deficiencies,
depression, feelings of guilt, rejection and humiliation.’ Her prognosis was
poor. She was awarded general damages in the sum of R150 000.
[30] Counsel for the appellant submitted that the award in this matter should
not be based on Pillay for two reasons. The first was that the award in that
matter was ‘grossly excessive’. The second was that the full court failed to
distinguish the facts in this matter from those in Pillay. Counsel for the
respondents submitted that the full court correctly held that Pillay was the case
which most closely resembled the present one. He also submitted that the full
court was alive to the distinguishing features and also considered a number of
other matters, including those relied upon by the appellant in contending for a
lower award.
[31] The second submission of counsel for the appellant was withdrawn before
us, as I have mentioned. No misdirections on the part of the full court were
10 Pillay v Minister of Safety and Security [2008] ZAGPHC 463 (2 September 2008).
relied on. In my view, this withdrawal was correct. The full court focussed on a
range of factors in the present matter which had guided it. It also considered a
number of other cases dealing with psychological sequelae and with unlawful
arrest and detention, some of which resulted in substantial awards.
[32] One of these was Kritzinger & another v The Road Accident Fund,11
where parents of two children killed in a motor vehicle accident suffered from
chronic PTSD and major depressive disorder. They were awarded R150 000 and
R120 000 respectively in 2009. In Marwana v Minister of Police,12 the
employer of the plaintiff, a domestic worker, was robbed at his home. When the
plaintiff reported for work the following day, she was arrested and detained for
just over a day. During that time she was taken to her home where an
unauthorised search was conducted and she was assaulted. Her general damages
under various heads totalled R155 000 in 2012. In Minister of Police v
Dlwathi,13 the plaintiff, an advocate, was assaulted resulting in a loss of hearing
and depression. He was awarded a reduced amount of R200 000 on appeal in
2016.
[33] In addition to these cases, the appellant referred to a number of cases. The
only one of these not already covered which is of relevance is that of Minister of
Safety and Security v Van Der Walt & another,14 where the respondents had
both been police captains prior to their resignation. They were unlawfully
arrested and detained. They were imprisoned by and in front of their erstwhile
colleagues and suffered dreadful conditions in the holding cells. One of them
could not sleep well for a while afterwards and the other contracted influenza
11 Kritzinger & another v The Road Accident Fund [2009] ZAECPEHC 6 (24 March 2009).
12 Marwana v Minister of Police [2012] ZAECPEHC 56 (28 August 2012).
13 Minister of Police v Dlwathi (20604/14) [2016] ZASCA 6 (2 March 2016).
14 Minister of Safety and Security v Van Der Walt & another (1037/13) [2014] ZASCA 174; 2015 (2) SACR 1
(SCA) (19 November 2014).
which led to complications with his kidneys. On appeal the award of R250 000
was reduced to R120 000 in 2014.
[34] In the light of the abovementioned cases, it can hardly be said that the
awards made by the full court in this matter allow for interference on the test set
out above. Some of the aggravating factors in this case were that the incident
happened in the dead of night, it took place in the sanctity of the respondents’
home, which ultimately led to their relocation due to flashbacks which must
have been exacerbated by passing the places associated with the events.
Moreover, the whole family suffered serious sequelae such that their ability to
provide comfort and support to each other was compromised. After the relevant
cases and factors were debated, the appellant’s counsel simply submitted that
the award was ‘a little bit high’. That may be so but that is not sufficient to
warrant interference by an appeal court.
[35] The final submission of the appellant’s counsel on the question of
quantum was that the higher award of R250 000 to the fourth respondent was
not justified. This is not correct. The clear and unchallenged evidence of Dr
Swanepoel was that the fourth respondent was the most seriously affected of all
of the respondents. She was even unable to testify due to the strong probability
that this would be seriously detrimental to her health. There is accordingly also
no basis on which to interfere with this aspect of the quantum of damages
arrived at by the full court.
[36] Counsel for the appellant submitted that the punitive scale of the costs
order was not warranted. In particular, it was submitted that there was no appeal
against the costs order granted by the trial court and that the full court erred in
concluding that the trial was extended by the denial that the police were at all
involved and that they acted unlawfully. As to the first of these, the notice of
appeal to the full court requested costs on the scale as between attorney and
client. The submission is thus without merit. As to the second, not only was
there no basis to interfere with the exercise of the full court’s discretion, but the
punitive costs order was fully warranted.
[37] I have set out quite fully earlier in this judgment the manner in which the
litigation was conducted. The approach taken is to be deprecated. When those
entrusted with protecting the public15 do the opposite, the least that can be
expected is that they do not compound this behaviour with deliberate
falsehoods. These must have been made in full knowledge that if the
respondents were able to muster the resources to bring the matter to court, the
denials would be shown up for what they were. In addition, giving false
testimony that a document bearing the name of the person they were seeking
was found in the home of the respondents was a cynical attempt to mislead the
court. To then discover, but refuse to make available, documents in the matter
forcing a formal application to compel disclosure invites severe censure. From
the expert report the appellant was aware of the trauma which the members of
the South African Police Service had caused the respondents. In causing the
respondents to be cross-examined on the basis of the false version, with this
awareness, showed a total disregard for the police motto to serve and protect.
The outrageous conduct of the police when it was realised that the complaint of
the respondents involved fellow police officers was cynical, self-serving and a
clear attempt to impede the respondents in their justifiable quest for justice. It
15 The preamble to the South African Police Service Act 68 of 1995 says that it was enacted to meet the need for
a police service to:
‘(a) ensure the safety and security of all persons and property in the national territory;
(b) uphold and safeguard the fundamental rights of every person as guaranteed by Chapter 3 of the
Constitution;
(c) ensure co-operation between the Service and the communities it serves in the combating of crime;
(d) reflect respect for victims of crime and an understanding of their needs; and
(e) ensure effective civilian supervision over the Service . . .’.
directly ignored their obligations as police members. In addition, their actions
contravened the provisions of s 28 read with s 29 of the Independent Police
Investigative Directorate Act.16 When counsel for the appellant was confronted
with these factors, he wisely and properly indicated that he would make no
further submissions on this point.
[38] In the result, the following order is made:
The appeal is dismissed with costs.
________________________
T R GORVEN
Acting Judge of Appeal
16 Independent Police Investigative Directorate Act 1 of 2011. The material parts of these sections read:
‘28 Type of matters to be investigated
(1) The Directorate must investigate-
(f) any complaint of torture or assault against a police officer in the execution of his or her duties’
. . .
29 Reporting obligations and cooperation by members
(1) The Station Commander, or any member of the South African Police Service or Municipal Police Service
must-
(a) immediately after becoming aware, notify the Directorate of any matters referred to in section 28
(1) (a) to (f); and
(b) within 24 hours thereafter, submit a written report to the Directorate in the prescribed form and manner of
any matter as contemplated in paragraph (a).
(2) The members of the South African Police Service or Municipal Police Services must provide their full
cooperation to the Directorate . . .’.
Appearances
For the Appellant:
M S Phaswane
Instructed by: State Attorney, Pretoria
State Attorney, Bloemfontein
For the Respondents:
R J Groenewald
Instructed by: Aucamps Attorneys, Kempton Park
Symington & De Kok 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:
24 May 2017
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does not form
part of the judgment of the Supreme Court of Appeal.
MINISTER OF SAFETY AND SECURITY
v
AUGUSTINE & OTHERS
Today the Supreme Court of Appeal handed down a unanimous judgment dealing with an appeal
against the quantum of general damages and costs handed down by the full court of the Gauteng
Division of the High Court, Pretoria. The claim arose from an incident where between 30 and 45
members of the South African Police Service broke into the home of the respondents at 02h00
without announcing that they were the police. The police pointed firearms at the respondents,
insulted, assaulted, humiliated and intimidated them. They respondents believed that they were
being robbed. The police did not have a warrant to search the premises or arrest any of the
respondents. They were looking for a suspect who, it seems, lived in the next door house. The
respondents suffered serious psychological harm whose sequelae endured some four years after
the incident and which caused them to have to move home.
The full court had heard an appeal by the respondents against the judgment of Mali AJ sitting as a
judge of first instance. This judgment awarded the respondents general damages in the sum of
R25 000 each and costs on the Magistrates’ Court tariff. On appeal, the full court increased the
award for general damages to R200 000 each for the first three respondents and R250 000 for the
fourth respondent along with attorney and client costs on the High Court tariff.
On appeal before the Supreme Court of Appeal, the appellant submitted that the award by the full
court was so excessive as to warrant interference, submitting that an award in the region of
R45 000 each should have been awarded, along with party and party costs on the High Court tariff.
The appeal against the quantum of damages was dismissed on the basis that the award of the full
court was not so disproportionate as to warrant interference on appeal. The appeal against the
punitive costs order was also dismissed on the basis that it was appropriate in that the untruthful
and obstructive manner in which the litigation was conducted was to be deprecated.
|
1249
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 349/07
Reportable
In the matter between:
EDCON PENSION FUND
APPELLANT
and
THE FINANCIAL SERVICES BOARD
OF APPEAL
FIRST RESPONDENT
THE DEPUTY REGISTRAR OF
PENSION FUNDS
SECOND RESPONDENT
CORAM:
SCOTT, FARLAM, NAVSA, MTHIYANE JJA et
MHLANTLA AJA
HEARD:
20 MAY 2008
DELIVERED:
29 MAY 2008
SUMMARY:
Pensions – whether right to bring transfer application under s 14 of
Pension Funds Act 24 of 1956 accrued to appellant before Act 39 of
2001 came into operation.
Neutral citation: This judgment may be referred to as Edcon Pension Fund v The
Fianancial Services Board of Appeal and Another (349/07) [2008]
ZASCA 65 (29 May 2008).
__________________________________________________
FARLAM JA
Introduction
[1] This is an appeal against a decision of Preller J, sitting in the Pretoria
High Court, in which he dismissed a review application against a decision of
the first respondent, the Financial Services Board of Appeal.
[2] The appellant, the Edcon Pension Fund, is a pension fund organization
registered as a pension fund in terms of the Pension Funds Act 24 of 1956, as
amended (to which I shall refer in what follows as ‘the Act’). The first appellant
is the Board of Appeal constituted in terms of s 26 of the Financial Services
Board Act 97 of 1990, which heard and dismissed an appeal from a decision
taken by the second respondent, the Deputy Registrar of Pension Funds, to
reject certain transfer applications submitted to him in terms of s 14 of the Act.
The second respondent’s decision to reject the transfer applications was
based on his view that they were incompatible with the provisions of the
Pension Funds Second Amendment Act 39 of 2001 (which I shall call in what
follows ‘the surplus legislation’).
[3] The appellant does not dispute that the transfer applications are
incompatible with the provisions of the surplus legislation but contends that it
had acquired a vested right to have the applications determined in
accordance with the provisions of the Act as they were before the surplus
legislation came into effect.
Facts
[4] Before I summarise the arguments advanced before us by the
appellant and the second respondent it is necessary to summarise the main
facts.
[5] On 7 July 1997 the fund was closed to new entrants and its members
were offered the opportunity of transferring to certain provident funds which
had been established by the employer. Thereafter the fund embarked upon an
exercise which involved a restructuring and distribution of the surplus in the
fund. This exercise, which started before the advent of the surplus legislation,
was designed and implemented in accordance with the legal position at that
time. The restructuring part of the exercise involved the transfer of members
to the provident funds and the outsourcing of the benefits payable by the fund
to pensioners. Transferring members, pensioners and certain members were
offered benefit enhancements funded out of the surplus but were required to
renounce their employer post-retirement medical aid benefits. Former
members who had already transferred to the provident funds were also
offered the opportunity of renouncing their post-retirement medical aid
benefits in exchange for an enhanced benefit. In order to match an
enhancement which former members who had already transferred to the
provident funds had received when the transfer occurred transferring
members and pensioners were also offered an additional 25 per cent
enhancement. It was thereafter envisaged that the balancing surplus would be
transferred to the Edcon Provident Fund for specified uses by the employer.
[6] In order to give effect to the restructuring certain amendments to its
rules were adopted by the fund and submitted to the Registrar’s office on 7
December 2000 for approval in terms of s 12 of the Act. The Registrar was
not happy with the amendments, primarily because they had not been
adopted pursuant to a negotiated settlement. In May 2001 at a meeting at the
Registrar’s office it was agreed that the fund would enter into a negotiated
agreement concerning the distribution of the surplus with all stakeholders and
that certain consequential amendments would be made and that the
amendments, as modified in the light of the negotiated agreement, would be
resubmitted for approval. On 14 June 2001 the negotiated agreement was
submitted to the Registrar’s office, together with further draft amended rules
for advance approval. On 18 June 2001 the Registrar’s office advised that it
could not approve rules in advance but that it could not see anything untoward
in principle in the draft rules.
[7] During August 2001 the amended rule amendments, which gave effect
to the negotiated settlement, were submitted to the Registrar’s office, together
with certificates from the actuary of the fund and the trustees stating that they
regarded the distribution as reasonable.
[8] No response regarding the amendments was received from the
Registrar’s office before 7 December 2001, when the surplus legislation came
into effect. Subsequently, in March 2002, the Registrar’s office advised the
fund that in view of the surplus legislation it was obliged to reject all
applications for rule amendments that failed to give effect to the reasonable
expectations of members and former members arising from the surplus
legislation. The fund was further advised that it had to retain a contingency
reserve sufficient to address any claims that were likely to arise as a result of
the surplus legislation. A further set of amendments was then drafted and
submitted by the fund on 6 June 2002 so as to comply with the Registrar’s
further demands. Eight days later the Registrar’s office issued a circular
stating that rule amendments and transfer applications submitted before 7
December 2001, (when, it will be remembered, the surplus legislation came
into operation), would be considered in the light of the legal position as it was
when they were submitted. Applicants whose applications were submitted
before 7 December 2001 but were rejected after that date because of non-
compliance with the surplus legislation were invited to resubmit applications.
[9] The fund responded to this invitation and to certain other advice it
received from the Registrar’s office and requested the Registrar to consider
the rule amendments it had submitted in August 2001. As a result these
amendments, which provided that they were effective from 1 September
2001, were registered. In terms of s 12 of the Act they were deemed to have
come into effect on the date stated, ie, over three months before the surplus
legislation came into operation.
[10] After the rule amendments were registered the fund implemented what
the chairman of its trustees called in the founding affidavit ‘an extensive
communication exercise’ to advise stakeholders about the rule amendments
and steps were taken to begin implementing the scheme.
[11] On or about 17 February 2003 each of the members was provided with
what was described as ‘an option’, either to remain a member of the fund or to
transfer to one of the provident funds, effective from 1 March 2003. Those
members who elected to transfer were to receive a 25 per cent enhancement
to their actuarial reserve values, but were to forfeit their entitlements to have
their post-retirement medical aid contributions, as well as other medical costs,
subsidised by the employer. 155 active members were communicated with, of
whom 29 elected to remain members of the fund, 35 did not reply (and thus
by default also remained members of the fund), 87 accepted the offer to
transfer to one of the provident funds, and there were what were described as
four ‘exits’ from the fund. Pensioners of the fund were also given options in
respect of future payments and funding of their pensions, either to remain
pensioners of the fund and thus continue to receive their monthly pension
payments from the fund and to receive their post-retirement medical aid
contribution subsidy from the employer, or to purchase annuities in their own
names with an enhancement to their pensioner liabilities of 25 per cent and to
agree to discharge their former employer from its post-retirement medical aid
contribution subsidy liability. From 1 March to 1 May 2003 560 pensioners
appear to have elected to choose the second alternative.
[12] On 4 June 2003 the fund submitted the relevant transfer applications to
the Registrar’s office for approval in terms of s 14 of the Act.
[13] On 13 August 2003 the Registrar’s office wrote a letter to Alexander
Forbes Financial Services, the fund’s consultants, stating that the Registrar
could at that stage only approve the transfer of 100 per cent of Member’s
accrued liabilities and that any surplus in the fund should be dealt with in
terms of the surplus legislation.
[14] On 14 August 2003, the chairman of the fund’s trustees sent a letter to
the Registrar’s office in which he stated that he had been informed by the
fund’s consultants of the decision to decline to approve the s 14 applications.
After expressing his concern and frustration at this outcome, given the long
and protracted negotiations and dealings the fund had entered into with the
Registrar’s office in relation to the transfer applications, he requested a formal
response from the Registrar.
[15] The second respondent’s reply to this letter was sent to the appellant
on 28 August 2003. It reads as follows:
‘Amendment No 14 to the Rules of the Edcon Pension Fund and Amendment No 1 to the
Rules of the Edcon Provident Fund were, as you state in your letter, registered by this office
on 10 September 2002, i.e. after the commencement of the Pension Funds Second
Amendment Act, 39 of 2001, on 7 December 2001.
These amendments were registered at the request of the Fund, as evidenced by an e-mail
dated 2 September 2002. A copy is attached as Annexure A. The request followed a letter
dated 28 August 2002 in which Rule Amendment 14 as submitted under cover of a letter
dated 6 June 2002, was formally rejected. In spite of this, the Registrar agreed to reconsider
registration of Amendment No 14 as submitted prior to 7 December 2001, but never formally
rejected. A copy of this letter is attached as Annexure B.
It is clear that the officials concerned did everything possible to be helpful and to comply with
the requests of the Fund.
Registration of these rule amendments did not guarantee approval of the applications
submitted thereafter in terms of section 14 of the Act. Unfortunately, in view of the
amendment of the Pension Funds Act, it was not possible to approve the subsequent transfer
applications, as these applications provided for an apportionment of surplus, after 7
December 2001, in a manner not consistent with the Act as it was not reasonable and
equitable to all stakeholders.
Whilst I appreciate that the Fund, as stated in your letter, communicated often with the
Registrar’s office and endeavoured to make full and transparent disclosure regarding the
intention, basis and consequence of the reconstruction of the Fund, the Registrar now finds
himself in the invidious position that he is not empowered to approve the section 14
applications due to the amendment of the Act with effect from 7 December 2001.
This was explained at a meeting held on 11 August 2003 at 16:30.
A letter was sent to Alexander Forbes Financial Services on 13 August 2003, informing them
that the Registrar can at this stage only approve the transfer of 100% of Member’s accrued
liabilities and that any surplus in the Fund should be dealt with in terms of the Act as
amended. This was not a formal rejection of the section 14 applications, but rather an
opportunity to amend the application and get the 100% of accrued liabilities approved.
The Registrar does not have discretionary powers in this matter. The section 14 applications
for transfer as submitted can therefore not be approved whilst the transfers include the
transfer of surplus.’
[16] On 15 September 2003, the appellant lodged an appeal to the first
respondent against the refusal to approve the transfers. In the formal reasons
furnished by the second respondent pursuant to Regulation 4 of the
Regulations issued under s 26(2) of Act 97 of 1990 the following points were
made:
(a)
the rule amendments submitted before the surplus legislation came
into operation had to be considered in accordance with the legal position then
prevailing;
(b)
by registering the amendments the Registrar did not undertake to
approve the s 14 applications;
(c)
the s 14 applications were only submitted on 4 June 2003, after the
surplus legislation came into force, and they had to be considered in
accordance with the surplus legislation; and
(d)
the benefits accruing to members were not automatically enhanced by
the registration of the amendments. ‘Enhancement would only take place on a
case by case basis if and when a member of the fund agreed to transfer to
another fund. After 7 December 2001 such ad hoc enhancement from surplus
was no longer possible.’
[17] On 7 December 2004 the first respondent handed down its written
decision dated 14 November 2004, dismissing the fund’s appeal. In its
reasons it found, inter alia, that the second respondent had not erred in
applying the provisions of the surplus legislation to the transfer applications
and (as it was put in the reasons) ‘in finding that the benefit enhancements did
not vest before 7 December 2001 . . . [and] that the transfer applications were
not reasonable and equitable to all stakeholders’.
[18] The fund then launched an application in the Pretoria High Court for an
order reviewing and setting aside the first respondent’s decision, relying on a
number of grounds set out in s 6 of the Promotion of Access to Justice Act 3
of 2000, (commonly known as ‘PAJA’), inter alia, that the decision was
materially influenced by an error of law (section 6(2)(d) of PAJA) and that the
decision was taken because relevant considerations were not taken into
account (s 6(2)(e)(iii) of PAJA).
Judgment of court a quo
[19] With the approval of counsel for the parties Preller J in the Court a quo,
approached the matter on the basis that if the case could be distinguished
from the majority judgment of this court in Chairman, Board of Tariffs and
Trade v Volkswagen of South Africa (Pty) Ltd 2001 (2) SA 372 (SCA) (which I
shall call in what follows ‘the Volkswagen decision’), the application should fail
but that if the majority decision in that case could not be distinguished then
the application had to succeed. In the result the learned judge came to the
conclusion (for reasons which will appear presently) that the Volkswagen
decision was distinguishable and he dismissed the application.
Relevant statutory provisions and summary of the Volkswagen decision
[20] Before I summarise the submissions of counsel for the appellant it will
be appropriate to set out the relevant portions of sections 12 and 14 of the Act
as well as the facts and the reasons for the majority judgment in the
Volkswagen decision.
[21] Sections 12 and 14 of the Act, as far as material, provide as follows:
’12
(1)
A registered fund may, in the manner directed by its rules, alter or rescind
any rule or make any additional rule, but no such alteration, rescission or addition shall be
valid─
(a)
if it purports to effect any right of a creditor of the fund, other than a member or
shareholder thereof; or
(b)
unless it has been approved by the registrar and registered as provided in subsection
(4).
(2)
Within 60 days from the date of passing of a resolution for the alteration or rescission
of any rule or for the adoption of any additional rule, a copy of such resolution shall be
transmitted by the principal officer to the registrar, together with the particulars prescribed by
regulation.
(3)
If any such alteration, rescission or addition may affect the financial condition of the
fund, the principal officer shall also transmit to the registrar a certificate by the valuator or, if
no valuator has been employed, a statement by the fund, as to its financial soundness, having
regard to the rates of contributions by employers and, if the fund is not in a sound financial
condition, what arrangements will be made to bring the fund in a sound financial condition.
(4)
If the registrar finds that any such alteration, rescission or addition is not inconsistent
with this Act, and is satisfied that it is financially sound, he shall register the alteration,
rescission or addition and return a copy of the resolution to the principal officer with the date
of registration endorsed thereon, and such alteration, rescission or addition, as the case may
be, shall take effect as from the date determined by the fund concerned or, if no date has
been so determined, as from the said date of registration.
. . .
(1)
No transaction involving the amalgamation of any business carried on by a
registered fund with any business carried on by any other person (irrespective of whether that
other person is or is not a registered fund), or the transfer of any business from a registered
fund to any other person, or the transfer of any business from any other person to a
registered fund shall be of any force or effect unless─
(a)
the scheme for the proposed transaction, including a copy of every actuarial or other
statement taken into account for the purposes of the scheme, has been submitted to
the registrar;
(b)
the registrar has been furnished with such additional particulars or such a special
report by a valuator, as he may deem necessary for the purposes of this subsection;
(c)
the registrar is satisfied that the scheme referred to in paragraph (a) 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;
(ii)
to any additional benefits in respect of service prior to the date of transfer, the
payment of which has become established practice; and
(iii)
to the payment of minimum benefits referred to in section 14A,
and that the proposed transactions would not render any fund which is a party thereto and
which will continue to exist if the proposed transaction is completed, unable to meet the
requirements of this Act or to remain in a sound financial condition or, in the case of a fund
which is not in a sound financial condition, to attain such a condition within a period of time
deemed by the registrar to be satisfactory;
(d)
the registrar has been furnished with such evidence as he may require that the
provisions of the said scheme and the provisions, in so far as they are applicable, of
the rules of every registered fund which is a party to the transaction, have been
carried out or that adequate arrangements have been made to carry out such
provisions at such times as may be required by the said scheme;
(e)
the registrar has forwarded a certificate to the principal officer of every such fund to
the effect that all the requirements of this subsection have been satisfied.
. . .’
[22] The Volkswagen decision concerned an application for a rebate on
excise duty payable on motor vehicles manufactured in the Republic, for
which provision was made in s 75 of that Act. In terms of that section a motor
vehicle manufacturer was allowed to claim a rebate on excise duty for the
purpose of the Export Incentive Scheme for the Motor Industry (Phase VI).
The calculation of the amount of the rebate depended on the extent of the
manufacturer’s foreign currency earnings, which in turn depended on the
volume of its exports of locally manufactured vehicles and component parts.
[23] Because the rebate was subject to a ceiling a manufacturer’s earnings
above the ceiling would have been of no value to it. To cater for this a note
was enacted to the relevant rebate item in Schedule 6 to the Customs and
Excise Act, which permitted a customs and excise warehouse, such as
Volkswagen of SA (Pty) Ltd, (which I shall call ‘Volkswagen’ in what follows)
the first respondent in the case, to cede ‘any specific amount of foreign
currency earnings in respect of motor vehicles exported by such warehouse,
as specified in a certificate issued by the Director-General: Trade and
Industry, on recommendation of the Board on Tariffs and Trade, to other
customs and excise manufacturing warehouses . . ..’ The note was repealed
with effect from 1 September 1995. Prior to the repeal Volkswagen had
applied for and been granted a rebate in respect of vehicles manufactured
and exported by it. It also applied for and was granted certificates permitting
cessions of excess earnings. It was unable, however, to take advantage of the
full extent of the rebates to which it was entitled due to an erroneous method
required by the Commissioner of Customs and Excise in calculating the
surplus. After the repeal of the note Volkswagen requested permission from
the Commissioner to extract exports previously included in its quarterly
accounts and to cede them to another motor manufacturer for inclusion in its
accounts for the same quarters. It accordingly sought permission to cede,
notwithstanding the repeal of the relevant note, that part of its foreign currency
earnings which it had previously been obliged to commit to its own account
because of the Commissioner’s insistence on the employment of an
erroneous method to calculate the surplus. The Commissioner conceded the
correctness of Volkswagen’s standpoint and granted permission for the
cession. In terms of the repealed note the cession could only take place after
the Director-General had issued the relevant certificate upon the
recommendation of the Board on Tariffs and Trade, which resolved not to
make a recommendation, as it was of the view that in doing so it would be
required to exercise powers in terms of legislation that was no longer
applicable. The majority in this court (Nienaber JA, with whom Smalberger JA
and Mthiyane AJA concurred) held that the right to approach the Board for a
recommendation in respect of the additional surplus had accrued to
Volkswagen before the note was repealed, and that the Board’s view that it
was no longer empowered to make recommendations to the Director-General
in terms of the repealed note was not correct.
Appellant’s submissions
[24] Counsel for the appellant in this case relied on the principle that an
applicant has a right to have his or her application determined in accordance
with the law as it was prior to the amendment or repeal of the law in terms of
which the application is brought where the applicant has taken sufficient steps
prior to the commencement of the amending or repealing law to assert the
right relied on. It was contended that a right to have the s 14 applications
considered in the light of the legal position as it was before the surplus
legislation came into operation accrued to the appellant in this case. It was
submitted that the fund had taken sufficient steps to satisfy the test for the
accrual of the right contended for as laid down in a series of decisions of this
court, culminating in the Volkswagen decision. The facts in that case, so it
was argued, were closely analogous to those in the present matter and there
is no legitimate basis for distinguishing between them.
[25] Counsel for the appellant also advanced an alternative contention to
the effect that the second respondent erred in finding that no vested right to a
benefit enhancement could be said to have accrued to the members before 7
December 2001. In this regard it was pointed out that the rule amendments
which were registered must be deemed to have taken effect from 1
September 2001. This was in accordance with the express wording of the rule
amendments, which specifically stated that they were to take effect on 1
September 2001, and s 12 (4) of the Act, which provides that an amendment
to existing rules may take effect ‘as from the date determined by the fund
concerned or, if no date has been so determined, as from the . . . date of
registration.’
[26] Counsel submitted further that the elections which had to be made by
members as to whether to opt for the benefit enhancements provided for in
the rule amendments must by the same fiction of law be deemed to have
been made within a period calculated to have commenced on 1 September
2001, notwithstanding that they were in fact exercised after registration of the
amended rule in September 2002. Such elections as were made by members
were, so it was argued, accordingly, for purposes of the law, deemed to have
been made prior to the commencement of the surplus legislation. Accordingly,
so the argument proceeded, the members acquired a vested right in terms of
a duly registered rule to receive payments of the enhancements therein
promised and the s 14 applications did not in these circumstances facilitate
the distribution of a surplus but catered for the payment of accrued liabilities.
Second respondent’s submissions
[27] Counsel for the second respondent submitted that Preller J had
correctly distinguished the facts of the present case from those in the
Volkswagen case. They drew attention to the fact that it took the appellant
approximately nine months, after the rule amendments were approved, to
submit the transfer applications and submitted that it was not possible to find
that if the rule amendments had been approved in August or September 2001
the transfer applications would have been submitted before 7 December
2001.
Discussion
Did the right contended for accrue?
[28] In my opinion the appellant’s contention that it had the right to have its
s 14 application considered in terms of the law as it was before 7 December
2001, because this right had accrued to it before that date cannot be upheld.
The test to be applied when an answer is sought to the question as to whether
a right has accrued appears from para 13 of Nienaber JA’s judgment in the
Volkswagen case (at 380 E):
‘A right “accrues” when all the conditions for its existence in relation to the particular
beneficiary are met.’
In my view in the present context the election by the member in respect of
whom the transfer is sought is one of the conditions which must be met before
it can be said that the right to bring s 14 application for the transfer in question
accrues. This patently did not happen until well after 7 December 2001.
[29] Counsel for the appellant endeavoured to meet this point by pointing to
the fact that in the Volkswagen case Volkswagen had sought permission, after
the repeal of the note, to cede that part of its foreign currency earnings which
previously, because of the Commissioner’s erroneous view, it had been
obliged to commit to its own account. In this regard they relied on passages in
paras 6, 14, 15 and 20 of Nienaber JA’s judgment. Preller J distinguished the
Volkswagen case essentially on the ground that what happened in that matter
was that the relevant accounts were ‘historically’ amended whereas in the
present case an entirely new application was brought by the appellant. I agree
that the Volkswagen decision is to be distinguished on this basis. While in a
formal sense it is correct to say that Volkswagen was proposing to bring a
further application to cede what was called ‘the super-surplus’ in essence
what it was doing was seeking to correct the amount of the surplus to be
ceded. This appears clearly in my view from the following paragraphs in
Nienaber JA’s judgment (at 381H-382B):
‘[16]
What VW now sought to do after the Commissioner acknowledged that not all
royalties had to be taken into account in calculating the surplus it sought permission to cede
was to rectify the pre-repeal position by seeking supplementary permission to cede what had
now been determined to be the correct amount. As such the permission sought went to the
amount rather than to the entitlement. This is not, therefore, a situation where VW, never
having applied for permission to cede its excess foreign currency earning prior to the repeal,
now seeks to do so for the first time after the event.
[17] Prior to the repeal VW had fulfilled all the requirements which in fact and in law
entitled it to approach the Board for permission to make its recommendation in respect of the
super-surplus; and from its side VW had taken all the steps realistically open to it to advance
its request for permission to effect such a cession. After the repeal it remained, as it would
have been before the repeal, a matter for consideration by the Board and the Director-
General.
[18] Seen in this light the right to approach the Board for a recommendation in respect of
the super-surplus in order that “the relevant accounts be historically amended” (see para [6]
above) accrued to VW prior to the repeal of the relevant note.’
The legal fiction point
[30] I turn now to consider the appellant’s alternative contention, viz that by
a legal fiction the members who elected to accept the enhanced benefit and to
transfer to one of the provident funds and pensioners who elected to have the
benefits payable to them by the fund outsourced must be deemed to have
made the relevant elections before 7 December 2001.
[31] In what follows I am prepared to assume, without deciding, that the
elections made by the members and pensioners must by a legal fiction be
deemed to have been made within a period calculated to have commenced
on 1 September 2001. Even if that assumption is made in favour of the
appellant, I do not think that it assists the appellant because it is not possible
to hold, as the appellant’s counsel contended, that the elections must be
deemed to have taken place within a period of three months and one week
(from 1 September to 7 December) after the notional commencement date of
the period. We know that the rule amendments were registered in September
2002 and the elections were made between 17 February and 1 March 2003.
Indeed counsel for the appellant, when pressed on the point, conceded that it
was not possible to find by when the elections would have been made if the
rule amendments had been registered on 1 September 2001. This
concession, which I am satisfied was correctly made, effectively destroys the
alternative argument.
[32] In the circumstances I am satisfied that the appeal must fail.
Order
[33] The following order is made:
The appeal is dismissed with costs, including those occasioned by the
employment of two counsel.
……………..
IG FARLAM
JUDGE OF APPEAL
CONCURRING
DG SCOTT
JA
MS NAVSA
JA
KK MTHIYANE
JA
NZ MHLANTLA
AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
29 May 2008
STATUS: Immediate
EDCON PENSION FUND V THE FINANCIAL SERVICES BOARD OF
APPEAL and another
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 judgment
of the Pretoria High Court brought by the Edcon Pension Fund against the
Financial Services Board of Appeal and the Deputy Registrar of Pensions.
Edcon Pension Fund had amending its rules with effect from a date before the
Pension Fund Second Amendment Act came into operation. Thereafter it
embarked on an exercise involving the restructuring and distribution of the
surplus in the fund which entailed the transfer of members to provident funds.
Transferring members were offered benefit enhancements funded out of the
surplus but were required to renounce their employer post-retirement medical
aid benefits. EDCON submitted the transfer applications after the Act had
come into operation. As the applications did not comply with the provisions of
the Act, they were rejected by the Deputy Registrar of Pension Funds and an
appeal to the Financial Services Board of Appeal was dismissed. In the
Pretoria High Court an application for the review of the decision was
dismissed and it is against this judgment that the matter came on appeal.
The Appellant argued that it had acquired a right to have the matter dealt with
in terms of the law prior to the enactment of this Act. The SCA rejected this
argument and held that for a right to accrue all the conditions for its existence
in relation to the benefit must be met, both in fact and in law all steps
realistically required needed to taken. In the present case in view of the fact
that the election by the members for whom transfer was sought in the
application only occurred after the enactment of the legislation, and as this
was found to be a condition which had to be met in order for the right in terms
of s 14 of the Pension Fund Act 24 of 1956 to exist, no right could have
accrued. As the transfer application did not comply with the provisions of the
Pension Fund Second Amendment Act the appeal against the judgment was
dismissed.
|
3679
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 831/2020
In the matter between:
NOEL PATRICK McGRANE
APPELLANT
and
CAPE ROYALE THE RESIDENCE (PTY) LTD
RESPONDENT
Neutral citation: McGrane v Cape Royale The Residence (Pty) Ltd (831/2020)
[2021] ZASCA 139 (6 October 2021)
Coram:
SALDULKER, MATHOPO AND PLASKET JJA AND KGOELE
AND POTTERILL AJJA
Heard:
7 September 2021
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme
Court of Appeal website and release to SAFLII. The date and time
for hand-down is deemed to be 09h45 on 6 October 2021.
Summary: Contract – agreement of sale of immovable property – whether
unenforceable on account of non-fulfilment of a condition precedent clause
embodied in the agreement – interpretation of the clause – whether condition
precedent applicable – the impugned clause sufficiently clear – agreement not
subject to condition precedent – waiver proven – agreement valid and binding.
ORDER
On appeal from: Western Cape Provincial Division of the High Court, Cape
Town (Sievers AJ sitting as court of first instance):
The appeal is upheld with costs.
The order of the court below is set aside and replaced with the following
order:
‘1 It is declared that the agreement of sale concluded by the parties is not
null and void on account of the non-fulfilment of the suspensive condition,
as alleged by the defendant in paragraphs 5.3 and 5.4 of the plea;
2 The defendant is directed to pay the plaintiff’s costs in respect of the trial
on the separated issue.’
JUDGMENT
Kgoele AJA (Saldulker, Mathopo and Plasket JJA and Potterill AJA
concurring):
[1] The issue in this appeal concerns the interpretation of an agreement of sale
in respect of an immovable property. In particular, it concerns whether the
agreement relied upon by the appellant, Mr Noel Patrick McGrane, had been
rendered unenforceable by the non-fulfilment of a condition precedent embodied
in the said agreement which he concluded with the respondent, Cape Royale The
Residence (Pty) Ltd. The litigation that culminated in this appeal commenced by
way of a trial in the Western Cape Division of the High Court (the high court),
before Sievers AJ, who upheld a plea raised by the respondent that the agreement
was subject to a condition precedent which had not been fulfilled. In the result,
the claim instituted by the appellant against the respondent for specific
performance was dismissed with costs on 14 April 2020. The appeal is before us
with special leave granted by this Court.
[2] The factual matrix within which the issue arose is largely common cause.
In November 2006, the parties entered into a written agreement of sale (the
agreement) in terms of which the appellant purchased and the respondent sold a
unit yet to be built in a sectional title development, commonly known as section
215 of the sectional title scheme ‘Cape Royale’ situated at Green Point, Cape
Town (the property). The agreement comprised of a contract, a covering schedule
(the schedule) and the standard terms and conditions. Only the clauses of the
agreement relevant to the determination of the issues in this appeal will be
referred to.
[3] The appellant signed the agreement on 1 July 2006 in Dublin, Ireland,
while the respondent signed it on 20 November 2006 at Cape Town. In terms of
clause 4 of the schedule, the purchase price agreed upon was R1 298 960,
inclusive of Value Added Tax (VAT). In terms of clause 5 of the schedule, a
deposit of R324 740 was payable on signature of the agreement and the balance
of R974 200 on registration of the transfer. Transfer to the purchaser was to be
effected ‘as soon as possible after the opening of the sectional title register . . .’.
When the agreement was concluded, the unit had not yet been constructed. As a
result, the floor area of the property decreased when a structure was built thereon.
In October 2007, the parties concluded a written addendum to the agreement in
respect of the floor area. The purchase price was accordingly adjusted to
R1 278 342 inclusive of VAT. The addendum did not change anything in the
original agreement except for the purchase price.
[4] As evidenced by the present proceedings, the relationship between the
parties became strained at a later stage. According to the appellant, the strained
relationship arose as a result of the respondent having stopped its attorneys from
proceeding with the process of transferring the property, despite the fact that he
had already at that time paid the full purchase price. The payment of the full
deposit and the purchase price were disputed by the respondent. Clause 5 of the
standard terms and conditions of the agreement, which provides for the
acquisition of loan finance by the appellant to pay part of the purchase price, is
the subject of the contested issue between the parties. For the sake of coherence
in the narrative, the full text thereof will be set out later in this judgment.
[5] In January 2013, the appellant instituted an action in which he sought an
order directing the respondent to comply with the terms of the agreement by
taking all the necessary steps to transfer ownership of the property to him. In his
particulars of claim, the appellant alleged that he had complied with all of his
obligations under the agreement, by paying the deposit and the remainder of the
purchase price to the respondent’s transferring attorneys. The sectional title
register had been opened, triggering transfer. Despite this, so he claimed, the
respondent refused and/or failed to transfer ownership of the property to him.
This failure, according to appellant, constituted a breach of the agreement. He
elected to enforce the agreement, hence the claim for specific performance.
[6] In response to the appellant’s particulars of claim, the respondent set up
the following defence. In its plea, the respondent claimed that in terms of clause
5.1 of the standard terms and conditions read with clause 6.1 of the schedule, the
agreement was subject to a condition precedent that the appellant obtain a loan of
R649 480 within 21 days from the date of acceptance. This clause had not been
fulfilled as there was no such loan secured by the appellant within the stipulated
time period, thereby rendering the agreement null and void. Furthermore, the
appellant paid a deposit of only R151 300 instead of R324 740, and refused to
pay the balance of R173 440 in terms of clause 5.1 of the schedule. Alternatively,
pleaded the respondent, if the court did not rule in its favour (regarding the issue
of the agreement being null and void), then the failure by the appellant to pay the
deposit as set out above amounted to a repudiation of the agreement, which
repudiation the respondent accepted and therefore consequently elected to cancel
the agreement. The appellant did not replicate.
[7] At the commencement of the trial, the respondent successfully applied to
have the issue of the enforceability of the agreement, on the basis of the
appellant’s failure to comply with the condition precedent as raised in paras 5.3.
and 5.4 of its plea, adjudicated separately in terms of rule 33(4) of the Uniform
Rules of Court.
[8] At the heart of the dispute between the parties, are clauses 5.1 and 5.2 of
the standard terms and conditions of the agreement. The parties differ in the
interpretation of these clauses. It is of crucial importance that the text of these
contentious clauses be quoted in full as they form the matrix of this appeal. They
provide:
‘5.1
In the event of the Purchaser requiring a mortgage loan to finance the acquisition of the
Unit and Exclusive Use Area, this sale shall be subject to the condition precedent that the
Purchaser obtains approval in principle from a recognised financial institution for such a loan
in the amount as specified in Clause 6.1 of the Schedule within 21 (twenty-one) days of
signature hereof by the Purchaser, on the institution’s usual terms and conditions relating to
such loans. The Purchaser undertakes to use his best endeavours to ensure that the loan referred
to is granted timeously and undertakes to sign all such documentation and co-operate with the
Seller fully in order to ensure that the said loan is approved. This condition shall be deemed to
have been fulfilled upon the Purchaser obtaining approval in principle from a financial
institution for a loan as herein contemplated.
5.2
In the event that the condition precedent is not fulfilled within the time period provided
for in clause 5.1 above, the Seller may in its sole discretion extend this period for 7 (seven)
days at a time until the Seller, in its absolute discretion, notifies the Purchaser of the termination
of such time period.’
[9] Clause 6 of the schedule referred to above in clause 5.1 of the standard
terms and conditions provides:
‘6.
MORTGAGE BOND
6.1
Amount required: R649,480
Date by when to be granted: Within 21 days after the date of acceptance of this Agreement by
the Seller, or such extended period as the Seller in its sole discretion may allow.’
[10] The only evidence led during the trial on the separated issue was that of the
appellant. He testified that he had paid the full purchase price. The first payment
was a deposit of R151 300 on 29 September 2006. On 11 December 2007, less
than two months after the addendum was signed, the balance of the purchase price
was paid. It was paid into the Phelan Cape Royale account held in Dublin which
was given to him by Mr Phelan, who represented the appellant at all times.
[11] The appellant did not deny that the condition precedent was embodied in
the agreement, however, his testimony was that it was not applicable to him as he
did not require the mortgage loan. He had enough money to pay the full purchase
price and Mr Phelan was aware of this. He therefore did not even apply for the
loan. According to his testimony, he stated emphatically to Mr Phelan when they
concluded the agreement that he will pay the purchase price in cash, which he
did.
[12] Furthermore, he testified that he was never given notice that he was in
breach of any condition of the agreement and to remedy same as required by
clause 15.1 of the standard terms and conditions. He was also never given notice,
in terms of clauses 15.1.1 and 15.1.2 regarding the cancellation or termination of
the agreement by the respondent as a result of the non-fulfilment of the condition
precedent or payment of the full deposit.
[13] In support of his evidence that the respondent at all the times accepted that
an obligation to acquire a mortgage loan was not a condition precedent, the
appellant relied on two account reconciliations which reflected the payment of
the full purchase price, and a surplus of some R28 000 owing to him, which
documents were written by Mr Phelan himself in his presence. He also included
an email from Mr Janse van Rensburg, the financial manager of Phelan Holding
(Pty) Ltd, to Mr Phelan, which stated that the funds (paid into the respondent’s
Dublin account) which were initially disputed by the respondent, had been traced
and were to be transferred to the respondent’s conveyancers. The appellant relied
too on an email from Mr Phelan, in which Mr Phelan acknowledged that the
appellant paid more than the amount specified in the addendum, and had earned
interest. Mr Phelan further stated therein that the transfer of the unit would take
place in September, at which stage the appellant would get the Rental Pool
income. The appellant was surprised by this as the agreement did not include a
Rental Pool agreement, which was something the respondent had unilaterally
introduced. The disagreement between the parties was sparked by the appellant’s
refusal to sign the Rental Pool agreement, when the respondent insisted that it
was required before transfer could be effected.
[14] As already indicated above, the high court found favour with the
respondent’s interpretation that the agreement was subject to a condition
precedent in terms of clause 5.1 of the standard terms and conditions. In
dismissing the appellant’s claim, the high court reasoned that even though the
appellant pleaded that he had complied with all of his obligations under the
agreement, his evidence established unequivocally that the mortgage loan was
not obtained as required by clause 5.1 of the standard terms and conditions of the
agreement. As a result, the condition precedent had not been fulfilled, and the
agreement was held to have no legal force.
[15] In this Court, the appellant persisted with his contention that the agreement
was not subject to a condition precedent. He maintained that the contentious
clause was not applicable to him and if this Court does not find favour with his
interpretation, then the respondent was entitled to extend the period, which it did.
The respondent’s stance was that the high court’s finding is correct. The basis for
this contention was twofold. First, the respondent argued that the agreement
expressly provided that a mortgage bond was required to pay part of the purchase
price and this is the only manner in which clause 5.1 of the standard terms and
conditions could be interpreted. Second, the same argument grew more nuanced
in this Court as it was also argued in the alternative that, in the absence of the
appellant pleading and proving waiver, estoppel or any other ground upon which
the effect of the non-compliance could be neutralised, the appellant’s action could
not be sustained. He must be kept to the immutable consequences of his choice
of not deleting the said clause. Further that, there was no sufficient evidence
adduced to establish waiver.
[16] It is therefore apparent that two issues crystallised in this appeal. The first
and primary issue is whether the agreement, properly interpreted, was subject to
a condition precedent which was not fulfilled. The second is whether, despite the
condition precedent remaining unfulfilled, the agreement survived in the
circumstances where waiver was not pleaded. The second issue only arises if the
answer to the first issue is not positive.
[17] The approach to interpretation of contracts is settled.1 Recently, this Court
re-stated the trite principles involved in Passenger Rail Agency2 and held that
when interpreting a contract an ‘insensible or unbusinesslike result’ or a result
undermining the apparent purpose of the document, must be avoided. It is also
well established that the mere use of the word ‘condition’ does not always
translate into the condition in question being a suspensive condition.3
[18] In an enquiry such as the present one, it is best to start with the clause itself.
Accordingly, it becomes necessary to examine clause 5.1 in order to decide
whether its proper characterisation meant to merely create a condition precedent
with legally enforceable obligation or not. A proper reading of clause 5.1 reveals
that it is prefixed by the words ‘[i]n the event of the Purchaser requiring a
mortgage loan to finance the acquisition of the Unit . . . this sale shall be subject
to the condition precedent . . .’ (Emphasis added). From the language of the text,
the structural and grammatical construction, including the punctuation of the
whole clause, it is self-sufficiently clear that the parties did not expressly provide
that the appellant, as purchaser, was obliged to obtain the mortgage loan. This is
certainly not what clause 5.1 says.
[19] The clause is not capable of the contrary interpretation that was contended
for by the respondent namely that the appellant was obliged to obtain a loan. The
words ‘[i]n the event of the Purchaser requiring a mortgage loan’, cannot be
wished away and render the respondent’s interpretation untenable. The clause is
clear. The condition precedent of obtaining a mortgage loan was for the benefit
of the appellant and only arose if the appellant required finance. If he did not
1 See Natal Joint Municipal Pension v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) 593 (SCA) para 18.
2 Passenger Rail Agency of South Africa v Sbahle Fire Service CC [2020] ZASCA 90 at 28.
3 Sivubo Trading v Development Bank [2019] ZASCA 28 para 11.
require any, no obligation was created by this condition and the condition
precedent did not have any force and effect.
[20] The finding of the high court inclusive of its reasoning is difficult to discern
as it amounts to striking out the words ‘[i]n the event’ from clause 5.1. As
pronounced by this Court in Sivubo,4 the mere inclusion of the word ‘condition
precedent’ in the contract does not always translate into the condition in question
being a suspensive condition. It follows that the high court misconceived the
inquiry. The decision of the high court cannot therefore be supported. Despite the
fact that the alternative argument raised by the appellant is dependent on the
conclusion that I have reached, I am of the view that for the sake of completeness,
an analysis of the arguments regarding waiver is necessary.
[21] The high watermark of the respondent’s case is that the appellant’s
arguments in this Court suggest that the condition precedent should be regarded
as having been waived and by reason of the fact that waiver was not specifically
pleaded, this court cannot come to the assistance of the appellant. It was also
argued that the appellant’s evidence did not establish waiver at all. Even though
it is trite that the defence of an election or waiver must be pertinently raised and
pleaded,5 there are several reasons why this argument cannot advance the
respondent’s case either.
[22] It is not necessarily fatal to the appellant’s case that waiver was not
expressly pleaded. In Collen v Rietfontein Engineering Works6 this Court decided
the matter on the basis of a contract that was never pleaded and contained
different terms to the one that was pleaded. It held that because of the fact that all
4 Fn 3 above.
5 Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A); Montesse Township and Investment Corporation
(Pty) Ltd and Another v Gouws NO and Another 1965 (4) SA 373 (A) at 381B-D.
6 Fn 5 above at 433.
the relevant material had been produced and placed before it, it would have been
‘idle for it not to determine the real issue which emerged during the course of the
trial’. Similarly, where a party sought to rely on a tacit contract that was not
pleaded, Schreiner JA stated that ‘where there has been full investigation of a
matter, that is, where there is no reasonable ground for thinking that further
examination of the facts might lead to a different conclusion, the Court is entitled
to and generally should treat the issue as if it had been expressly and timeously
raised’.7
[23] More recently this Court held that litigation is not a game.8 In my view, the
issues in the present case were defined, ventilated and examined by way of viva
voce evidence before the high court. The appellant, from the onset, and during
the trial proceedings, established waiver. He emphatically indicated that he had
paid the deposit and the full price in cash and that the respondent’s representative
knew that he did not require a loan even before the conclusion of the agreement.
[24] Even if this Court was to find that the agreement was subject to a
suspensive condition, the fallacy of the argument of the respondent lies in the fact
that it has long been established that a subject-to-bond clause such as clause 5.1
of the standard terms and conditions of the agreement including the consequent
clause 6 of the schedule, operates solely for the benefit of the purchaser.9 In Mia
v DJL Properties,10 De Villiers J stated that the purpose of a subject-to-bond
clause was to ‘create a facility of which the purchaser could avail himself if he
7 Middleton v Carr 1949 (2) SA 374 (A) at 385; See also Minister of Safety and Security v Slabbert [2009] ZASCA
163; [2010] 2 All SA (SCA) paras 11-12; South British Insurance Co LTD v Unicorn Shipping Lines (Pty) Ltd
1976 (1) SA 708 (A) at 714G.
8 Cadac (Pty) Ltd v Weber-Stephen Products Company and Others [2010] ZASCA 105; [2011] 1 All SA 343
(SCA); 2011 (3) SA 570 (SCA) para 10; Madibeng Local Municipality v Public Investment Corporation Ltd
[2018] ZASCA 93; 2018 (6) SA 55 (SCA) para 30.
9 Van Jaarsveld v Coetzee 1973 (3) SA 241 (A) at 244 C-G.
10 Mia v D J L Properties (Waltloo) (Pty) Ltd and Another 2000 (4) SA 220 (T) at 222.
wished’ and that ‘[i]t was not intended at all to protect the seller’. The following
remarks made by De Villiers J are apposite in this matter and bears repetition:
‘Furthermore, since the suspensive condition was inserted to protect the purchaser in the event
of his not being able to raise the purchase price without obtaining a bond over the purchased
property, the parties obviously intended that, if the purchaser chose to make provision for the
delivery of the guarantees without obtaining such a bond, he would be free to do so. The parties
could accordingly not have intended that the purchaser would be obliged to apply for the bond
and that, if he failed to apply therefor, he would thereby breach the contract.’11
[25] It is clear against the backdrop of the authorities quoted above that the
appellant had the right to waive his reliance on the condition precedent clause. A
waiver is a unilateral act12 and so the appellant did not require an acceptance on
the part of the respondent for it to be effective. Of significant importance in the
appellant’s evidence is that his waiver or election occurred at the outset. Although
there is no evidence of the precise date on which his waiver occurred, the manner
in which the impugned clause is phrased lends credence to the probability that he
expressly indicated upfront that he would pay cash and waived his right. It is
furthermore clear that Mr Phelan, the representative of the respondent with whom
the appellant dealt, knew that the appellant did not require a bond, because he
undertook to invest the cash on behalf of the appellant.
[26] I turn now to the conduct of the respondent. Throughout the period
concerned, the respondent treated the agreement as valid. The most telling
instance is when the addendum was signed to make provision for the amendment
of the purchase price. This occurred long after the expiry of the period within
which, on the respondent’s argument, the appellant had been required to obtain a
loan. On this argument, the condition precedent would have come into operation
11 Footnote 10 above at 229.
12 Absa Bank Ltd v Master and Others NNO 1998 (4) SA 15 (N) at 28B.
and it would have had the effect of nullifying the agreement; yet the respondent’s
conduct manifests an intention to comply with the terms of the agreement.
[27] The respondent failed in various respects to utilise the powers conferred
upon it by the agreement. These failures are consistent with a party who had
accepted waiver or, at least, was aware of such a waiver. They are: (a) the
agreement provided that the application for the mortgage loan by the purchaser
would be submitted to the relevant financial institution through the respondent or
its appointed agents. Clause 5.4 of the standard terms and conditions further
provided that the agreement operated as a power of attorney in favour of the
respondent, ‘which shall have the power to apply for a loan . . . on behalf of the
[the appellant]’. No such application was submitted by either party. The
respondent in particular, did not utilise the power conferred upon it to apply for
the mortgage bond on behalf of the appellant; (b) the respondent did not give
notice to the appellant, informing the appellant that he was in breach of the terms
of the agreement, and that as a result, the respondent has decided to terminate the
agreement. The only ‘notice’ given to the appellant of the breach and subsequent
termination was when the respondent filed its plea on 24 May 2013. This is a
period of almost 7 years after the agreement was concluded; (c) throughout the
duration of the agreement, the respondent used the purchase price and paid the
appellant interest as recompense for the use of his funds; and (d) the respondent
had already instructed its attorneys to pass transfer of the property to the
appellant, only to renege when the appellant refused to sign the Rental Pool
agreement.
[28] In conclusion, it is clear that, from the onset, the appellant did not require
a bond or loan in order to effect the purchase price in due course and the parties
accepted this. The condition precedent embodied in clause 5.1 of the agreement
created an obligation on the appellant only in the event that he required a bond or
a loan. Therefore, as a result of the fact that the evidence of the appellant remained
uncontroverted that he paid the full purchase price in cash, clause 5.1 had no
application and its benefits were waived by the appellant. What is more, the
respondent never regarded the agreement as having failed due to the non-
fulfilment of the condition precedent. The finding of the high court that the
condition precedent did apply to the agreement of the parties; that the appellant
failed to fulfil such a condition; and that such a failure rendered the agreement
unenforceable was flawed. The appeal must therefore succeed.
[29] In the result the following order is made:
The appeal is upheld with costs.
The order of the court below is set aside and replaced with the following
order:
‘1 It is declared that the agreement of sale concluded by the parties is not
null and void on account of the non-fulfilment of the suspensive condition,
as alleged by the defendant in paragraphs 5.3 and 5.4 of the plea;
2 The defendant is directed to pay the plaintiff’s costs in respect of the trial
on the separated issue.’
_____________________
A M KGOELE
ACTING JUDGE OF APPEAL
APPEARANCES
For the appellant:
P Tredoux
Instructed by:
Francis Thompson Aspden, Cape Town
Symington & De Kok, Bloemfontein
For the respondent:
A D Brown
Instructed by:
Abraham & Gross Inc, Cape Town
Lovius Block 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:
6 OCTOBER 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
McGrane v Cape Royale The Residence (Pty) Ltd (831/2020) [2021] ZASCA 139 (6 October
2021)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal, with costs,
against the Western Cape Division of the High Court, Cape Town (the high court).
The issue in this appeal concerned the interpretation of clause 5.1 embodied in an agreement of sale
concluded by the appellant and the respondent in respect of an immovable property situated at Green
Point, Cape Town. The text of the contentious clause provides: ‘In the event of the Purchaser requiring
a mortgage loan to finance the acquisition of the Unit and Exclusive Use Area, this sale shall be subject
to the condition precedent that the Purchaser obtains approval in principle from a recognised financial
institution for such a loan in the amount as specified in Clause 6.1 of the Schedule within 21 (twenty-
one) days of signature hereof by the Purchaser. . . ’
A disagreement arose when the transfer of the property was to be effected. In July 2013, the appellant
instituted an action for specific performance against the respondent for failing to effect transfer of the
property to him, despite the fact that, as the appellant contended, the deposit and the balance of the
purchase price was paid in full. In defence, the respondent disputed these allegations, and further raised
a defence that the condition precedent provided in clause 5.1 was not fulfilled because the appellant
failed to secure a loan of R649 480 within the stipulated period, thereby rendering the contract null and
void.
At the commencement of the trial, the issue of the enforceability of the agreement was separated to be
adjudicated first by the high court. In his testimony, the appellant insisted that the clause was not
applicable to him; he did not apply for a loan as he did not require any; and the respondent was aware
of this. After hearing the only evidence adduced by the appellant on this separated issue, the high court
held that the agreement was subject to a condition precedent which had not been fulfilled, and declared
the agreement null and void.
Before this Court, the arguments revolved firstly on the issue of whether the agreement, properly
interpreted, was subject to a condition precedent. The respondent argued further that in the absence of
the appellant specifically pleading waiver in the circumstances where the non-fulfilment remained
common cause, the agreement cannot survive.
The SCA held that the words ‘[i]n the event of the Purchaser requiring a mortgage loan’, contained in
the condition precedent, made it clear that the condition precedent only arose in the event the appellant
required finance. On the issue of waiver, the SCA held that the failure to plead waiver was not fatal
because the undisputed evidence of the appellant was that he paid the balance of the full price in cash
as he required no loan; Clause 5.1 had no application and its benefits were waived by the appellant.
The SCA held further that the respondent never regarded the agreement as having failed due to the
non-fulfilment of the condition precedent. As a result, the appeal was upheld with costs and the order
of the high court was set aside and replaced with the order that the agreement was not rendered
unenforceable because of the non-fulfilment of this clause.
~~~~ends~~~~
|
1543
|
non-electoral
|
2008
|
DIE HOOGSTE HOF VAN APPèL
REPUBLIEK VAN SUID-AFRIKA
UITSPRAAK
Saaknommer: 732/07
Geen gesagswaarde
In die saak tussen:
MADLEEN ALBERTINA MARIKE BREDENHANN
APPELLANT
en
DIE STAAT
RESPONDENT
Neutral citation:
Bredenhann v S (732/07) [2008] ZASCA 145 (27
November 2008)
CORAM:
CLOETE, COMBRINCK ARR et BORUCHOWITZ
WNDE AR
DATUM:
11 NOVEMBER 2008
GELEWER:
27 NOVEMBER 2008
GEKORRIGEER:
OPSOMMING:
Moord – feitevraag of appellant skuldig is aan
moord of begunstiging by die pleging van moord.
Murder – factual issue whether appellant was
guilty of murder or being an accessory after the
fact to murder. (Judgment in Afrikaans.)
BEVEL
Op appèl vanaf:
Pretoria se Hooggeregshof
Mynhardt, Molopo & Du Plessis RR (Volle hof)
1.
Die appèl word van die hand gewys.
UITSPRAAK
COMBRINCK JA (Cloete AR et Boruchowitz Wnd AR stem saam)
[1] Drie vrouens van dieselfde familie, 'n 27-jarige dogter, haar moeder en
ouma aan moederskant, het saamgewoon in 'n huis in 'n voorstad van
Pretoria. Die moeder en ouma het 'n slaapkamer gedeel en die dogter het in
'n aparte slaapkamer langsaan geslaap. Gedurende die vroeë oggendure van
Saterdag 13 April 2003 is die moeder en ouma wreed met 'n byl aangerand
terwyl hulle in hul beddens gelê het. Hulle het albei aan hul beserings beswyk.
Die dogter, die huidige appellant, is aangekla van die moord op haar moeder
en ouma. Die saak het in die Pretoria se Hooggeregshof voor Botha R gedien.
Hy het die appellant op beide klagtes skuldig bevind en haar tot twee termyne
lewenslange gevangenisstraf gevonnis. Sy het tot die volbank van die
provinsiale afdeling teen die skuldigbevinding appelleer. Met 'n meerderheid
van twee teen een is die skuldigbevinding bekragtig. Mynhardt R het die
meerderheidsuitspraak gelewer en Molopa R het saamgestem. Du Plessis R
het die minderheidsuitspraak geskryf. Laasgenoemde was van mening dat die
staat nie daarin geslaag het om te bewys dat appellant aan moord skuldig
was nie en dat daar slegs bewys is dat sy skuldig was aan begunstiging by
die pleging van moord. As gevolg van hierdie bevinding is spesiale verlof tot
appèl tot hierdie hof toegestaan.
[2] Die getuienis voor die verhoorhof is breedvoerig uiteengesit in al drie
uitsprake en 'n gedetailleerde uiteensetting in hierdie uitspraak sal oorbodig
wees. 'n Bondige opsomming van die vernaamste bewese feite sal voldoen.
Verskeie bure het die oggend van 13 April 2003 tussen 4 en 5 uur as gevolg
van honde wat geblaf het en geluide wat hulle gehoor het, wakker geword.
Hulle het vermoed dat die geluide vanaf die huis waar die drie genoemde
vrouens gewoon het, gekom het. Twee van die bure het getuig dat hulle 'n
venster hoor breek het en by verdere ondersoek vasgestel dat dit appellant se
slaapkamervenster was wat gebreek was. Die een getuie, mnr Du Plessis het
appellant buite die venster sien staan, besig om glas uit haar hare te vee. Die
ander, mev Wesselman, het appellant in die kamer gesien waar sy besig was
om iets uit 'n hangkas te haal. Sy het vir haar geskree en gevra of daar by
hulle ingebreek is en of hulle kon help. Appellant het geantwoord dat sy 'OK'
is maar dat daar nog iemand in die huis was. Sy het toe die polisie op die
noodnommer 10111 ontbied. Appellant het toe met haar motor Pretoria-Noord
Polisiestasie toe gery waar sy omtrent 5 vm opgedaag het en aan sersant
Robinson vertel het dat daar by haar woning ingebreek is en dat sy by haar
moeder en ouma se kamer in is en dat daar net bloed was. Sy het gevra dat
die nooddienste ontbied word. Sersant Robinson het gemerk dat daar
bloedspatsels op haar arm was. Verskeie polisielede is na die huis waar hul
eers moes wag vir die appellant om terug te keer om die motorhek oop te
sluit. In die hoofslaapkamer het hulle die lyke van die oorledenes gevind.
Hulle het op hulle onderskeie beddens gelê. By appellant se moeder, mev
Bredenhann, was daar baie bloedspatsels op die muur, plafon en meubels.
Behalwe vir 'n bloedbesmeerde kussing was daar min bloed in die omgewing
van wyle mev Wambach, die ouma. Op die bed langs die oorledene het 'n
bloedbesmeerde byl gelê. Beide oorledenes is verskeie kaphoue teen die kop
toegedien. Die moordtoneel is grafies in fotos wat by die verhoorhof ingedien
is, uitgebeeld. Die polisie het opgemerk dat daar bloedspatsels aan appellant
se bloes was. Daar is daarop beslaggelê en dit is gestuur vir forensiese
ontleding. Appellant het daardie oggend aan verskillende persone
uiteenlopende mondelinge verklarings gemaak oor wat die nag gebeur het.
Deskundige getuienis deur die staat aangebied, wat nie betwis is nie, het die
volgende bewys: eerstens dat beide oorledenes dood is aan bloedverlies as
gevolg van die kopwonde wat hulle toegedien is; tweedens, dat doksalimien in
beide se bloed gevind is. Dit het daarop gedui dat hul elk 'n normale dosis
slaapmiddel ingeneem het. Derdens, dat die bloed wat op die byl gevind is,
dié van wyle mev Bredenhann was. Vierdens, dat die bloed wat op appellant
se bloes gevind is dié van haar moeder, mev Bredenhann, was. Vyfdens, dat
ten einde daardie tipe bloedspatsels op haar bloes te gekry het, moes
appellant nie meer as twee meter van die oorledene gestaan het toe die
kophoue toegedien is nie.
[3] Appellant het getuig dat sy die nag wakker gemaak is deur die hondjie
wat by haar slaap. Sy het opgestaan en gaan water drink in die badkamer
oorkant die gang. Sy hoor toe 'n geluid in die kombuis en toe sy kyk, sien sy
twee figure. Sy kruip toe weg in die badkamer en sien een persoon gaan by
haar kamer in. Sy hardloop toe na haar ma se kamer om haar en haar ouma
te waarsku. Toe sy by haar ma se bed kom, kom daar 'n persoon die
slaapkamer binne en skakel die lig van die badkamer (wat 'en-suite' was) aan.
Sy hurk toe laag langs haar ma se bed. Die persoon kom na haar ma se bed,
leun oor en kap na haar ma. Sy spring toe op, skree en gryp hom en probeer
hom wegstamp. Hulle stoei en die aanvaller stamp haar toe weg, mik 'n hou
na haar, mis en slaan haar ma raak. Sy kruip toe hande-viervoet oor haar ma
en haar ouma en vlug by die kamerdeur uit. Die aanvaller skree toe:
'Madeleen (appellant se voornaam) is op pad na jou.' Sy identifiseer die stem
as dié van haar oom, Ludwig Wambach. Sy kruip toe weereens weg in die
badkamer en daarna hardloop sy haar kamer binne en sluit die deur. Die
aanvallers probeer by die kamer inkom en dreig haar dat as sy iets sê oor wat
sy gesien het, dieselfde met haar sal gebeur. Die tweede aanvaller se stem
het geklink soos dié van Ludwig se seun, Dieter, maar sy was nie seker nie.
Daar volg toe twee kaphoue teen die deur. Sy breek toe die venster met haar
leeslampie, spring uit, besef sy het haar motorsleutels vergeet, spring terug in
die kamer, kry haar sleutels en 'n trui uit die kas en spring weer uit. Sy
bevestig dat mnr Wesselman haar gevra het of daar ingebreek is en dat sy
gesê het sy is 'OK' maar dat daar nog iemand in die huis is. Sy is toe met
haar motor weg polisiestasie toe. Sy het erken dat sy die weergawe van die
gebeure aan niemand vertel het voor haar arrestasie nie – nie eens aan haar
familielede nie.
[4] Die appellant se getuienis is deur die verhoorhof verwerp as nie redelik
moontlik waar nie. Die bevinding is deur die belese regters in die
meerderheids- en die minderheidsuitspraak bevestig. Die appellant se
advokaat het in sy betoogshoofde aanvanklik aangevoer dat die bevinding
van die vier regters verkeerd was. Gedurende betoog voor ons het hy egter
toegegee dat hy geen gronde gehad het om die bevinding in twyfel te trek nie.
Gevolglik is die feit dat die appellant 'n valse weergawe gegee het van wat
gebeur het nie in hierdie appèl in geskil nie. Vir die redes in al drie uitsprake
verskaf is ek van mening dat appellant se advokaat se toegewing gegrond is
en ek ag dit onnodig om weereens die redes te herhaal waarom haar
getuienis verwerp moet word.
[5] Die verhoorhof het bevind dat die omstandigheidsgetuienis teen
appellant baie sterk was. Die appellant was in die huis en een van die
slagoffers se bloed was op haar klere. Haar verduideliking oor hoe dit gebeur
het is vals. Die enigste redelike afleiding wat gemaak kan word is dat sy
aandadig was aan die aanval op die twee oorledenes. Die hof het gevolglik dit
nie nodig geag om 'n bevinding te maak oor hoe presies die moorde gepleeg
is en wie almal betrokke was nie. Die meerderheid in die volbank was van
mening dat appellant 'n mededader was. Sy was, so is bevind, deel van 'n
komplot en het die werklike daders bygestaan deur te help om die huis binne
te kom, die moorde te pleeg en hulle uit die voete te maak. Dit is
onwaarskynlik dat sy enige van die moordhoue toegedien het. Du Plessis R in
sy minderheidsuitspraak het bevind dat die bloed op appellant se bloes wel
aantoon dat sy by was by die moorde, maar nie dat sy noodwendig
goedkeurend by was nie. Daar kan nie met sekerheid afgelei word dat
appellant haar met die aanval vereenselwig het nie. Die omstandighede in
geheel beskou, so is bevind, laat steeds die moontlikheid dat appellant 'n vals
weergawe gegee het om die werklike dader te beskerm.
[6] Op die keper beskou draai hierdie appèl om die vraag of die
verhoorhof, soos deur Du Plessis R bevind, misgetas het deur te bevind dat
daar voldoen is aan die tweede toets in R v Blom1 deurdat 'n ander redelike
afleiding uit die bewese feite gemaak kon word, naamlik dat die appellant nie-
goedkeurend by was toe die moorde gepleeg is. Hierdie tweede toets blyk uit
die volgende dictum van Watermeyer AR in Blom2:
'The proved facts should be such that they exclude every reasonable inference from
them save the one sought to be drawn. If they do not exclude other reasonable
inferences, then there must be a doubt whether the inference sought to be drawn is
correct.'
[7] Voordat hierdie vraag behandel word, is dit dienlik om weer die
vermaning in R v Mlambo3 te herhaal:
'An accused's claim to the benefit of a doubt when it may be said to exist must not be
derived from speculation but must rest upon a reasonable and solid foundation
created either by positive evidence or gathered from reasonable inferences which are
not in conflict with, or outweighed by, the proved facts of the case.
Moreover, if an accused deliberately takes the risk of giving false evidence in the
hope of being convicted of a less serious crime or even, perchance, escaping
conviction altogether and his evidence is declared to be false and irreconcilable with
the proved facts a court will, in suitable cases, be fully justified in rejecting an
argument that, notwithstanding that the accused did not avail himself of the
opportunity to mitigate the gravity of the offence, he should nevertheless receive the
same benefits as if he had done so.'
(Sien verder S v Steynberg4.)
[8] Daar bestaan drie moontlikhede as dit kom by die vraag oor wie die
moordenaar(s) was, naamlik, eerstens, een of meer vreemdeling(e), of
tweedens, 'n persoon of persone aan appellant bekend en derdens, die
appellant. By die tweede moontlikheid is die vraag of die appellant
goedkeurend by was in die sin dat sy deur haar dade haar assosieer het met
die moorde en of sy nie-goedkeurend bygestaan het. Die eerste moontlikheid,
1 1939 AD 188
2 Te 202 in fine - 203
3 1957 (4) SA 727 (A) te 737F-738D
4 1983 (3) SA 140 (A).
(dat vreemdelinge betrokke was), kan onmiddellik uitgeskakel word. Daar was
geen gedwonge toegang tot die huis verkry nie. Die drie honde het nie geblaf
nie. Met 'n ooggetuie by is dit hoogs onwaarskynlik dat so 'n gewelddadige
moordenaar appellant ongedeerd sou gelaat het. Die appellant het dan ook
geen rede gehad om 'n valse weergawe te gee van wat gebeur het nie. Indien
die appellant self die moorde gepleeg het – die derde moontlikheid hierbo
genoem – is sy tereg skuldig bevind aangesien die aard van die aanval
sodanig was dat sy nie nodige direkte opset moes gehad het om te moor. Wat
die tweede moontlikheid betref, was beide die verhoorhof en die meerderheid
in die volbank van mening dat dit te betwyfel is dat die appellant die
moordhoue toegedien het en dat sy bystand moes gehad het. Ek kan egter
nie sien waarom daar op die getuienis sodanige twyfel moes wees nie. Nie
een van die bure het enige ander persone gesien nie. Een het net 'n motor
soortgelyk aan haar pa s'n sonder ligte aan in die straat sien verbyry
ongeveer die tyd van die moorde, maar dit insigself is niksseggend. Die
polisie kon ook geen teken in die huis of daarbuite van enige derde persone
vind nie. Die enigste getuienis van ander persone wat betrokke was by die
moorde is dié van die appellant en sy was bevind 'n leuenaar te wees. Die
waarskynlikhede dui na my mening daarop dat die appellant op haar eie
sonder bystand die moorde gepleeg het.
[9] Indien die moorde wel deur 'n persoon (of persone) aan die appellant
bekend gepleeg is en sy haar vereenselwig het met sy (of hulle) dade, dan
was die verhoorhof korrek en is sy tereg skuldig bevind. Die enigste
oorblywende moontlikheid is dat die aanval deur iemand aan die appellant
bekend gepleeg is en dat sy haar nie met die misdade vereenselwig het nie,
maar slegs hulp verleen het aan die dader deur sy identiteit te weerhou en
sodoende hom toegelaat om vervolging vry te spring. Na my mening kan op
sterkte van die appellant se optrede die moontlikheid dat sy nie-goedkeurend
bygestaan het terwyl die moorde gepleeg is, verwerp word.
[10] Dit is duidelik dat hierdie moorde beplan was – die aanval het nie
voortgespruit uit 'n skielike rusie of 'n onverwagte gebeurtenis nie. Die
moordtoneel self bewys dit. 'n Vreemde byl is op die ouma se bed gevind – 'n
mens bring nie 'n byl in 'n slaapkamer in tensy jy dit as 'n wapen gaan gebruik
nie. Dit is duidelik van die posisies waarin die lyke gevind is dat hulle op hul
beddens gelê en slaap het toe hulle aangeval is. Die feit dat hulle oënskynlik
geen weerstand gebied het (behalwe dat die ouma 'n hou moes probeer
afweer het, aangesien een van haar vingers afgekap is) en nie geskree het
nie, getuig ook hiervan. As daar 'n geheimsinnige maar bekende aanvaller
was, moes hy geweet het dat die appellant ook in die huis sou wees en dat hy
'n plan moes maak met haar. Tog, volgens die hipotese, stap hy by haar
kamer verby om die moorde te pleeg sonder om hom oor haar te bekommer –
en wanneer sy wel op die moordtoneel verskyn, doen hy haar geen leed aan
nie. Die vraag ontstaan eerstens, hoe het sy in die moordkamer beland en
tweedens, hoe het dit gekom dat sy binne twee meter van haar ma gestaan
het toe dié aangeval is?
[11] Óf die appellant het geweet die aanval gaan plaasvind en sy het saam
met of net na die moordenaar die kamer binnegegaan, óf sy was onbewus
van wat gaan gebeur en het as gevolg van ander faktore onwetend dat iets
gaan gebeur, ingegaan. In die eerste geval sou dit beteken sy was
goedkeurend by die moorde. In die tweede geval sou 'n mens verwag dat sy
onmiddellik sou gil en vlug toe sy 'n persoon met 'n byl in haar moeder se
kamer waargeneem het – wat sy nie gedoen het nie.
[12] Die vraag oor hoe sy baie naby haar ma was toe die dodelike houe
toegedien is strook ook glad nie met die 'nie-goedkeurende bystander' teorie
nie. Volgens die fotos en sketsplan wat ingehandig is, het die twee beddens
waarop die oorledenes gelê het so te sê teen mekaar gestaan met die ouma
se bed naaste aan die deur. Tussen die moeder se bed en die ver kant se
muur het 'n laaikas en 'n bedkas gestaan met 'n spasie van ongeveer 'n halwe
meter tussen die kant van die bed en die kaste. Die aanvaller moes in hierdie
spasie gestaan het toe hy die dodelike houe toegedien het. Appellant kon nie
langs hom gestaan het nie – die spasie is te nou en sy moes dus half voor
hom gestaan het om die bloed op haar bloes te gekry het. Hoe sy as 'nie-
goedkeurende' toeskouer in hierdie posisie kon beland het, is onverklaarbaar.
As sy die houe en die bloed wat gespat het waargeneem het, sou 'n mens ook
verwag dat sy al gillend uit die kamer sou vlug en gaan hulp soek. Maar wat
maak sy? Sy gaan terug na haar kamer, breek 'n venster en as haar buurvrou
navraag doen oor wat aangaan, sê sy sy is 'allright'. Sy sê niks van die
gruweltoneel wat sy waargeneem het en dat haar ma baie ernstig beseer is
nie. Sy kon immers nog noodhulp ontbied het om haar ma te behandel – sy
kon toe nie al geweet het dat sy dood is nie. Sy het dan nog tyd gehad om
daaraan te dink om 'n trui uit die kas te haal om vermoedelik saam te neem
indien sy koud kry. Sy het verder ook tyd gehad om, nadat sy by die buitehek
uit is, te stop, die hek toe te maak en te sluit – dit terwyl haar moeder en
ouma besig is om dood te bloei. Sy moes ook by gewees het to haar ouma
aangeval is, aangesien sy vir haar vorige kêrel se suster, wat sy op pad
polisiestasie toe gebel het, gesê het dat haar moeder en haar ouma beseer is.
[13] 'n Verdere vraag wat nie rym met die 'nie-goedkeurende bystander'
moontlikheid is waarom appellant valse weergawes aan verskeie mense
gegee het oor wat gebeur het. Aan sersant Robinson het sy gesê daar is by
haar woning ingebreek. Aan inspekteur Otto, een van die eerste polisiemanne
op die toneel, het sy gesê dat sy in haar kamer gelê het en toe iemand in die
woning gehoor het. Sy het 'n ruit gebreek, uitgeklim en polisiestasie toe gery.
Aan 'n mnr Fouche, 'n paramedikus wat haar vir skok behandel het dieselfde
oggend, het sy gesê dat sy alleen in haar kamer was toe sy kapgeluide hoor.
Sy het geskree sy gaan die polisie bel en is toe by die gebreekte venster uit
polisiestasie toe. Aan haar broer, Albertus Bredenhann, het sy vertel dat toe
sy agtergekom het dat daar mense in die huis was, sy haar deur gesluit het.
Sy het nie gesê dat sy iemand gesien of herken het nie. Voor haar arrestasie
het sy ontken dat sy op die moordtoneel was. Eers toe dit blyk dat sy moet
verduidelik hoe haar moeder se bloed op haar bloes gekom het, het sy met
die weergawe gekom wat sy ook in die verhoorhof herhaal het – wat vals was.
As sy haarself nie met die moorde assosieer het nie en slegs ten doel gehad
het om die identiteit van die aanvaller te weerhou om hom te beskerm,
waarom nie van die begin af vertel dat sy 'n ooggetuie was tot die moorde,
maar dat die moordnaar aan haar onbekend was of 'n masker aangehad het
en sy hom nie kon identifiseer nie?
[14] Alles in ag genome is ek van mening dat daar geen moontlikheid
bestaan dat die appellant nie die moorde goedgekeur het nie. Óf sy het die
moorde self gepleeg wat myns insiens die waarskynlikste is, óf sy het haar
vereenselwig met dade van die aanvaller en hom aktief bygestaan in die
pleeg van die misdrywe.
[15] Die appèl word van die hand gewys.
………………………..
P C COMBRINCK
APPÈLREGTER
VERSKYNINGS:
VIR APPELLANT:
J P KRIEL (PROKUREUR)
IN OPDRAG VAN:
J P KRIEL & KIE
PRETORIA
KORRESPONDENTE:
NAUDES
BLOEMFONTEIN
VIR RESPONDENT:
E C J WAIT
IN OPDRAG VAN:
DIE DIREKTEUR VAN OPENBARE
VERVOLGING
PRETORIA
KORRESPONDENTE:
DIE DIREKTEUR VAN OPENBARE
VERVOLGING
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 2005
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
MADLEEN ALBERTINA MARIKE BREDENHANN
APPELLANT
and
THE STATE
RESPONDENT
A young woman, Madleen Bredenhann, 27 years old at the time, was convicted in
the Pretoria High Court of having murdered her mother and grandmother by hacking
them to death with an axe while they lay sleeping in their Pretoria-North home. She
was sentenced to two terms of life imprisonment.
Her appeal to the Full Bench of the Pretoria High Court was unsuccessful though
one of the three judges found that she should have been found guilty of being an
accessory after the fact to murder and not murder.
In a further appeal to the SCA the question was whether the single dissenting judge
was correct. The SCA found that the appellant either committed the murders herself
(the most probable scenario) or she actively assisted someone else in the
commission of the offences. The possibility that she merely stood by while the
murders were committed without approving was dismissed as not being a possible
inference to be drawn from the proven facts. The appeal court held that the
appellant's explanation as to how her mother's blood came to be on her blouse was
false.
The appeal was dismissed.
|
1921
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 757/10
CLEAR ENTERPRISES (PTY) LTD
Appellant
and
THE COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICES
First Respondent
CROSS-BORDER ROAD TRANSPORT AGENCY
Second Respondent
CART BLANCHE MARKETING
Third Respondent
THE INTERNATIONAL TRADE
ADMINISTRATION COMMISSION
Fourth Respondent
Neutral citation:
Clear Enterprises (Pty) Ltd v SARS
(757/10) [2011] ZASCA 164 (29 September 2011)
BENCH:
PONNAN, CACHALIA, LEACH, WALLIS JJA and PETSE AJA
HEARD:
2 SEPTEMBER 2011
DELIVERED:
29 SEPTEMBER 2011
CORRECTED:
SUMMARY:
Appeal – s 21A(1) of the Supreme Court Act – power of court
to dismiss appeal where judgment or order sought would have
no practical effect or result.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from:
North Gauteng High Court (Pretoria)
(Murphy J sitting as court of first instance).
The appeal is struck off the roll and each party is ordered to pay its own costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
PONNAN JA (CACHALIA, LEACH, WALLIS JJA and PETSE AJA concurring):
[1] On 2 September 2011 this appeal was struck off the roll in terms of s 21A of the
Supreme Court Act 59 of 1959 and each party was ordered to pay its own costs. It was
intimated when so ordering that reasons would follow. These are those reasons.
[2] Section 21(A)(1) of the Supreme Court Act 59 of 1959 provides:
'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.'
The primary question therefore, one to which I now turn, was whether the judgment
sought in this appeal would have any practical effect or result. It arises against the
backdrop of the following facts.
[3] On 22 February 2007 and at Port Elizabeth, Mr Gideon van Loggerenberg, a
senior customs and excise officer in the employ of the first respondent, the
Commissioner, South African Revenue Service (the Commissioner) detained two trucks
— a Mercedes Benz and an ERF. On 23 April of the same year a similar fate befell a
third truck, a Leyland DAF Rigid. All three trucks belonged to the appellant, Clear
Enterprises (Pty) Ltd (Clear Enterprises), a Botswana based company. In detaining
each of those trucks, Van Loggerenberg purported to act in terms of s 88(1)(a) read with
s 87 of the Customs and Excise Act 91 of 1964 (the Act). Section 87(1) expressly
provides that goods imported or otherwise dealt with contrary to the provisions of the
Act are liable to forfeiture 'wheresoever and in possession of whomsoever found'. In
turn s 88(1)(a) provides that certain persons may detain any goods at any place for the
purpose of establishing whether they are liable to forfeiture under the Act. And
Paragraph (d) of s 88(1) authorises the Commissioner, in his discretion, to seize any
goods liable to forfeiture under the Act. (See Tieber v Commissioner for Customs and
Excise 1992 (4) SA 844 (A) at 847C-D.)
[4] Clear Enterprises launched two separate applications in the North Gauteng High
Court against the Commissioner, as the first respondent, the Cross-Border Road
Transport Agency (the CBRT), a juristic person established in terms of s 4(1) of the
Cross-Border Road Transport 4 of 1998 (CBRT Act), as the second respondent and
Cart Blanche Marketing CC, a South African closed corporation as the third. No relief
was sought against either the second or third respondents and neither participated in
the proceedings either in this court or the one below. The International Trade
Administration Commission of South Africa (ITAC), a juristic person established in terms
of s 7 of the International Trade Administration Act 71 of 2002 (ITA Act), sought - but
was refused - leave by the high court to intervene in the matter. That notwithstanding it
continues to be cited as the fourth respondent. Needless to say it took no part in the
appeal.
[5] The primary relief sought by Clear Enterprises in the first application was:
'1.
The detention in terms of section 88(1)(a) of the Customs and Excise Act No. 91 of 1964 of a
Leyland DAF 55 Rigid Truck with chassis number L156272, engine number 21288296, and
registration number and letters B955ALU ("the vehicle") on 23 April 2007 at Port Elizabeth is
declared to have been unlawful.
2.
Alternatively to prayer 1 above, the continued detention in terms of section 88(1)(a) of the
Customs and Excise Act No. 91 of 1964 of the vehicle is declared to be unlawful.
3.
The First Respondent is ordered, at its own cost, to immediately restore the vehicle into the
Applicant's possession, alternatively to immediately permit the Applicant to remove the vehicle
from the Westview State Warehouse, Port Elizabeth or wherever else the vehicle is presently
detained by the First Respondent.'
And, that sought by it in the second was:
'1.
First Respondent's seizure in terms of Section 88(1)(c) read with Section 87 of the Customs and
Excise Act, 91 of 1964 (hereinafter referred to as "the Customs and Excise Act") on 23 May 2007
and at Port Elizabeth of the following vehicles (hereinafter referred to as "the vehicles") is
reviewed and/or declared unlawful and set aside:-
1.1.
Mercedes Benz truck with chassis number 385019251403982, engine number 35 395120
799399 and registration number and letter B 786 AKB; and
1.2.
ERF truck with chassis number 68038, engine number 6BTA21085000 and registration
number and letters B 540 AKU.
2.
First Respondent is ordered, at its own costs, to immediately return the vehicles into Applicant's
possession, alternatively to immediately permit the Applicant to remove the vehicles from the
West View State Warehouse, Port Elizabeth or wherever else the vehicles are presently held by
First Respondent;
3.
In the event of First Respondent failing to either return and deliver the vehicles to Applicant or to
enable or allow the Applicant to remove the vehicles as provided for in paragraph 2 above, the
Sheriff or his lawfully deputy is duly authorised, empowered and directed to remove the vehicles
from possession of First Respondent or wherever the vehicles may be found and to deliver the
vehicles to the Applicant.'
[6] In each application Clear Enterprises, moreover, sought additional declaratory
relief. In its amended form the orders sought were:
'2.
That the movement of a vehicle from a country within the common customs area into the
Republic of South Africa (RSA) after such vehicle had been lawfully imported into such other
country within the common customs area and such movement either:-
a)
being pursuant to a permit issued by the competent authority of such other country to a carrier as
defined under Article 1(a) of the Memorandum of Understanding on Road Transportation in the
Common Customs Area (promulgated by Proclamation 100 in Government Gazette No 13576 on
18 October 1991 and hereinafter referred to as the "MOU"); or
b)
pursuant to an exception as provided for under Article VIII of the MOU; and
c)
inclusive of when transport is undertaken with such vehicle on a public road in the RSA involving
the on and/or off loading of freight between two points within the RSA either by a foreign carrier in
terms of an appropriate permit issued in terms of Section 31 of the Cross Border Road Transport
Act, 4 of 1998 or without such permit by someone who is not a foreign carrier:-
2.1.
does not attract import or export duties; and
2.2.
is not regarded as goods imported into the Republic of South Africa as envisaged in the Customs
and Excise Act, 91 of 1964, unless such vehicle is to be disposed of.
[7] Murphy J, who heard both applications, dismissed them but granted leave to
Clear Enterprises to appeal to this court.
[8] For a fuller understanding of the matter and a better appreciation of the
competing contentions of the parties it is necessary to record that the Republics of
South Africa, Namibia and Botswana as also the Kingdoms of Lesotho and Swaziland,
being members of the Southern African Customs Union (SACU), are parties to certain
SACU agreements. Two of those are relevant for present purposes. The first, which
excluded Namibia, was entered into on 11 December 1969 (the 1969 SACU
Agreement). It was subsequently superseded by what has been described on the record
as a more sophisticated, re-negotiated agreement entered into on 21 October 2002 (the
2002 SACU Agreement). The 2002 SACU Agreement came into effect on 15 July 2004.
Subsequent thereto certain additional understandings, which were to be read with and
to form part of the SACU agreements, were reached amongst the government parties to
the SACU agreements. On 18 October 1991 a Memorandum of Understanding (MOU)
on road transportation in the common customs area was concluded between the states
parties to the 1969 SACU agreement and was published as a Schedule to the Transport
Deregulation Act 80 of 1988.
[9] According to Clear Enterprises, the three trucks were imported into the Republic
of Botswana. Each landed at Durban and was then transported to Botswana in bond.
Being second-hand trucks, like others in its fleet, there they were repaired and
refurbished before being licensed and registered in its name. Clear Enterprises asserts
that its trucks enter the Republic of South Africa from time to time, which, so the
assertion goes, is permissible in terms of the SACU agreements and the MOU.
Moreover, according to Clear Enterprises, despite not necessarily always being
required, permits in accordance with the provisions of s 31 of the CBRT Act are also
obtained in respect of its trucks that enter South Africa.
[10] According to Mr Van Loggerenberg, who deposed to the answering affidavit on
behalf of the Commissioner in each matter, a certain Mr Eric Muller and Ms Michelle
Airey are the controlling minds of various juristic entities including Clear Enterprises. He
states that Clear Enterprises' explanation and justification for the presence of these
three as well as various other trucks in the Republic of South Africa is fictional. Rather,
so he asserts, the explanation advanced by Clear Enterprises is a subterfuge designed
to conceal a scam devised and implemented by Mr Muller and Ms Airey to import used
trucks into South Africa in breach of the provisions of both the Customs and Excise Act
and International Trade Administration Act. Mr Van Loggerenberg complains that the
trucks were imported into the Republic of South Africa without the provisions of those
two Acts being complied with ‘and for the purpose of avoiding the payment of duty and
defrauding the fiscus’. He states that in terms of paragraph 1(b) of Notice Number R3,
published in the Government Gazette Number 25873 of 2 January 2004, the Minister of
Trade and Industry has declared that no second-hand or used goods may be imported
into the Republic of South Africa except by virtue of an import permit issued in terms of
s 6 of the ITA Act. ITAC, the authority responsible for the issuing of permits required in
terms of s 6 of the ITA Act, has decided that no permits for the import of second-hand or
used vehicles should be issued. Accordingly, so Mr Van Loggerenberg asserts, Mr
Muller and Ms Airey's solution to the conundrum was to establish juristic entities such as
Clear Enterprises in other SACU member states. Each of those juristic entities was then
used as a front to import used trucks into the common customs union and then invoking
the SACU Agreement and the MOU those trucks were driven into South Africa where
they were used locally on a permanent basis.
[11] On 16 October 2007 all three of the trucks were seized by ITAC in terms of s
4(1)(g) of the ITA Act from an employee of the Commissioner, the Controller of Customs
in Port Elizabeth. The seizure by ITAC predated the filing of replying affidavits by Clear
Enterprises in the two applications. The matter was argued before Murphy J during
October 2008 and judgment was handed down on 3 August 2009. And yet in all of that
time neither the parties nor the court below appeared to appreciate that the controversy
which occupied them may not have been an existing or live one. For, plainly, after the
seizure of the vehicles by ITAC the primary relief initially sought by Clear Enterprises,
namely, the return of the vehicles, had become academic. Thus after heads of
argument on the merits of the appeal had been filed, this court addressed a directive to
the parties calling for further heads and informing the parties that at the outset of the
hearing of the appeal they would be required to address argument on the preliminary
question of whether the appeal and any order made thereon would within the meaning
of s 21A have any practical effect or result.
[12] Courts should and ought not to decide issues of academic interest only. That
much is trite. In Radio Pretoria v Chairman, Independent Communications Authority of
South Africa 2005 (1) SA 47 (SCA) this court expressed its concern about the
proliferation of appeals that had no prospect of being heard on the merits as the order
sought would have no practical effect. It referred to Rand Water Board v Rotek
Industries (Pty) Ltd 2003 (4) SA 58 (SCA) at para 26 where the following was said:
'The present case is a good example of this Court's experience in the recent past, including unreported
cases, that there is a growing misperception that there has been a relaxation or dilution of the
fundamental principle . . . that Courts will not make determinations that will have no practical effect.'
[13] In the further heads of argument and affidavits filed by the parties to address the
preliminary point raised we were advised that Clear Enterprises has launched an
application against ITAC in the North Gauteng High Court during December 2009 in
which both the Commissioner and ITAC are cited as respondents. It seeks an order that
the seizure by ITAC of all three vehicles be reviewed and set aside and also for certain
declaratory relief pertaining to the interpretation of inter alia the MOU as read with the
relevant SACU agreements. That application has been opposed by both the
Commissioner and ITAC. The parties to the present appeal have agreed that that
application should be stayed pending the outcome of this appeal. Why that course was
adopted is lost on me. We are not concerned in this appeal with the same issue as will
occupy the attention of the high court in that application.
[14] The parties urged upon us that, notwithstanding the seizure of the trucks by
ITAC, we should nonetheless entertain the appeal. By that they meant that although the
primary relief could no longer be granted we should nonetheless proceed to consider
the merits of the declaratory relief sought. Broadly stated two reasons were advanced:
first, that there are a number of other pending matters and in all of them ‘the questions
of law to be determined therein, are to a greater or lesser extent similar (in certain
instances even identical) to those to be determined in the present appeal'; and, second,
should Clear Enterprises in due course succeed in the pending review application
against ITAC in the high court ‘same would be an empty judgment, should [this] Court
not hand down a judgment in this appeal, as the seizure by [the Commissioner] would
then simply remain’. The second issue should perhaps be disposed of first in order to
clear the way for a consideration of the main issue in this appeal. I shall do so briefly.
[15] As to the second issue: The parties misconceive the position. The employees of
the Commissioner who had possession of the three vehicles voluntarily parted with such
possession on being served with a seizure notice by ITAC. The Commissioner’s jus
retentionis thus terminated with that loss of possession. If in due course the seizure by
ITAC is set aside by the high court in the pending application, possession of the
vehicles shall not, without more, revert to the Commissioner. That disposes of the
second issue.
[16] Turning to the first: Not all of the cases pending before the high court involve the
same parties. To the extent that they concern different parties any declaratory order that
issues can hardly be binding on those other parties. Moreover, each of the pending
applications involves different vehicles. The fallacy in the approach of the parties is that
they assume, erroneously so, that what confronts us is a discrete point of statutory
construction. It is not. It is first and foremost a fact-based enquiry. Any interpretive
exercise to be undertaken will be inextricably linked to the facts. And, it is trite that every
case has to be decided on its own facts. That is particularly the case where, as here,
the one party contends that the facts advanced by the other are a ‘sham’, ‘fictional’ and
a ‘stratagem’ to circumvent the applicable legislation. It follows that efforts to compare
or equate the facts of one case to those of another are unlikely to be of assistance. For,
as we well know, parties frequently endeavour to distinguish their case on the facts from
those reported decisions adverse to their cause. Moreover, absent an undisputed
factual substratum, it would be extremely difficult to define the limits of the declaratory
relief that should issue.
[17] Simply put, whatever issues do arise in the pending matters none of them are yet
‘ripe’ for adjudication by this court. To borrow from Kriegler J in Ferreira v Levin NO &
others; Vryenhoek v Powell NO & others 1996 (1) SA 984 (CC) para 199:
'The essential flaw in the applicants' cases is one of timing or, as the Americans and, occasionally the
Canadians call it, "ripeness". That term has a particular connotation in the constitutional jurisprudence of
those countries which need not be analysed now. Suffice it to say that the doctrine of ripeness serves the
useful purpose of highlighting that the business of a court is generally retrospective; it deals with
situations or problems that have already ripened or crystallised, and not with prospective or hypothetical
ones. Although, as Professor Sharpe points out and our Constitution acknowledges, the criteria for
hearing a constitutional case are more generous than for ordinary suits, even cases for relief on
constitutional grounds are not decided in the air. And the present cases seem to me, as I have tried to
show in the parody above, to be pre-eminent examples of speculative cases. The time of this Court is too
valuable to be frittered away on hypothetical fears of corporate skeletons being discovered.’
[18] Although expressed somewhat differently and in the different context of
constitutional adjudication where ‘ripeness’ has taken on a particular meaning, both the
principles and policy considerations articulated by Kriegler J resonate with the
jurisprudence of this court. Thus in Coin Security Group (Pty) Ltd v SA National Union
for Security Officers & others 2001 (2) SA 872 (SCA) para 9, 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 at 930g:
‘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'.
In a similar vein, in Western Cape Education Department v George 1998 (3) SA 77
(SCA) at 84E, Howie JA stated:
'Finally, it is desirable that any judgment of this Court be the product of thorough consideration of, inter
alia, forensically tested argument from both sides on questions that are necessary for the decision of the
case.”
And in Radio Pretoria (para 44), Navsa JA said:
'Courts of appeal often have to deal with congested court rolls. They do not give advice gratuitously. They
decide real disputes and do not speculate or theorise (see the Coin Security case (supra) at paragraph [7]
(875A-D)). Furthermore, statutory enactments are to be applied to or interpreted against particular facts
and disputes and not in isolation.'
[19] In effect what the parties are seeking is legal advice from this court. But as Innes
CJ observed in Geldenhuys & Neethling v Beuthin 1918 AD 426 at 441:
'After all, Courts of Law exist for the settlement of concrete controversies and actual infringements of
rights, not to pronounce upon abstract questions, or to advise upon differing contentions, however
important.'
In National Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs &
others 2000 (2) SA 1 (CC) para 21 footnote 18, the Constitutional Court echoed what
the learned Chief Justice had stated over eight decades earlier when it said:
'A case is moot and therefore not justifiable 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.'
The cumulative consequence of all the factors that I have alluded to is that no practical
effect or result can be achieved in this case. For the aforegoing reasons the appeal was
struck off the roll.
[20] That leaves costs. On 7 July 2011 the Registrar of this Court directed the
attention of both parties to the provisions of s 21A and enquired whether the appeal was
being persisted in. Undeterred both parties filed additional heads of argument and
affidavits intimating that they persisted with the appeal. That was the stance adopted
before us in argument as well. Neither was an unwilling participant in the appeal.
Moreover, the point which was held to be decisive of the matter was raised by the court
and not one of the parties. In those circumstances it was deemed appropriate that each
party be ordered to pay its own costs.
_________________
V PONNAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
I J Zidel SC
J C Uys
Instructed by:
Eugene Marais Attorneys
Bryanston
Symington & De Kok
Bloemfontein
For 1st Respondent:
J A Meyer SC
L G Kilmartin
Instructed by:
The State Attorney
Pretoria
The State Attorney
Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
29 September 2011
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Clear Enterprises (Pty) Ltd v SARS
(757/10) [2011] ZASCA 164 (29 September 2011)
Media Statement
On 2 September 2011 the Supreme Court of Appeal (the SCA) acting in terms of s
21A of the Supreme Court Act struck an appeal by Clear Enterprises (Pty) Ltd, a
Botswana based company, against a judgment of the North Gauteng High Court,
Pretoria from the roll and ordered each party to pay its own costs. It indicated then
that reasons would follow. Today it furnished those reasons.
The appellant owned three trucks which were detained by the first respondent, the
South African Revenue Services (SARS) in terms of the Customs and Excise Act.
SARS alleged that the vehicles were imported into South Africa in contravention of
the Customs and Excise Act and the International Trade Administration Act. Two
separate applications were launched by Clear Enterprises in the high court for the
trucks to be restored to its possession. The International Trade Administration
Commission (ITAC) seized the same trucks from SARS before the applications were
argued in the high court. The high court dismissed both applications but granted
leave to appeal to the SCA.
Section 21A of the Supreme Court Act provides that an appeal may be dismissed if
the issues before the court are of such a nature that the judgment sought will have
no practical effect or result. Clear Enterprises argued that the SCA should entertain
the appeal because there were other pending matters where the questions of law
were similar to those to be determined in the present appeal.
The SCA stated that once the vehicles had been seized by ITAC the present matter
had become academic. In respect of the pending cases, the SCA held that it is trite
that every case has to be decided on its own facts. According to the SCA, the parties
had misconceived the position, as the enquiry was a fact-based one as opposed to
being a discrete point of statutory construction.
The SCA also stated that neither the parties nor the high court appreciated that the
dispute which occupied them in both applications may not have been live or an
existing one. The SCA held that courts should and ought not to decide issues of
academic interest only. The SCA held that the present case is moot and found that
the cumulative consequence of all the factors in the case is that no practical effect or
result can be achieved in the case.
The SCA ordered each party to pay its own costs since neither party was an
unwilling participant in the appeal and the decisive point on appeal was raised by the
court and not one of the parties.
--- ends ---
|
1781
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 253/07
In the matter between:
PETER GRAHAM GARDENER
First Appellant
RODNEY MITCHELL
Second Appellant
and
THE STATE
Respondent
Neutral citation: Gardener v The State (253/07) [2011] ZASCA 24 (18 March 2011)
Coram:
HEHER, CACHALIA and SERITI JJA
Heard:
18 February 2011
Delivered:
18 March 2011
Updated:
Summary:
Criminal law – fraud – prejudice – intention to prejudice – company director
intentionally and without acceptable explanation withholding disclosure of
facts relevant to transaction in which company interested – a priori case of
fraud.
Criminal law – sentence – role of public interest in balance of factors.
___________________________________________________________________________________
_
ORDER
On appeal from: Western Cape High Court (Cape Town) (Uijs AJ sitting as court of
first instance):
The appeals of both appellants against conviction are dismissed. The appeals of both
appellants against sentence are upheld. The sentences imposed by the Western Cape
High Court are set aside and replaced by the following:
Each accused is sentenced to seven years’ imprisonment.
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (CACHALIA AND SERITI JJA concurring):
[1] This is an appeal from a judgment of Uijs AJ sitting in the Western Cape High Court
with leave of that court.
[2] The appellants, Mr Gardener and Mr Mitchell, were at material times joint chief
executive officers of LeisureNet Limited, a listed company, and directors of LeisureNet
International Limited, an offshore subsidiary, and of its subsidiary, Healthland Germany
Limited. The last-mentioned held half the shares in Healthland Germany GmbH, the
balance being held by a Jersey company, Dalmore Limited.
[3] In May 1999 International purchased Dalmore’s interest in Healthland Germany for
DM 10 million. The appellants each held a 20 per cent interest in the business of Dalmore
in Germany and received a proportionate share of the purchase price (DM 2 million each)
in consequence. The price was raised and paid by LeisureNet. The appellants had not
disclosed their interest in Dalmore to LeisureNet or International before or at the time of
the sale and did not do so subsequently. That fact only came to light in the course of an
enquiry into the affairs of LeisureNet subsequent to its liquidation in 2001. The appellants
were charged with (inter alia) fraud in failing to disclose their interest in Dalmore to the
board of LeisureNet during the period about April to December 1999 (‘the Dalmore
charge’) and were duly convicted. Gardener was sentenced to 12 years’ imprisonment (of
which 4 years were conditionally suspended). Mitchell was likewise sentenced to 12
years’ imprisonment, but, in his case, 5 years were conditionally suspended.
[4] The appellants acknowledged from the outset of the trial that they had at all material
times been under a duty to disclose their interests in Dalmore to the LeisureNet board and,
in failing to do so, had breached that duty. In the appeal they also conceded that their
conduct had made them guilty of contravening s 234(1) of the Companies Act 61 of 1973,
with which offence they had been charged in the alternative to the Dalmore charge. That
concession was limited to an admission of negligence in failing to make the disclosure,
culpa being sufficient mens rea for a contravention of the section.
[5] The issues in this appeal are:
Whether, in failing to disclose their interest in Dalmore, the appellants intended to
deceive the board of LeisureNet.
If they did so intend-
(a)
whether the appellants possessed an intention to prejudice the company; and
(b)
whether their failure to disclose resulted in actual or potential prejudice to it.
If the conviction on the charge of fraud is sustained-
(a)
whether the trial court misdirected itself in the manner in which it evaluated the
interests of society in relation to the crime;
(b)
whether the trial court erred in imposing a heavier sentence on Gardener by reason
of certain convictions for VAT fraud and insider trading committed during his tenure as
managing director of LeisureNet (but after the perpetration of the Dalmore fraud) and for
which he had been convicted and sentenced before the trial commenced.
(c)
whether the sentences were, in any event, disturbingly inappropriate, thus justifying
interference by this Court.
If the fraud conviction should be set aside, the appropriate sentence for a conviction
for contravening s 234(1).
[6] The proper determination of the appellants’ intentions during the relevant period can
only be made in the context of the evidence concerning their own experience and conduct
during the preceding five years (‘the facts as a whole’: S v Ressel 1968 (4) SA 224 at
231A-D and 232A-E).
[7] Health & Racquet Club Ltd was listed on the Johannesburg Stock Exchange on 11
April 1994. According to its prospectus the company was ‘the market leader in ownership
and operation of fitness-based leisure clubs in South Africa’. During 1995 its name was
changed to LeisureNet Ltd.
[8] For a number of years before the listing the appellants had been associated in
establishing and managing fitness clubs. Gardener was a chartered accountant and
possessed expertise in the financial aspects of running the businesses. Mitchell’s skill lay
in the planning, setting up and operation of the clubs.
[9] Initially the largest shareholder in LeisureNet was a Cape Town attorney, Mr
Joubert Rabie. Both appellants held substantial interests. Rabie withdrew at an early stage
but remained both a friend and business associate of the appellants. The Krok family,
prominent in South African business, obtained direct or indirect holdings in the company
and apparently influenced the appointment of its board to the advantage of the company.
The chairman was Mr Joe Pamensky, a chartered accountant and businessman and,
formerly, a respected administrator of South African cricket. Also appointed was Mr Archie
Aaron, a very senior and esteemed Johannesburg commercial attorney. A strong
corporate governance ethic was inculcated in the board members, and in particular, as the
evidence showed, repeated calls were made on its members to disclose their personal
interests in matters arising for discussion in the affairs of the company.
[10] Although LeisureNet was initially interested in expanding its interests beyond South
Africa, unfortunate experiences in England and Holland in 1994 led the board to assure its
investors in the 1994 annual financial statements that the company would not expand
overseas, save by way of franchise.
[11] Early in 1995 the appellants were approached at the offices of LeisureNet in Cape
Town by Mr Hans Moser, a former business associate who had relocated to Germany. He
was eager to develop businesses in that country along the lines of Health & Racquet Clubs
and enquired whether LeisureNet would be interested in embarking on a joint venture. The
appellants explained to him that LeisureNet would proceed only by the route of a licence or
a franchise. An oral agreement was reached in terms of which LeisureNet granted Moser
licence rights for Germany in respect of the Health and Racquet brand name.
[12] During the first half of 1996 Rabie requested that the oral licence agreement be
reduced to writing, and, as a result, a 20-year written exclusive licence agreement for
Germany was concluded on 14 May 1996 between LeisureNet and Dalmore Ltd, in which
Moser and Rabie had an interest through offshore entities. The agreement was signed by
the first appellant and clause 2.6 provided that:
‘in all of their dealings with the LICENSEE [Dalmore], the officers, directors, employees and agents
of the COMPANY [LeisureNet] act only in a representative capacity, not in an individual capacity,
and that this Agreement, and all business dealings between the LICENSEE and such individuals
as a result of this Agreement, are solely between the LICENSEE and the COMPANY’.
[13] During the second half of 1996 Moser was again in Cape Town. He discussed the
developing business with the appellants at LeisureNet’s premises. He explained that it
needed a competent business plan to persuade landlords and financiers to support it, a
plan that provided a demonstrable ability to operate health clubs and to run a competent
financial corporate structure in relation to a health club business. He asked the appellants,
whose reputations apparently carried weight even in Germany, whether they would allow
him to use their names and whether they would give him their personal backing in the
German operation. They agreed to do so in return for a 20 per cent interest (for each of
them) in whatever the German business produced in due course. This, it would appear,
was not to be a direct interest in Dalmore through equity, but rather an undertaking by
Moser to recognise their financial stake in the German aspects of its business. Despite the
fact that the appellants thereby acquired an interest in LeisureNet’s licensee with the
obvious concomitant potential for a future conflict of interest the appellants thought it
unnecessary either to inform the LeisureNet board or seek its approval. Their explanation
was that the prospect of future expansion of Dalmore’s interests in Germany was so
tenuous that they did not consider it necessary to do so.
[14] During about April 1997 LeisureNet considered investing offshore by way of joint
ventures and as a result the board sent the appellants to Australia (in April) and Germany
(in May) to investigate opportunities. Up to that stage the appellants had not visited
Germany to assist Moser with his franchise. According to Gardener they had done
nothing other than to lend their names to the business. According to Mitchell they had
advised Moser in Cape Town from time to time. Both testified that, if the franchise in
Germany were to continue, they would become involved in operations and management in
return for the interests they had obtained in Dalmore.
[15] At an executive committee meeting of LeisureNet on 25 June 1997 the possible
expansion of its business to Germany was discussed. The appellants raised the licensing
agreement as a potential problem. It was then resolved that the appellants would ‘pursue
the investigation with regard to the cancellation of the regional licence for Germany and
the conclusion of a joint venture with the licensee’. The meeting requested the appellants
to open negotiations to these ends. The appellants consequently visited Moser in Germany
in June 1997 where they had discussions with him and on their return they negotiated with
Rabie representing Dalmore. It was agreed that the licensing agreement for Germany
would be cancelled.
[16] On 1 August 1997 LeisureNet, Dalmore and Healthland Fitness Club GmbH entered
into a written agreement which the second appellant signed on behalf of LeisureNet. In
this, ‘the first shareholders’ agreement’, LeisureNet in essence obtained 50 per cent of the
shares in GmbH, the company through which Dalmore conducted its operations in
Germany. LeisureNet undertook to advance on loan to Healthland Fitness Club GmbH its
funding requirements to an amount equal to the cost of fitting out the first five facilities
(health, leisure and fitness complexes). The agreement contained a right of first refusal in
the event of either party wishing to transfer its shares in the company. LeisureNet was to
appoint four directors to the board and Dalmore three. If the appellants are to be believed it
did not occur to them that LeisureNet should be informed that it was effectively going into
partnership with its own joint chief executives and providing funds which would be used, at
least in part, to their ultimate benefit. Gardener and Mitchell were appointed as two of
LeisureNet’s nominees to the board.
[17] During October 1997 LeisureNet approached the exchange control department of
the South African Reserve Bank for approval of the first shareholder’s agreement.
Approval was given on 10 October 1997.
[18] From August 1997 LeisureNet, with the assistance of its auditors reconsidered its
overall structure and agreements. Upon the advice of the auditors it decided to split the
employment of the appellants between South Africa and its offshore interests. At about this
time, as an incentive to the appellants, LeisureNet agreed to issue 5% of the shares in its
international subsidiary, LeisureNet International, to each of the appellants on the basis
that such holdings would be non-dilutable, ie the appellants would each retain that
proportion in the shareholding of the company irrespective of the numbers of future shares
allotted.
[19] In that context the appellants with the assistance of Investec Ltd, caused offshore
trusts and companies to be set up by Insinger Trust (Jersey) Ltd to house these and other
interests. Although the trustees were in law not bound to carry out the requests of the
appellants in respect of the trust assets it appears that in practice their ‘letters of wishes’
were honoured.
[20] During 1998, as part of the restructuring of LeisureNet’s offshore subsidiaries:
LeisureNet International Ltd was introduced as LeisureNet’s subsidiary to hold its
interests in Germany.
Teria Ltd, a United Kingdom company, was interposed above GmbH as the sole
shareholder of GmbH. On 5 May 1998 its name was changed to Healthland Germany Ltd.
International and Dalmore each became 50% shareholders in Healthland Germany
Ltd consistent with the joint venture agreed between them in August 1997.
To accommodate the restructuring, the first shareholders’ agreement was replaced
by a second shareholders’ agreement on 30 October 1998. It was signed by Gardener on
behalf of LeisureNet and International, and by Dalmore and Healthland Germany Limited.
In this agreement the funding obligation of LeisureNet was to be satisfied by subscribing
for preference shares in Healthland Germany Limited ‘limited to the fit-out costs . . . of
such number of premises in aggregate not exceeding an amount of £5,000,000.’
[21] During the first half of 1998 the first appellant requested Rabie to record the
interests that he and the second appellant held in the German business of Dalmore. Rabie
duly instructed the Royal Bank of Canada Trustees Ltd, the trustees of an offshore trust
set up by Rabie which held shares in Dalmore, on 30 June 1998 as follows:
‘I hereby direct that 20% of the shareholdings of the company Teria Limited must be registered in
the name of Peter Gardener and a further 20% in the name of Rod Mitchell as their respective
nominees upon my death. The Trustee of the trust holds the said shares as trustee. This should be
received as my wishes accordingly’.
The evidence of Gardener and Mitchell establishes that they discussed the request to
Rabie, perhaps before it was made and, certainly, after the instruction was carried out,
although neither was shown the letter.
[22] During 1998 International was engaged in discussions with a rival operator in
Germany, Fitco, for the acquisition by International of shares in Fitco. To that end the
appellants were involved in a process of due diligence in Germany.
[23] Towards the end of 1998 a venture capital fund, Brait, discussed with the group the
possible acquisition of a portion of International’s operations. During the same period and
into the following year another venture capital fund, Bankers Trust, approached the group
for the possible acquisition of a portion of International’s European operations. It became
clear to the appellants that it would redound to the substantial advantage of LeisureNet if it
were able to acquire the whole of the shares in Healthland Germany, principally because
that company would in consequence become much more desirable to prospective suitors.
In addition the unattractive prospect of Dalmore disposing of its interest to a third party,
perhaps one elsewhere in competition with International, would be negated.
[24] At the beginning of April 1999 representatives of Fitco, together with Moser, visited
South Africa to discuss the possible acquisition by Fitco of Dalmore’s interests in the
German operation. The appellants decided that LeisureNet, through International, should
acquire Dalmore’s 50% shareholding in the German operation. In telephone conversations
with the directors of International and certain of LeisureNet’s directors consensus was
achieved. The second appellant then manipulated the negotiations to the advantage of
LeisureNet. Knowing that Moser would consider a purchase price of DM 15 million, he
suggested to the Fitco representatives that they offer about DM 10 million, telling them that
he would try to persuade Rabie and Moser to accept such an offer. On 9 April 1999
Mitchell received a letter from Fitco containing a proposal to acquire Dalmore’s shares in
Healthland Germany for DM 10 million. He convinced Rabie, who acted on Moser’s
behalf, to accept DM 10 million. When Rabie agreed, Mitchell informed him that
International intended to exercise the right of pre-emption stipulated in its favour in the
second shareholders’ agreement.
[25] On 16 April 1999 an agreement was signed in terms of which the shareholding of
Dalmore in Healthland Germany was sold to International for DM 10 million. It was signed
by Gardener on behalf of International, Leisurenet and Healthland Germany.
[26] At a meeting of LeisureNet’s executive committee on 24 May 1999, the agreement
with Dalmore was discussed and at the board meeting of 26 May 1999 the acquisition of
Dalmore’s interests in Healthland Germany was confirmed. At neither meeting was a
disclosure made of the appellants’ interests in the acquisition. Once again the appellants
explained in evidence that they were so concentrated on the transaction that disclosure did
not occur to them. The minutes of the meeting of the board on 26 May recorded the
following statements which are relevant to this judgment:
‘3.
Disclosure of Directors’ Interests:
The meeting was informed that no further disclosures were received from any of the directors
subsequent to the previous meeting.’
And further:
‘The meeting on the recommendations of Exco. . . confirmed LeisureNet International Limited’s
acquisition of all Dalmore Limited’s interests in Healthland Germany Limited with effect from 1 May
1999 for an amount of DM 10 million and the payment therefor by the Company issuing 7,85 million
shares at 420 cents per share with effect from 28 May 1999.’
[27] Within the following week both appellants issued appropriate instructions to ensure
that their share of the proceeds of the sale was paid by Dalmore directly into the offshore
accounts of their trusts.
[28] Before the acquisition of Dalmore’s shares by International, a process of due
diligence undertaken by Bankers Trust was already in progress. That continued after the
acquisition of the Dalmore shares. It is clear from Mitchell’s evidence that even before the
Fitco offer was received he and Gardener were optimistic that they would be able to sell
Healthland Germany to Bankers Trust at an enormous price provided International was
able to obtain control of all the Dalmore shares. The key representatives of Bankers Trust
left its employ in the middle of 1999 and moved to AIG. After substantial negotiations and a
due diligence process lasting most of the year, an agreement was concluded on 21
December 1999 in terms of which AIG purchased 25% of International for £17 million. At
that stage, too, Germany remained a major focus of offshore development for the
LeisureNet group.
The law governing fraud
[29] It is trite that:
‘Fraud consists in unlawfully making, with intent to defraud, a misrepresentation which causes
actual prejudice or which is potentially prejudicial to another.’
J R L Milton: South African Criminal Law and Procedure, Vol. 2 (3rd Edition) at 702. And
see S v van den Berg 1991 (1) SACR 104(T) at 106b.
[30] With regard to the question whether non-disclosure is criminally fraudulent Coetzee
J in S v Burstein 1978 (4) SA 602(T) at 604G-605B, stated the law in this regard as
follows:
‘The question whether non-disclosure is criminally fraudulent is not an easy one. As pointed out by
Hunt in SA Criminal Law and Procedure Vol 2 at 716, silence may well constitute civil fraud without
constituting criminal fraud. The distinguishing feature lies mainly in the presence or absence of the
necessary intention to defraud. There are very few cases of criminal non-disclosure. The most
comprehensive judgment on this topic is that of Trollip J (as he then was) in S v Heller and Another
(2) 1964 (1) SA 524(W) at 536-538, which I adopt, with respect, as an authoritative statement of
the law. For the purpose of dealing with the facts of the present case more conveniently, I would
summarise the requisites of this type of fraud, as discussed by the learned Judge, as follows:
(a)
a duty to disclose the particular fact;
(b)
a wilful breach of this duty under such circumstances as to equate the non-disclosure with a
representation of the non-existence of that fact;
(c)
an intention to defraud which involves
(i)
knowledge of the particular fact;
(ii)
awareness and appreciation of the existence of the duty to disclose;
(iii)
deliberate refraining from disclosure in order to deceive and induce the representee to act
to its prejudice or potential prejudice;
(d)
actual or potential prejudice of the representee.’
See also S v Heller (2) 1964 (1) SA 524(W) at 536F-537F; S v Brande and Another 1979
(3) SA 371 (D) at 381A-D; S v Harper and Another 1981 (2) SA 638 (D) at 677F-H.
[31] Professor Snyman puts the required mens rea thus:
‘There is a distinction drawn between an intention to deceive and an intention to defraud. The
former means an intention to make somebody believe that something which is in fact false, is true.
The latter means the intention to induce somebody to embark on a course of action prejudicial to
herself as a result of the misrepresentation. The former is the intention relating to the
misrepresentation, and the latter is the intention relating to both the misrepresentation and the
prejudice.’ [Emphasis provided].
Snyman Criminal Law (5 ed) at 531-2; S v Isaacs 1968 (2) SA 187(D) at 191C-192A; S v
Huijzers 1988 (2) SA 503(A) at 506I-508B.
[32] The authorities I have cited support the view that an intention to cause actual or
potential prejudice is a necessary element of the crime of fraud. But it may be that proof of
deceit which is calculated (likely) in the ordinary course of things to result in such prejudice
is sufficient without a subjective mental element.1 The law has not been argued before us
and it is unnecessary to decide the question, since, for reasons which will appear, the
State has, in my view, succeeded in proving an intention to cause prejudice beyond a
reasonable doubt.
Intention to defraud
[33] The State was required to prove beyond reasonable doubt that the appellants
withheld disclosure of their interest in Dalmore with intent to deceive the board of
LeisureNet (and thereby to induce it to act on the misrepresentation to its prejudice).
[34] There being no direct insight into the minds of the appellants, the case for the State
was built on the cumulative effect of the objective probabilities. The contention, which was
accepted by the court a quo, was that the weight of such probabilities was sufficient to
disprove beyond a reasonable doubt, the truth of the explanations furnished by the
1 See particularly, R v Jolosa 1903 TS 694 at 700; R v Henkes 1941 AD 143 at 161; R v Kruse 1946 AD 524
at 532-4; S v Huijzers at 507I-508B; S v Sithole 1997 (2) SACR 306 (ZSC) at 312d-313c.
appellants in evidence for their non-disclosure throughout the period April to December
1999. Once that finding was made an intention to defraud followed as the only reasonable
inference.
[35] In the context of the events which I have described, the probabilities that influence a
decision as to whether, in failing to make disclosure, the appellants intended to defraud the
company, can be assessed by reference to the following:
What had to be disclosed, not so much as a requirement of law but rather as a
matter of pragmatism.
The appellant’s knowledge of the duty and their observance of it in general.
Their opportunity to disclose.
Whether the failure was isolated or repeated.
The prominence and importance of the subject matter requiring disclosure in the
minds of the appellants.
What the effects of disclosure would have been.
Whether there were reasons for withholding disclosure.
Whether the appellants derived a clear benefit from non-disclosure.
The conduct of the appellants in relation to the performance of their duty.
The subject matter of the disclosure
[36] This is not as straightforward as it might seem. Undoubtedly the primary duty of the
appellants was to inform the boards of International and LeisureNet before the contract for
the purchase of Dalmore’s interest was concluded and confirmed that they each
possessed a financial interest in Dalmore and the extent of that interest: s 234(1) read with
s 234(3) of the Companies Act. But a full and proper disclosure would also have involved
details of when and under what circumstances it was acquired. Inevitably such a revelation
would have meant that LeisureNet’s board became aware that since acquiring the interest
the appellants had on various occasions negotiated with Dalmore ostensibly on behalf of
LeisureNet and International and concluded agreements between Dalmore and those
companies which also benefited themselves. Thus both the personal embarrassment to
the appellants and the consequences of disclosure must necessarily have been in the
forefront of the minds of both appellants as informed and experienced executives of
LeisureNet if they had given any thought to the duty.
The appellant’s knowledge of their duty to disclose and the opportunities available
for disclosure
[37] The appellants readily conceded that as directors of LeisureNet they owed a duty to
disclose situations of actual or potential conflict of interest and did not deny the
applicability of that duty to any of their dealings between Dalmore and the LeisureNet
group. They were both members of the executive and ethics committees of LeisureNet.
They were conversant with the statutory requirements. The duty was drawn to the notice of
members of the board by the chairman, Mr Pamensky, on repeated occasions during the
period 1995 to 1999. Disclosures were openly made by the appellants and other directors
on appropriate occasions and records were kept. Both appellants knew that in discussions
with the Reserve Bank relating, for example, to the acquisition or financing of overseas
assets by LeisureNet, disclosure of assets held by directors offshore was required. They
insisted on disclosure by their subordinates in accordance with the principles of proper
corporate governance where the possibility of conflict with the company might arise.
Examples of failure to disclose
[38] The appellants were silent as to their interest in Dalmore at all times, but particular
reference to the following instances is warranted:
i)
when they acquired the Dalmore interest at a time when Dalmore was a franchisee
of LeisureNet;
ii)
when they persuaded the Board of LeisureNet that the franchise licence should be
cancelled and replaced by a joint venture;
iii)
when they negotiated and concluded the first shareholders’ agreement which
brought Dalmore and LeisureNet into a partnership agreement;
iv)
when they negotiated and concluded the second shareholders’ agreement;
v)
at the time of the Fitco negotiations and before signing the written agreement in
terms of which International obtained Dalmore’s shares.
vi)
at the executive committee meeting held on 24 May 1999 and at the board meeting
on 26 May 1999 at which the Dalmore transaction was discussed and confirmed.
vi)
when it became necessary, in September 1999, to amend the second shareholders’
agreement retrospectively. (Gardener again signed on behalf of the LeisureNet
companies and Healthland Germany.)
The appellants’ failure to disclose their connection with Dalmore may fairly be described as
chronic.
[39] The prominence and importance of their interest in Dalmore in the minds of
the appellants
According to their evidence, the initial oral agreement between themselves and
Moser was regarded as no more than drawing a bow at a venture with little prospect of a
return. By the time of the first shareholders’ agreement the appellants felt that LeisureNet’s
proposed expansion into Germany required greater security than a franchisor/franchisee
relationship could provide because of the probable scope of business in Germany which
was opening up for LeisureNet.
In the first quarter of 1999, LeisureNet, through a rights issue and the sale of its
non-core assets, raised capital of R200 million to finance its intended offshore expansion
of which Germany was the major focus. As early as October 1997 a report before the
LeisureNet board had referred to the ‘unique opportunity’ for development in Germany. By
November 1998 there was reference to ‘unparalleled opportunities offshore’ and Germany
was described as ‘a powerhouse of the health and fitness industry’, and, in the following
month as a ‘unique window of opportunity’. In early 1999 the health and fitness industry
was ‘one of the fastest growing in Europe’. In this regard it is worth quoting from the
appellants’ heads of argument in relation to the potential value of the German operation at
the time of the Dalmore sale in April 1999:
‘However, the documentary evidence points with no exception at all and with a remarkable
consistency to the massive value then represented by the German operation. This includes:
91.1. All of the board minutes dealing with the subject;
91.2. All of the Exco minutes dealing with the subject;
91.3. Mr Neil’s own independent observations in Germany (such as with his due diligence
investigation into Fitco);
91.4. The financial interest shown by financiers such as Brait Capital;
91.5. The projected profit produced independently by the German team and reflected on the
budget statements for Germany for both 1999 and 2000;
91.6. The acquisition of Fitco by Fitness First, prior to 9 April 1999;
91.7. The views of independent analysts published at the time; and
91.8. The in-depth (and conservative) view expressed by AIG in the investment memorandum
(Exhibit CC in vol. 41).’
In 1999 LeisureNet budgeted for a 100 fold increase in the previous year’s operating profit
of Healthland Germany.
I have referred earlier to the appellants’ obtaining of a non-dilutable 5%
shareholding in International as compensation for the inconvenience of spending a large
amount of time away from home during the projected expansion of the group’s activities
overseas. The critical role which this interest assumed in the appellants’ intentions and
actions over the next 18 months or so can best be spelled out in their own words.
[40] Gardener’s evidence as to his state of mind during the negotiations with Fitco, and
Moser and Rabie, in April 1999 which culminated in the exercise of the pre-emptive right is
revealing:
‘I had only one thing in mind and that was to make sure the top company [International] received
the greatest benefit possible because that’s where I had my 5% shareholding and that was where
LeisureNet had its interests.’
(My emphasis.)
He had earlier testified that, on the listing of International, an event contemplated from the
outset of its existence as likely to happen in about 2001, his 5% interest in the offshore
companies was going to be worth ‘something like’ R75 million. In an application to the
exchange control department of the SA Reserve Bank in March 1999 the following was
recorded:
‘Such is the progress of the international company that it is anticipated that by the year 2001 it will
be possible to list the international company on an international stock exchange. . . At that stage
20% of the international companies could be worth conservatively R300 million compared with the
possibility of selling 20% at this time for R18 million.’
[41] The evidence of Mitchell leaves no doubt about his state of mind at the time of
negotiating and concluding the Dalmore acquisition. As to his relationship with
International and their interdependence he said:
‘You must remember M’Lord, that, from ’98, my interest and LeisureNet’s interest, LI’s interest, our
stars were in a line. Whatever was good for LeisureNet, LI, was effectively good for me and vice
versa. And with regard to the Dalmore entity, again I stress, I had no interest, control on the
direction of that entity at all.’
And further, in reply to questions by the learned Judge:
‘You were entitled to 20%? --- I was entitled to 20%, M’Lord.
Why did it not occur to you to disclose this to the Board, because you know 6 million rands is a
large or that’s the equivalent of – in those days, two million dm, that’s a large amount of money.
Did it not occur to you to tell your Board that? --- M’Lord, as I gave in my evidence, at that point in
time, I again tried to put things in context in that week. The activity and the frenzy that was going,
all that I was centred on in that week, as M’Lord has seen, is to bring that deal home for
Leisurenet.
You wanted Germany? --- We had to have it. We had to have it.
That’s how you saw it? --- 100%, M’Lord, and also what I did always see, M’Lord, is that LI, the top
or the company (indistinct).
The company which was ultimately going to be listed in London? --- My – from the time that I got
my founder shares, we were, as I’ve said, coupled on the (indistinct). It was as if we were going
down the rainbow together, strapped to the pot of gold. What was good for the top company, was
good for me and what was good for me was good for . . . (intervention).
I understand that concept, but where I am losing you and possibly you’re missing the point of my
question. Didn’t it occur to you when you realised that Dalmore was a done deal, did it occur to you
that this was going to net you some six million rand? --- When the deal was done?
Yes? --- Without a doubt, M’Lord.
Well the time the deal was done effectively, it would appear to me, at the time that you got consent
from (indistinct), now the deal was done? --- Yes. At that time not, M’Lord.
It didn’t occur to you? --- Not, M’Lord. And I can say (indistinct) say no and whether it was a case
that I sabotaged that out of my mind, once I’ve done the deal way back in 1997, to me that was a
done deal already then. There was an investment that I had and I hope to God one day it would
materialise into something.
Yes? --- But it was done.
When it’s done, it’s going to net you or it having been done is going to net you a large lump of
money? --- My mind was switching at that point in time, not during that week, a couple of weeks
afterwards, where my mind was, M’Lord, was to say, this deal now has cleared the road to net me
an enormous amount of money, not the six, to net me a potential 35 million, a 150 million if
(indistinct).
Yes? --- An that was definitely top of my mind then, M’Lord.
Yes, no, I understand that and you thought you were going to get that from Leisurenet International
Ltd? --- Yes.’
[42] The importance to Mitchell (and, equally, to Gardener) of the acquisition appears
again from the following exchanges with the judge:
‘If at the end of the day Leisurenet International Ltd when it was listed, was going to be worth a
large pot of money, then it made sense to get the assets and the companies which would form part
of the Leisurenet International Ltd Group as cheaply as possible, not so, because the cheaper you
got it, the greater was going to be your ultimate worth? --- 100%, M’Lord.’
and
‘No, let’s call a spade a spade. You were the chap who actually manouvred everybody into the
position where Leisurenet acquired Dalmore for 10 million? --- Bought Dalmore’s shareholding for
10.
Yes. Now if it was bought for six and ultimately that was increased considerably or the value which
it had paid was a 10 bagger, would have been increased to 60 million dm? --- Yes.
Do you understand what I am saying. I don’t mean to confuse you and I am not trying to catch you.
I am just trying to think, if I was thinking in the long term of what my ultimate worth would be for
Leisurenet International Ltd, I would want to get . . . (intervention). --- At the cheapest price
possible.
At the cheapest price, yes? --- I firmly agree with you and the cheapest possible price, I couldn’t
take it further down the 10, I mean . . . (intervention).
No, no, no, but you see what you could have done, is you could have said, I have done – or Mr
Gardener and I have done the most magnificent deal here, because we can get it at 10 and we’ve
got 20 already. And because we are Directors you don’t necessarily have to pay us out for that
price, because you were the agents who had in fact . . . (intervention).
--- But then sorry, M’Lord, are you proposing that I would have to walk away from my right to an
investment.’
[43] The overwhelming benefit of the acquisition and the extent to which it relegated the
payment for the Dalmore interest to ‘small change’ (Gardener’s expression) was never
made clearer than in the following passage from Mitchell’s evidence under cross-
examination:
‘At this point in time [ie when carrying on the Fitco negotiations] my interest related that I – my
anticipated pay out that I was going to receive from Hans [Moser] apropos my 1996 deal that I had
done with him, didn’t even come onto my radar at this point in time. At this point in time what was
very firmly entrenched in my mind was that I had now cleared all obstacles out the way to drive the
Bankers Trust deal through, which would affect – which it did do – put a value on Healthland – this
is where my mind was sitting – of just on 700 million, and my personal wealth was linked into
that on my founder shares, which were sitting at 35 million. And in my mind then, I thought that if
Scott Paton [of Bankers Trust] could be half believed on his theory of the ten bagger, and if he only
brought it home at a five bagger, the deal that I had consummated would have effectively created
value for LeisureNet to the tune of 3.5 billion and my personal wealth could have been to the tune
of 150 million. So in my mind I was always coupled on the tote, as it were, with LeisureNet.’
From this it seems clear that the stock exchange listing was taking second place to the
dollar signs erected by the prospects of a deal with Bankers Trust even while Mitchell and
Gardener were pulling the wool over the eyes of Fitco, Moser and Rabie, and added a new
and very profitable motive to the conclusion of the purchase, a matter about which Mitchell
had earlier crowed in his evidence in chief:
‘Mr Mitchell, did you tell him [Rabie] of Bankers Trust’s interest in the off-shore operations of
LeisureNet at the time? --- M’Lord, what I didn’t tell Joubert and again because there was only one
entity that I was focused on, that was to acquire the equity for LI. What I didn’t tell Joubert what our
game plan was apropos that I requested Fitco to put the offer in at 10, not his asking price of 15. I
didn’t tell Joubert what our intention was to perform the classic gazump as soon as we got that
offer down to as low as possible, that we were going to grab it – that’s LI. And what I didn’t tell
Joubert was that I had Bankers Trust effectively in the wings and that the upliftment in value, if
Bankers Trust came in, could be potentially R75 million and that upliftment would fall into
LeisureNet coffers, not Dalmore’s coffers. That’s what I didn’t tell him.’
[44] In the context of all this evidence, when Mitchell said that they ‘had to have’
Germany, it is quite clear that he was speaking at least as much for Gardener and himself
as for International. The purchase of Dalmore and the vast enhancement of the appellants’
personal wealth were inextricably linked. It is in the circumstances wholly at odds with the
evidence to describe the appellants’ conduct as ‘solely for the benefit of [International]’ or
as ‘prejudicial’ to their own interest (as appellants’ counsel did in their heads of argument).
Moreover the size and prominence of the benefits that the appellants stood to gain from
the acquisition (together with their not-insignificant share of the price) render it in the
highest degree unlikely that their own interest in Dalmore was not in the forefront of their
minds during all the events of April and May, including the exco and board meetings on 24
and 26 May respectively. That they gave attention to their own personal interests only after
the meetings is very improbable. Their prompt instructions to Rabie, within days of the
board decision to confirm and fund the acquisition, was all one with the importance of the
deal to them personally. The role that their shares in International played in influencing
the appellants during the relevant period was not referred to by the learned judge in
assessing the probabilities. It serves however as a substantial corroborating factor for his
conclusion.
[45] The effects of disclosure
The possible consequences may be summarised as follows, bearing in mind the
necessary breadth of such disclosure:
Diminution of the appellants’ status in the eyes of the LeisureNet and, probably, its
shareholders.
Inability on the part of the appellants to influence confirmation of the Dalmore
transaction, because they would perforce have been obliged to distance themselves from
any further involvement.
Uncertainty as to whether LeisureNet would be prepared to finance the purchase.
As Mitchell put it, its refusal would ‘shatter’ the deal.
The strong likelihood that LeisureNet or International would take steps to recover
the ‘secret profit’ derived by the appellants from their dealings with Dalmore.
Perhaps most pertinently, the threat which honest disclosure presented to the
appellants’ trouble-free ride ’down the rainbow to the crock of gold’ to adapt Mitchell’s
expressive description.
[46] All the factors mentioned in the previous paragraph were strong disincentives to a
full and candid disclosure of the appellants’ interest in Dalmore. Aside from considerations
of honest dealing and a clear conscience, however, the appellants stood to gain nothing
material from opening the can of worms inherent in disclosure.
[47] The benefit in fact derived from non-disclosure
As the appellants had contemplated before concluding the purchase to Mitchell, within six
months 25% of International had been sold to AIG for a vast profit, and the appellants,
through their holdings in International, duly swelled by the Dalmore acquisition, were able
to share proportionately in the resultant good fortune.
[48] The conduct of the appellants during May and June in relation to the
proceeds of the Dalmore transaction
First, it should be noted that it must at all times have been apparent to the appellants that
Moser would be and was able to liquidate their interest in Dalmore only if LeisureNet made
funds available (for that purpose). Within a week after confirmation of the sale agreement
the appellants had given the necessary instructions for the transfer of their proceeds into
their offshore accounts. Neither suggested in evidence that the sudden availability of the
money came as any surprise to them. On 3 June 1999 Gardener arranged for payment of
£5000 to be paid from his trust in consideration for the 5% interest in International long
previously allotted to him and Mitchell’s instructions followed shortly.
[49] The cumulative effect of all the aforegoing factors provides strong prima facie
reason to conclude that the appellants knew at all material times that disclosure was
required of them but deliberately withheld such disclosure. Whether that is a justifiable
inference can however only be decided after considering the submissions made on their
behalf.
[50] In the appeal the appellants relied upon two major submissions to justify the
contention that their explanations were reasonably true, ie that it had never occurred to
either of them to make disclosure..
A strong credibility finding in favour of both appellants made by the trial judge based
upon their demeanour, candour, consistency and the general impression created by his
observation of the appellants in the witness box.
The overwhelming probability that the appellants were responsible for having
procured the Dalmore shares at a bargain price through their planning and endeavours.
This, it was submitted, was solely for the benefit of LeisureNet and to their own prejudice in
so far as it materially reduced the value (and therefore the proceeds) of their 20% interests
in Dalmore. Reliance was placed on an observation of the learned judge uttered in relation
to the State’s (unsuccessful) application to reserve certain questions of law:
“One can scarcely be intending to defraud anyone (in the sense intended by s 424 of the
Companies Act) if one believes subjectively and on good grounds which turn out to be well-
founded that one is benefitting one’s company in may ways, including financially by entering into a
deal.’
(This observation , if valid, will also be relevant to the existence of an intention to cause
prejudice.)
[51] A credibility finding of the nature in question can never be entirely discounted. It is
however the result of a subjective assessment. Its force in any given case depends upon
the strength and cogency of the objective probabilities opposed to it: the more such
probabilities accumulate the less persuasive it becomes. Moreover demeanour and
(apparent) candour are tricky yardsticks when the very basis of the case is the ability of the
witness successfully to deceive others. To rely unduly on such features may amount to no
more than a demonstration of the expertise of the witness to deceive the judge, a self-
defeating exercise. Such an exercise may also be suspect when the witness is an
experienced public speaker and negotiator, or the issue in dispute is an extremely narrow
one which allows for genuine candour and adherence to the truth in relation to the bulk of a
witness’s testimony. All of these considerations prevailed in this instance. The result is that
the weight of probabilities remains the acid test: are they sufficient beyond a reasonable
doubt to exclude truth from the appellants’ explanations?
[52] That the purchase of the half share in Dalmore for DM 10 million was a bargain and
a coup for LeisureNet was proved many times over. To conclude that that fact establishes
the good faith and selflessness of the appellants is however to look at only one side of the
picture. The other is, cumulatively, this:
The appellants ensured that they were paid out rapidly and without question DM 2
million each for an interest in Dalmore to which they had made no material contribution.
(There was no evidence of the extent to which Moser had used or relied on their names.) If
Dalmore had accepted the Fitco ‘offer’ the benefit of payment would have been subject to
stringent conditions and payment by instalments over several years. There is no
suggestion that the terms of the Fitco offer were ever disclosed to the board of LeisureNet.
Both appellants would of course receive the kudos and increase in personal
standing which necessarily flowed from the coup.
Because both appellants were shareholders in International and substantial
shareholders in LeisureNet, the benefit of the bargain price was also to their advantage.
More significantly, the booming health club industry, Germany as a powerhouse of that
industry and the immensely favourable prospects for expansion in that country, meant that
the LeisureNet acquisition of Dalmore held not only great potential value for LeisureNet
and International but also for their shareholders.
[53] On the evidence, absent the machinations of Gardener and Mitchell, it is very likely
that Moser would have accepted an offer of DM 15 million for his half share in Dalmore, an
acceptance that would have resulted in only a further DM 1 million in the hands of each
appellant. It seems clear that over and above the receipt of the DM 2 million each from the
transaction, the appellants stood to benefit financially in proportion to each financial benefit
which would in the future flow to LeisureNet or International. Taking all these
considerations into account, two conclusions are warranted: first that the sale of the
Dalmore shares to LeisureNet was, seen from the appellants’ perspective of obvious and
substantial benefit to them personally, and their efforts, ostensibly on LeisureNet’s behalf,
were anything but altruistic; second, the fact that the deal resulted in substantial benefits
for LeisureNet provided in itself no reason to conclude that the appellants would not have
intended to deceive LeisureNet by withholding disclosure of their own interests. Indeed,
having regard to the value of the potential returns to the appellants from the sale, they
would have possessed understandable reluctance to make such disclosure if they had
reason to believe either that the deal would thereby be threatened or that the company
might take steps to limit the benefit to them. This last is an aspect I shall return to in the
context of the enquiry into the intention to prejudice LeisureNet.
[54] A further strong inference arises from the unlikelihood that even if one of the
appellants had deliberately or inadvertently failed through the long history of their Dalmore
association to disclose his interest to LeisureNet, the other would have been similarly
unconscious of his responsibilities. The evidence proved that the two appellants operated
LeisureNet in a manner that involved frequent and close co-operation between them. This
was very much the case in relation to international expansion and the running of the
German operation. That both were consistently silent on a matter of such importance to
themselves and their companies was, one is bound to conclude, no coincidence but rather
the result of a premeditated policy.
[55] For the reasons which I have set out I am satisfied that the learned judge was
correct in finding that the probabilities in support of a deliberate withholding of the
existence and nature of the appellants’ interest in Dalmore were overwhelming. It would
in my view be naive in the extreme to believe that the benefits to the appellants
themselves and, therefore, the need to disclose, were relegated or subordinated in their
minds by the close attention paid to consummating and carrying through the sale to
International. The State according proved beyond a reasonable doubt an intention to
deceive the board of LeisureNet.
Actual or potential prejudice to LeisureNet
[56] At the hearing in this Court counsel did not press the absence of prejudice. This
was unsurprising. By failing to declare their interest in Dalmore the appellants-
(a)
precluded LeisureNet from considering the advantages and disadvantages of the
sale uninfluenced by the participation of the appellants;
(b)
precluded LeisureNet from investigating and considering the circumstances under
which that interest was obtained with a view to taking disciplinary steps against the
appellants and/or recovering the whole or part of the profit which the appellants derived or
stood to derive from the sale;
(c)
threatened the relationship built up between the company and the exchange control
authorities;
(d)
induced LeisureNet to raise the finance and pay them for their interest in Dalmore.
In all of these matters there resided a potential for prejudice to LeisureNet.
The intent to cause actual or potential prejudice
[57] As I have previously indicated the withholding of the fact and details relating to their
interest in Dalmore was deliberate and not accidental. It was done to avoid one or more of
the consequences that I have identified. All of those consequences involved the self
interest of the appellants to a substantial degree. They were all the probable result of the
reaction of LeisureNet’s board to the unwelcome news.
[58] However, in considering the intention to cause prejudice, it seems unnecessary to
be more specific as to the nature of that prejudice. When company directors deliberately
withhold information material to the affairs of their company from the board of directors,
there is, in the absence of an explanation for such conduct which may reasonably be true,
an a priori case of fraudulent non-disclosure. That is so because they know that the
company can only make decisions through a board properly informed and that by
withholding proper information they render it both blind and mute. Thus, in such
circumstances, both prejudice and the intention to prejudice are proved beyond doubt. In
the context of the evidence, the appellants deliberately withheld knowledge of their interest
in Dalmore from the board of LeisureNet. They intended the other board members to
believe that no such connection existed. The only purpose in so doing and, therefore, by
necessary inference, the appellants’ intention, can only have been that they feared or
mistrusted the steps which the board, properly informed, might take and intended to
preclude such action. Broadly stated, therefore, the prejudice to LeisureNet caused by
their action was ensuring that the board was deprived of the opportunity to exercise its
judgment in the interest of the company, a consequence of which both appellants were
fully aware.
[59] For all the aforegoing reasons I conclude that there is no merit in the appeal against
the conviction for fraud.
Sentence
[60] The learned judge devoted careful attention to his assessment of the appropriate
sentences. His judgment is criticized on only two substantial grounds. First, counsel
submitted, he overemphasised his view of what society demanded by way of retribution at
the expense of the other elements of sentencing. Second, it is said that he imposed
sentences that were disturbingly inappropriate in the balance of relevant facts.
[61] Uijs AJ was of the view that the appellants had been convicted of ‘an offence
relating to a fraud involving more than R500000 . . . committed in the execution or
furtherance of a common purpose’. Therefore, so he found, the minimum sentencing
legislation applied, carrying a sentence of at least 15 years’ imprisonment in the absence
of a finding of substantial and compelling circumstances. Both parties were ad idem that
such circumstances existed and the learned judge agreed. He referred to the fact that the
appellants were first offenders, had ‘disgorged the profits made by virtue of your short fall
into criminality albeit under some measure of coercion’ and that LeisureNet ‘did not
necessarily lose R12 million because the appellants gained that amount’. Although I
have some reservations about the second and third factors mentioned by the court, I am
prepared to accept that they are substantially accurate.
[62] The learned judge properly explained the balancing process involved in arriving at
an appropriate sentence by reference to well-known authority which it would be
superfluous to repeat here.
[63] As to the nature of the crime he took into account that:
(i)
it involved a serious abuse of trust to the company and the public;
(ii)
it was not committed on the spur of the moment but over a period which provided
many opportunities for reconsideration and disclosure;
(iii)
the amounts involved, R6 million in relation to each appellant, were ‘huge’;
(iv)
the fraud did not actually cause the company to suffer a loss of R12 million;
(v)
the fraudulent actions of the appellants did not lead to the eventual demise of
LeisureNet;
(vi)
repayment of R12 million by the appellants was an indication of remorse and a
punishment.
[64] As I have indicated earlier, it seems to me that LeisureNet, properly informed of the
true facts, would inevitably have been entitled to claim from the appellants at least R12
million as a secret profit made in breach of their fiduciary duty to disclose or to require
them to forfeit their interests in the joint venture to LeisureNet. Nor does it seem correct to
regard the ‘coercive’ payment of R12 million as induced by remorse: not only was there no
indication of acceptance of the error of their ways but the criminal defence has been
pursued to this point on a contention that the company was not prejudiced by such
deception as the appellants may have perpetrated.
[65] As to the interests of society Uijs AJ said that he ‘must impose, at the very least, a
sentence that will satisfy the community . . . I would be failing in my duty unless I give full
weight to what the public out there thinks and expects’. (My emphasis.) In weighing that
interest, as he perceived it, the judge took into account that:
(i)
the appellants had let society down badly;
(ii)
they had taken R12 million from the coffers of a public company;2
(iii)
persons holding office at the helm of public companies should not get off lightly if
they breach their trust;
(iv)
there is a particular societal need to deter white collar crime.
[66] Counsel submitted that the italicized words went too far: the judge had allowed
public opinion to override his own exclusive duty of achieving the balance which he had
earlier espoused. In so doing, it was contended, he misdirected himself.
[67] In R v Karg 1961 (1) SA 231 (A) at 236A-C Schreiner JA said:
‘While the deterrent effect of punishment has remained as important as ever, it is, I think, correct to
say that the retributive aspect has tended to yield ground to the aspects of prevention and
correction. That is no doubt a good thing. But the element of retribution, historically important, is by
no means absent from the modern approach. It is not wrong that the natural indignation of
interested persons and of the community at large should receive some recognition in the
sentences that courts impose, and it is not irrelevant to bear in mind that if sentences for serious
crimes are too lenient, the administration of justice may fall into disrepute and injured persons may
incline to take the law into their own hands. Naturally righteous anger should not becloud
judgment.’
In S v Homareda 1999 (2) SACR 319 (W) at 324b Cloete J pointed out that ‘it is not the
function of the courts slavishly to give effect to public opinion’.
[68] True justice can only be meted out by one who is properly informed and objective.
Members of the community, no matter how closely involved with the crime, the victim or
the criminal will never possess either sufficient comprehension of or insight into what is
relevant or the objectivity to analyse and reconcile them as fair sentencing requires. That is
why public or private indignation can be no more than one factor in the equation which
adds up to a proper sentence and why a court, in loco parentis for society, is responsible
for working out the answer.
[69] It will often happen that a judicial officer, in a bona fide attempt to express one of
the factors in the equation appears to overstate its effect. That applies to the two
2 This seems inconsistent with his earlier finding, but accords more nearly with my own view of the case.
statements which I have emphasised in the court a quo’s reference to the views of the
community. But whether they indeed reflect a misdirection depends on a holistic
consideration of the judge’s treatment of the subject. In this instance he appears to have
meant no more than that society would take it seriously amiss if company directors in the
appellants’ position were treated lightly. He was not suggesting that the community had
implicitly fixed on a sentence of any particular degree of severity or duration in relation to
the appellants. As he had earlier pointed out, the public, ill informed as to the causes of the
liquidation of LeisureNet, had vented its anger on the appellants. In emphasising the
reasons for imprisoning the appellants as ‘paramount’ ‘as far as society is concerned’ he
was making it clear that he too regarded the retributive element as the most important
factor and one which justified a substantial term of imprisonment. In balancing the equation
of accused, crime, retribution/deterrence and rehabilitation/reformation the weight
accorded to each may fairly differ, as each clearly did in the judge’s assessment. Given the
nature of the crime and the circumstances of its commission together with the minimal
degree of remorse expressed by the appellants for their actions, I cannot find that the
learned judge either overemphasised the retributive aspect or allowed it to detract from
according fair weight to the other elements of punishment.
[70] Counsel submitted that the origin of the crime was ‘an innocent acquisition of an
interest in the German operation years prior to the events in question’. This however is a
lop-sided and inadequate reflection of the truth as the earlier part of my judgment makes
clear. The oral agreement with Moser at the end of 1996 gave rise to a conflict with the
appellants’ fiduciary duty to LeisureNet, a conflict that was exacerbated by their part in the
joint venture and which they steadfastly maintained until it became possible for their
Dalmore interests to be turned into money. All the while the wool was being pulled over the
eyes of the board of LeisureNet.
[71] Counsel described the acquisition of a 20 per cent interest in Dalmore by each
appellant as ‘having no obvious value’. But the worth grew exponentially over the next two
and a half years. The growth in the consciences of the appellants unfortunately showed no
comparable advance. However ‘innocent’ the origin the connection between the appellants
and Dalmore, vis-a-viz LeisureNet it became steadily more tainted.
[72] It was further urged on us that Uijs AJ ignored the ‘long and meritorious service to
LeisureNet given by both appellants’. In carrying out a duty that was amply compensated
by direct and indirect benefits I do not think credit of this nature required consideration in
the sentence. In any event the breach of the duty of disclosure extended over a great part
of their otherwise meritorious service to the company.
[73] Counsel finally submitted that the learned judge failed to take account of the mental
anguish endured by the appellants while awaiting their fate over a period of five years. The
pretrial procedures, the trial itself and appeal procedures were lengthy but not unduly so.
Although they did not merit specific mention in the judgment of Uijs AJ there is no reason
to believe that he did not bear those circumstances in mind.
[74] In the result my conclusion is that the learned judge did not misdirect himself in the
respects urged upon us.
[75] There were however other misdirections at the heart of the sentences. The learned
judge apparently regarded 12 years as the appropriate period of imprisonment in respect
of each accused, but he considered it fair to suspend 4 years of that term, in the case of
Gardener, and 5 years in the case of Mitchell. A suspended sentence is generally used as
a weapon of deterrence against the reasonable possibility that a convicted person may
again fall into the same error (or at least one substantially similar). However when the
sentence requires that the accused serve a lengthy period of direct imprisonment (as to
which seven years qualifies easily) that sentence is in itself, a deterrent to recidivism, and
an additional period of suspension serves no purpose. This is the more so when the
person convicted is already of mature years or the circumstances of the crime are peculiar
or unlikely to be repeated, all of which applies to the appellants. Whether the suspension
of a sentence may have a role other than deterrence may be determined by particular
circumstances (see eg s 297(1)(a) and (b)), but it is never, as the learned judge held, ‘also
a form of mercy’.
[76] The second aspect concerns the distinction in sentence between the two
appellants. The learned judge apparently regarded Gardener as having ‘stooped lower’
than Mitchell inasmuch as he had engaged in other nefarious activities while a director of
LeisureNet, viz VAT fraud and insider trading. But he had also been sentenced to
correctional supervision and served his sentence. To distinguish as the learned judge did
was to punish him a second time. That was improper. I can find no valid basis for
distinguishing between the two appellants.
[77] The misdirection in relation to the suspension of part of the sentences leaves us at
large to impose sentences which fit the case. Despite factual differences it seems to me
that there are considerable similarities between this matter and S v Blank 1995 (1) SACR
62 (A) in which a well-to-do high-flying stockbroker was convicted of 48 counts of fraud
arising from a failure to disclose his personal interest in sharedealings to his principal and
his partners and to the Johannesburg Stock Exchange (of which he was a member). The
profits derived from the frauds exceeded R9,75 million of which the accused received
nearly R1,5 million. He pleaded guilty and was sentenced to eight years imprisonment, a
sentence which this Court confirmed on appeal. The benefits to the appellants of their
fraud were potentially greater. They showed little or no remorse. But they were also some
20 years older than Blank. Taking into account all the circumstances of the case, which
have been referred to in this judgment and in the judgment of the court a quo, I am of the
view that a lengthy period of imprisonment was demanded and that 7 years’ imprisonment
sufficiently represents the balance between the competing personal and public interests.
[78] The appeals of both appellants against conviction are dismissed. The appeals of
both appellants against sentence are upheld. The sentences imposed by the Western
Cape High Court are set aside and replaced by the following:
Each accused is sentenced to seven years’ imprisonment.
____________________
J A Heher
Judge of Appeal
APPEARANCES
APPELLANTS:
F van Zyl SC (with him J C Butler SC)
Bernard Vukic Potash & Getz Attorney, Cape Town
Lovius Block, Bloemfontein
RESPONDENT:
R F van Rooyen SC (with him R Valley-Omar)
Director of Public Prosecutions, Cape Town
Director of Public Prosecutions, Bloemfontein
|
Supreme Court of Appeal of South Africa
MEDIA STATEMENT
From:
The Registrar, Supreme Court of Appeal
Date:
18 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.
On 18 March 2011 the Supreme Court of Appeal delivered judgments in two related
appeals of The State v Gardener & Mitchell (Case 253/07) and National Director of
Public Prosecutions v Gardener & Mitchell (Case 582/09).
In case 253/07 the appellants appealed against their convictions for fraud by the Cape
High Court and the resultant sentences of 12 years’ imprisonment (of which four years
were suspended in Gardener’s case and five in Mitchell’s). The appellants were the
joint chief executive officers of LeisureNet Ltd. The fraud alleged against them was an
admitted non-disclosure to the board of the company of a twenty per cent interest
possessed by them in a Jersey company Dalmore Ltd. The failure to disclose took place
during the first half of 1999 at a time when the appellants were negotiating and
concluding an agreement on behalf of a LeisureNet subsidiary (in which they held
shares) for the sale of half the shares in Dalmore to that subsidiary and when the
appellants presented the deal to LeisureNet for confirmation and funding. The
appellants shortly received more than R6 million each from Dalmore pursuant to the
sale and many millions more in consequence of the increase in the value of their shares
in the subsidiary.
At their trial and in the appeal the appellants, while admitting the duty to make
disclosure, claimed that their withholding of the information had not been intentional,
that they had not intended to prejudice LeisureNet and that the company had not
suffered actual or potential prejudice as a result of their silence.
The SCA rejected the arguments. It considered the background facts over several years
and concluded that there was no reasonable possibility that the appellants’ failure to
disclose had been unintentional. Moreover the withholding had been intended to
deprive the LeisureNet board of the ability to reach an informed decision on whether to
approve and fund the purchase. The appellants were not prepared to run the risk that
the transaction would not be approved or that steps would be taken to deprive them of
the very substantial benefits which they would directly and indirectly, derive from the
acquisition by the subsidiary. The convictions for fraud were dismissed.
The SCA also rejected arguments on behalf of the appellants that the trial judge had
accorded undue weight to the supposed public interest in punishing persons in the
position of the appellants. It found however that the imposition of suspended sentences
served no purpose and that no reason existed to distinguish between the appellants in
respect of sentence. In reconsidering the sentences the SCA concluded that seven
years’ imprisonment was the sentence appropriate to each appellant.
In Case 582/09 the NDPP appealed against the refusal by the high court to order a
confiscation order of the proceeds of crime (the fraud) in terms of s 18 of the
Prevention of Organised Crime Act. Although the appellants had paid R6 million each
to the liquidators of LeisureNet in respect of the Dalmore transaction, the SCA held
that the benefits received by the appellants exceeded those amounts. Accordingly a
confiscation order was appropriate in relation to the additional benefits that had not
been repaid. The appeal was upheld. Gardener was ordered to pay R6 583 231,14
increased at the rate of the CPI from 30 June 2007. Mitchell was ordered to pay
R3 594 339,10 increased at the same rate from 30 June 2003.
--ends--
|
530
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 823/2015
In the matter between:
TRAVELEX LIMITED
APPELLANT
and
SEAN MALONEY
FIRST RESPONDENT
GILLIAN MALONEY
SECOND RESPONDENT
Neutral citation: Travelex Limited v Maloney (823/15) ZASCA 128
(27 September 2016)
Coram:
Mpati AP, Tshiqi and Mathopo JJA and Schoeman and
Fourie AJJA
Heard:
17 August 2016
Delivered:
27 September 2016
Summary: Civil procedure: rescission application: based on alleged lack
of jurisdiction of court that granted order of attachment ad fundandam et
confirmandam jurisdictionem: ratio jurisdictionis present: no submission
to
jurisdiction
established.
_____________________________________________________________________
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Teffo J
sitting as court of first instance):
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
___________________________________________________________
JUDGMENT
Schoeman JA (Mpati AP, Tshiqi and Mathopo JJA and Fourie AJA
concurring)
[1] The Gauteng Division, Pretoria refused an application by the
appellant to set aside an order granted at the instance of the respondents
attaching shares owned by the appellant in a company, FX Africa Foreign
Exchange (Pty) Limited (FX Africa), ad fundandam et confirmandam
jurisdictionem. This appeal is with the leave of the court a quo.
Background
[2] On 8 December 2010 the parties entered into an agreement related
to the sale of shares in FX Africa. In terms of the agreement the appellant
purchased the second respondent‟s shares in FX Africa as well as those
shares held by Sanderling Investments Incorporated, a company
incorporated in the Virgin Islands.
[3] The appellant is a peregrinus of South Africa while the respondents
are peregrini of the Gauteng Division, but incolae of South Africa. They
are both permanently resident in the area of jurisdiction of the Western
Cape Division of the High Court.
[4] The respondents, as applicants, brought an urgent application in the
Gauteng Division, Pretoria, on 19 November 2013 for the attachment of
the appellant‟s shares in FX Africa ad fundandam et confirmandam
jurisdictionem. The first respondent claimed locus standi in the Gauteng
Division on the basis that one of the suspensive conditions contained in
the agreement was that he was obliged to deliver to the appellant and FX
Africa his letter of resignation, both as an employee of FX Africa and as a
director of subsidiaries of FX Africa. The application for interim relief
was served on the appellant. Without opposition, but in the presence and
with the acquiescence of the appellant‟s counsel, an interim order was
granted attaching the shares. On the return date, 6 February 2014, the
application was unopposed, but again in the presence and with the
acquiescence of the appellant‟s legal representatives Prinsloo J confirmed
the rule nisi attaching the shares. I will refer to this order as „the initial
order‟.
[5] The attachment preceded an action for damages instituted by the
respondents against the appellant following an alleged repudiation of the
agreement. Two months later the appellant launched the rescission
application, seeking, inter alia, the setting aside of the initial order and the
action that had been instituted.
[6] The application, according to the founding affidavit of Mr Birch, a
director of the appellant, was premised on the fact that the court granting
the initial order did not have jurisdiction to do so. The reason advanced
was that the appellant had submitted to jurisdiction in the agreement and
therefore an attachment order was incompetent and impermissible.
During argument in the court a quo, counsel for the appellant raised a
further issue, namely that there was no ratio jurisdictionis for the initial
order and the subsequent action and that the court should therefore set
aside the initial order and the action.
[7] The respondents answered to the allegation relating to the
appellant‟s alleged submission to jurisdiction, but did not address the
issue of the ratio jurisdictionis of the court. This is because that issue was
not raised in the founding affidavit. The application was dismissed on the
basis that the appellant did not make out a case for rescission on those
grounds, as it should have.
[8] The appellant did not bring the application for rescission in terms
of the common law or the provisions of Uniform rule 42(1)(a) or (c). The
appellant argued that the court that granted the initial order did not have
the necessary jurisdiction to do so, due to the absence of a ratio
jurisdictionis, and that the appellant had in any event submitted to the
jurisdiction of the court.
Issues
[9] The appeal is opposed on three grounds, namely that (a) the
appellant procedurally should have brought the application for rescission
of the initial order either in terms of the common law or the provisions of
Uniform rule 42(1)(a) and (c) and that failure to do so resulted in the
court a quo correctly dismissing the application); (b) a recognised ratio
jurisdictionis existed and the court that granted the initial order therefore
had the requisite jurisdiction; and (c) the appellant had not submitted to
the court‟s jurisdiction.
The procedure in the application for rescission
[10] In dismissing the rescission application, the court a quo did not
consider the appellant‟s arguments that the court that granted the initial
order did not have jurisdiction to do so. Although the judgment mentions
that the appellant based its application on the lack of jurisdiction, no
reference is made in the judgment to the arguments advanced in this
regard or the issue of the absence of jurisdiction. Before us counsel for
the appellant submitted that the rescission application was in any event
unnecessary because the court that granted the initial order lacked
jurisdiction and that the initial order was, therefore, a nullity and could
simply be ignored.
[11] In Campbell v Botha1 Streicher JA quoted with approval the
following passage by Innes CJ in Lewis & Marks v Middel 1904 TS 291
at 303:
„[T]he authorities are quite clear that where legal proceedings are initiated against a
party, and he is not cited to appear, they are null and void; and upon proof of
invalidity the decision may be disregarded, in the same way as a decision given
without jurisdiction, without the necessity of a formal order setting it aside (Voet, 2.
4. 14, and 66; 49. 8. 1 and 3. . . . .
Voet 49:8:3 says:
„But by the customs of today such over stressful and pettifogging discussion on fine
points of law as to whether a decision is ipso jure void, or holds good by strict law
and must be set aside through the remedy of an appeal, has been as far as possible
abolished. The ruling has rather prevailed that decisions are never annulled under
cover of nullity without appealing. There are exceptions when the nullity arises from
a lack of jurisdiction, or of summons or of an attorney’s mandate.‟ (My emphasis.)
1 Campbell v Botha & others [2008] ZASCA 126; 2009 (1) SA 238 (SCA) at 243I-244B.
[12] This was again emphasised in The Master of the High Court (North
Gauteng High Court, Pretoria) v Motala NO & others,2 when Ponnan JA
said:
„As long ago as 1883 Connor CJ stated in Willis v Cauvin 4 NLR 97 at 98 – 99:
“The general rule seems to be that a judgment, without jurisdiction in the Judge
pronouncing it, is ineffectual and null. . . ”
Willis v Cauvin was cited with approval in Lewis & Marks v Middel 1904 TS 291; and
Sliom v Wallach’s Printing & Publishing Co, Ltd 1925 TPD 650. In the former,
Mason J (with whom Innes CJ and Bristowe J concurred) held at 303:
“It was maintained that the only remedy was to appeal against the decision of the
Land Commission; but we think that the authorities are quite clear that where legal
proceedings are initiated against a party, and he is not cited to appear, they are null
and void; and upon proof of invalidity the decision may be disregarded, in the same
way as a decision given without jurisdiction, without the necessity of a formal order
setting it aside (Voet, 2, 4, 14; and 66; 49, 8, 1, and 3; Groenewegen, ad Cod. 2; 41; 7,
54; Willis v Cauvin, 4 N.L.R. 98; Rex v Stockwell, [1903] T.S. 177; Barnett & Co. v
Burmester & Co., [1903] T.H. 30).”‟
[13] The Constitutional Court in MEC for Health, Eastern Cape &
another v Kirland Investments (Pty) Ltd t/a Eye & Laser Institute3
affirmed this approach:
„In The Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO
and Others 2012 (3) SA 325 (SCA) the Supreme Court of Appeal, reaffirming a line
of cases more than a century old, held that judicial decisions issued without
jurisdiction or without the citation of a necessary party are nullities that a later court
may refuse to enforce (without the need for a formal setting-aside by a court of equal
standing). This seems paradoxical but is not. The court, as the fount of legality, has
the means itself to assert the dividing line between what is lawful and not lawful. For
2 The Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO & others [2011]
ZASCA 238; 2012 (3) SA 325 (SCA) at 331J - 332D; See also Vidavsky v Body Corporate of Sunhill
Villas [2005] ZASCA 53; 2005 (5) SA 200 (SCA) para 14.
3 MEC for Health, Eastern Cape & another v Kirland Investments (Pty) Ltd t/a Eye & Laser Institute
[2014] ZACC 6; 2014 (3) SA 481 (CC).
the court itself to disclaim a preceding court order that is a nullity therefore does not
risk disorder or self-help.‟
[14] The respondents argued that even if there was a lack of jurisdiction
in the present matter that did not exonerate the appellant from proceeding
in terms of the rules or the common law. They relied on Bezuidenhout v
Patensie Sitrus Beherend Bpk4 where Froneman J said:
„I could find no support in the cases he [advocate for the applicant] referred to for the
proposition that another court of equal standing could vary or discharge an order for
temporary relief if the court that issued the original order lacked jurisdiction to deal
with the issues it did (but, to be fair, I may have misunderstood the argument).‟
[15] The facts of the instant matter differ markedly from Bezuidenhout.
In that case it was found that the Competition Tribunal did not have the
competence under the Competition Act 89 of 1998 to issue orders in
conflict with pre-existing orders of the relevant division of the high court
which had not been set aside, nor does the tribunal have the competence
under the Act to set aside such orders. The passage from the judgment of
Fronaman J quoted above was in response to counsel‟s contentions and is
of no assistance to the respondents.
[16] I incline to the view that if a judgment or order has been granted by
a court that lacks jurisdiction, such order or judgment is a nullity and it is
not required to be set aside. However, I agree with the view expressed in
Erasmus Superior Court Practice, that if the parties do not agree as to the
status of the impugned judgment or order, it should be rescinded.5 That is
the position in the instant matter where the appellant applied to have the
order set aside on the premise that the court did not have jurisdiction.
4Bezuidenhout v Patensie Sitrus Beherend Bpk 2001 (2) SA 224 (E) at 231H-232A.
5 D E van Loggerenberg and P B J Farlam 2 ed (looseleaf) Vol 1 Erasmus Superior Court Practice.
Section 21 notes.
Therefore, the usual requirements for a rescission application in terms of
the common law or rule 42 do not apply.
Did the court granting the initial order have jurisdiction?
[17] In Ewing McDonald & Co Ltd v M & M Products Co6 the different
bases upon which a court will assume jurisdiction in a claim sounding in
money were discussed. Of relevance to the instant matter is point (c)
which is set out as follows.
„Where the plaintiff is a peregrinus (foreign or local) and the defendant is a foreign
peregrinus both a recognised ratio jurisdictionis as well as an arrest or attachment are
essential. Any arrest or attachment merely ad fundandam jurisdictionem would not be
sufficient. To be sufficient the arrest or attachment must necessarily be one ad
confirmandam jurisdictionem. (Cf Pollak (op cit at 52, 58, 62 - 3); Herbstein and Van
Winsen (op cit at 40); Maritime & Industrial Services Ltd v Marcierta Compania
Naviera SA; NV Scheepsvictualienhandel Atlas & Economic Shipstores Ltd v
Marcierta Compania Naviera SA 1969 (3) SA 28 (D).)‟
This was affirmed as a correct exposition of our law.7
[18] The respondents are incolae of the Western Cape Division of the
High Court and thus local peregrini of the court a quo. The appellant is a
foreign peregrinus. Therefore it is necessary to determine: (a) whether
there was a recognised ratio jurisdictionis, for only if there was a ratio
jurisdictionis would an attachment be competent; and (b) if the court had
jurisdiction then it must be determined whether or not the appellant had
submitted to its jurisdiction.
[19] In the founding affidavit, Mr Birch only referred to the submission
to the court‟s jurisdiction and did not allege a lack of a ratio jurisdictionis.
6 Ewing McDonald & Co Ltd v M & M Products Co 1991 (1) SA 252 (A) at 258E-259B.
7 Siemens Ltd v Offshore Marine Engineering Ltd 1993 (3) SA 913 (A) at 929G-H.
This is understandable, for if the court did not have jurisdiction, then
there could be no valid submission to jurisdiction. However, in the court a
quo and in this court the appellant presented these contradictory
arguments viz that there was no ratio jurisdictionis and that the appellant
had submitted to the jurisdiction of the court. The latter cannot happen
without the former. It is therefore necessary to determine whether there
was a ratio jurisdictionis and only if so, whether the appellant has
submitted to the jurisdiction of the court.
Ratio jurisdictionis for the action
[20] The agreement, which forms the basis of the action, was signed in
Cape Town and Switzerland. The purchase price had to be paid in Cape
Town. The appellant argued that no other performance in terms of the
contract conferred jurisdiction on the court a quo, and as the contract was
not repudiated within the jurisdiction of the court a quo, the court did not
have the necessary jurisdiction to entertain the action or the application
for attachment. The appellant submitted that only the Western Cape
Division had the necessary jurisdiction.
[21] It is the respondents‟ case that this argument is incorrect, as there
were certain performances that had to take place within the area of
jurisdiction of the court. In Veneta Mineraria Spa v Carolina Collieries
(Pty) Ltd8 it was determined that „[b]y prorogation a defendant subjects
his person to the jurisdiction of the Court, but that is not enough. One or
more of the traditional grounds of jurisdiction must also be present.‟.
8 Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd 1987 (4) SA 883 (A) at 890E - 891B; See
also:Gallo Africa Ltd & Others v Sting Music (Pty) Ltd & Others [2010] ZASCA 96, 2010 (6) SA329
(SCA) at para 10.
[22] A court in whose area of jurisdiction a contract must be performed
has jurisdiction, as well as the court in whose area of jurisdiction part of a
contract has to be performed.9
[23] As no evidence was presented in the founding affidavit regarding
the lack of jurisdiction, it is incumbent on the court to rely solely on the
agreement to determine whether or not there is a contractual connection
with the court a quo‟s area of jurisdiction (Is it not of the court that
granted the initial order). The agreement relates to the sale of shares in
FX Africa, which company has both its registered office and principal
place of business in Johannesburg, within the court‟s area of jurisdiction.
The shares are located within the court‟s area of jurisdiction and, in terms
of the agreement, delivery of the share certificates and other
documentation had to take place within the court‟s area of jurisdiction.
The grant of exchange control approval was a suspensive condition of the
agreement and had to be performed within the court‟s area of jurisdiction.
Furthermore, in the event of any of the suspensive conditions not being
fulfilled, the respondents had to pay an amount of R2.2 million into the
appellant‟s bank account in Johannesburg, within the area of jurisdiction
of the court a quo. Although the agreement was not entered into or
payment of the purchase price had to be effected within the court‟s area
of jurisdiction these mentioned facts bring it into the ambit of a „direct
connection‟ to the court‟s area of jurisdiction. Therefore the necessary
ratio jurisdictionis, in my view, did exist.
Submission to the jurisdiction of the court
[24] The correct approach to determine whether the appellant had
submitted to the jurisdiction of the court is to ask if the cumulative effect
9 Roberts Construction Co Ltd v Willcox Bros (Pty) Ltd 1962 (4) SA 326 (A) at 331H-332A.
of the proven facts establish a submission on the balance of
probabilities.10
[25] The respondents argued that any submission by the appellant to the
court‟s jurisdiction would be incompetent, for a peregrinus defendant can
only submit to the jurisdiction of a court of which the plaintiff is an
incola. Therefore any submission by the appellant would have had no
effect because the respondents are also peregrini of the court. They based
this argument on Tsung & another v Industrial Development Corporation
of SA Ltd11 where the following was said:
„The rationale for jurisdiction is often said to be one of effectiveness, and attachment
is historically and logically closely related to this principle; but not only has the
principle of effectiveness been eroded (Forsyth says “it is artificial and conceptual
rather than realistic”), effectiveness is also not necessarily a criterion for the existence
of jurisdiction. In one instance, effectiveness is non-existent, and that is in the case of
submission to jurisdiction (also referred to as prorogation). The reason is this: If a
peregrine defendant has submitted - whether unilaterally or by agreement - to the
jurisdiction of the court of the incola, an attachment or arrest to found or confirm
jurisdiction is not only unnecessary, it is not permitted. (Consent on its own cannot
confer jurisdiction unless the plaintiff is an incola.)‟ (footnotes omitted, my
emphasis).
[26] In the case of a peregrinus defendant, what is additionally required,
with either attachment to found jurisdiction or a submission to
jurisdiction, is „ . . . the link between the cause and the court, a link that is
established when the plaintiff is an incola‟12. As stated in Veneta
Mineraria SPA at 894A-B, if the plaintiff and defendant are both
10 Hay Management Consultants (Pty) Ltd v P3 Management Consultants (Pty) Ltd [2004] ZASCA
116; 2005 (2) SA 522 (SCA) para 13.
11 Tsung v Industrial Development Corporation of SA Ltd [2006] ZASCA 28; 2006 (4) SA 177
(SCA) para 6.
12 Hay Management para 23.
peregrini, submission to jurisdiction by the defendant alone is
insufficient, one or more of the traditional grounds of jurisdiction must
also be present. Therefore if there is a ratio jurisdictionis, although the
plaintiff is not an incola, the appellant was able to submit to the
jurisdiction of the court. This is the only logical conclusion.
[27] Mr Birch stated in the founding affidavit that:
„. . .properly construed, paragraph 17 of the agreement required any dispute to be
resolved finally by way of arbitration and, in the event of a dispute arising, that
written notice thereof be given should any party wish to commence arbitration
proceedings to have the dispute resolved.‟
[28] Clause 17 of the agreement deals with arbitration in the event of
any dispute arising from the agreement. It is argued that in terms of
clause 17.7 of the agreement the appellant submitted to the jurisdiction of
the court and therefore attachment was not allowed.
Clause 17 reads:
„17
ARBITRATION
17.1
Any dispute arising from or in connection with this agreement shall be finally
resolved in accordance with the Rules of the Arbitration Foundation of
Southern Africa (“AFSA”) by an arbitrator or arbitrators appointed by AFSA.
17.2
Any Party shall be entitled to require that a dispute be determined by
arbitration in terms of this 17 by giving written notice thereof to the other
Parties.
17.3
This 17 shall not preclude any Party from obtaining interim relief on an urgent
basis from (or instituting any interdict, injunction or similar proceedings in) a
court of competent jurisdiction pending the decision of the arbitrator.
17.4
The decision of the arbitrator shall be final and binding on the Parties to the
dispute and may be made an order of any competent court at the instance of
any of the Parties to the dispute.
17.5
The Parties hereby consent to the non-exclusive jurisdiction of the South
Gauteng High Court, Johannesburg for the purpose of any interim relief
proceedings referred to in 17.3 and/or making the decision of the arbitrator an
order of court.
17.6
The Parties agree to keep the arbitration including the subject-matter of the
arbitration and the evidence heard during the arbitration confidential and not
to disclose it to any one except for purposes of interim relief in terms of 17.3
and/or an order to be made in terms of 17.4 or, where required by law, a court
of competent jurisdiction or under the rules of any relevant stock exchange,
listing authority or other competent regulatory body.
17.7
The provisions of this 17 -
17.7.1
constitute an irrevocable consent by each of the Parties to any
proceedings in terms hereof and no Party shall be entitled to withdraw
therefrom or claim at any such proceedings that it is not bound by such
provisions;
17.7.2
are severable from the rest of this Agreement and shall remain in effect
despite the termination of or invalidity for any reason of this
Agreement.‟
[29] To determine whether the appellant submitted to the jurisdiction of
the court a quo, it is necessary to interpret the whole document and
specifically clause 17 thereof. Such interpretation should be objective,
starting with the words of the agreement, while keeping in mind that the
interpretation does not occur in stages, but is „essentially one unitary
exercise‟.13
[30] The whole tenor and context of clause 17 is confined to arbitration.
Clause 17.1 determines that any dispute will be resolved by arbitration
while 17.2 requires written notification of arbitration. Clauses 17.3 and
17.5 relate to submission to jurisdiction solely pending the finalisation of
13 Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA
176; 2014 (2) SA 494 (SCA) para 12.
arbitration. It does not deal with an unreserved general submission to
jurisdiction. Clause 17.4 determines that the decision of the arbiter is final
and 17.6 with the confidential nature of the arbitration proceedings and
award. The submission referred to in clause 17.7 is a submission to
arbitration and there is nothing to indicate that the appellant considered
any other legal action.
[31] Apart from the analysis of clause 17 the appellant chose, both in
respect of its physical address and service by facsimile, a London address
and telephone number as its domicilium citandi et executandi. In Hay
Management14 it was found that a foreign company‟s selection of a
domicilium citandi et executandi in South Africa was a significant factor
indicating submission to jurisdiction. By parity of reasoning, the choice
of a foreign domicilium, tends to show that the appellant did not submit
to the jurisdiction of the court.
[32] I am of the view that the cumulative effect of the proved facts does
not, on a balance of probabilities, establish a submission to the
jurisdiction of the court a quo.
Conclusion
[33] It follows that, as the court hearing the application for attachment
ad fundandam et confirmandam jurisdictionem had the requisite
jurisdiction, the application was correctly dismissed, albeit for different
reasons.
[34] The following order is made:
14 Para 14.
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
______________________
I Schoeman
Acting Judge of Appeal
APPEARANCES
For Appellant:
M J Fitzgerald SC
Instructed by:
Bowman Gilfillan, Pretoria
Matsepes, Bloemfontein
For Respondent:
W R E Duminy SC (with him I C Bremridge
SC)
Instructed by:
Ward Ward & Pienaar Attorneys, Pretoria
Symington & De Kok, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
27 September 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Travelex Limited v S Maloney & another (823/15) ZASCA 128 [27 September 2016]
MEDIA STATEMENT
Today the Supreme Court of Appeal (SCA) delivered a judgment whereby the appeal was dismissed
with costs.
The issues before the SCA was (i) whether the appellant procedurally could have brought the
application for rescission of an order ad fundandam en confirmandam jurisdictionem solely on the
alleged lack of jurisdiction of the court granting the order or should the application have been brought
either in terms of the common law or the provisions of Uniform rule 42(1)(a) and (c); and (ii) whether a
recognised ration jurisdictionis existed and the court that granted the initial order therefore had the
requisite jurisdiction and (iii) whether the appellant had not submitted to the court’s jurisdiction.
On 8 December 2010 the parties entered into an agreement related to the sale of shares in FX Africa.
In terms of the agreement the appellant purchased the second respondent’s shares in FX Africa as
well as shares held by Sanderling Investments Incorporated, a company incorporated in the Virgin
Islands. The appellant was a peregrinus of South Africa while the respondents were peregrini of the
Gauteng Division, but incolae of South Africa. They were both permanently resident in the area of
jurisdiction of the Western Cape Division of the High Court. The respondents, as applicants, brought
an urgent application in the Gauteng Division, Pretoria, on 19 November 2013 for the attachment of
the appellant’s shares in FX Africa ad fundandam et confirmandam jurisdictionem. The first
respondent claimed locus standi in the Gauteng Division on the basis that one of the suspensive
conditions contained in the agreement was that he was obliged to deliver to the appellant and FX
Africa his letter of resignation, both as an employee of FX Africa and as a director of subsidiaries of
FX Africa. Without opposition, but in the presence and with the acquiescence of the appellant’s
counsel, an interim order was granted attaching the shares. On the return date, 6 February 2014, the
application was unopposed, but again in the presence and with the acquiescence of the appellant’s
legal representatives the court a quo confirmed the rule nisi attaching the shares. The attachment
preceded an action for damages instituted by the respondents against the appellant following an
alleged repudiation of the agreement. Two months later the appellant launched the rescission
application, seeking, inter alia, the setting aside of the initial order and the action that had been
instituted.
The appellant contended that the court granting the initial order did not have jurisdiction to do so and
that the appellant had submitted to the jurisdiction in the agreement and therefore an attachment
order was incompetent and impermissible. In the court a quo, counsel for the appellant raised a
further issue, namely that there was no ratio jurisdictionis for the initial order and the subsequent
action and that the court should therefore set aside the initial order and the action.
On appeal, the SCA stated that if a judgment or order has been granted by a court that lacks
jurisdiction, such order or judgment is a nullity and it is not required to be set aside. If parties do not
agree as to the status of the impugned judgment or order, it should be rescinded and that was the
position in the instant matter where the appellant applied to have the order set aside on the premise
that the court did not have jurisdiction.
The SCA had to determine: (a) whether there was a recognised ratio jurisdictionis, (for only if there
was a ratio jurisdictionis would an attachment be competent) and (b) if the court had jurisdiction then
it must be determined whether or not the appellant had submitted to its jurisdiction.
The SCA held that in order to determine whether the appellant submitted to the jurisdiction of the
court a quo, it is necessary to interpret the whole document and one of the factors is that the
appellant chose as its domicilium citandi et executandi a foreign domicilium. The SCA found that the
cumulative effect of the proved facts did not on a balance of probabilities establish a submission to
the jurisdiction of the court a quo and the court hearing the application for attachment had the
requisite jurisdiction and correctly dismissed the application, albeit for different reasons.
--- ends ---
|
3302
|
non-electoral
|
2006
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case no: 296/05
In the matter between:
THE STATE
Appellant
and
GERT JOHANNES ROSLEE
Respondent
_______________________________________________________
Coram:
Navsa, Cloete JJA et Cachalia AJA
Date of hearing: 6 March 2006
Date of delivery: 17 March 2006
Summary:
Appeal against sentence by State ─ misdirections ─ sentence shockingly
light ─ minimum sentence provisions ─ approach to be followed ─ sentence set aside and
substituted.
Neutral citation:
This judgment may be referred to as S v Roslee [2006]
SCA 15 (RSA).
_______________________________________________________
JUDGMENT
_______________________________________________________
NAVSA JA
NAVSA JA:
[1] The respondent, Mr Gert Johannes Roslee, premeditated the murder of
his former girlfriend, Elizabeth Magdaleen Minny (Liz-Marie). On Wednesday
29 October 2003, he waited for her in the parental home of her new boyfriend,
Jaco Greyling (Jaco). Whilst he was waiting he was confronted by Jaco’s brother,
Abraham Greyling (Abraham), whom he stabbed to death. A young woman,
Heloise van der Westhuisen (Heloise), accompanied by her three-year-old son
Donovan (Donovan), arrived at the house to deliver biscuits. He stabbed and
killed them both. When Liz-Marie arrived from work he stabbed and killed her. He
stole two cellular telephones which belonged to Abraham and Heloise as well as
Liz-Marie’s cellular telephone, her diary, bank card and money she had in her
possession. He also stole Heloise’s motor vehicle, which he later abandoned.
He was convicted in the Pretoria High Court (Mabuse AJ) on four counts of
murder and two counts of theft. In respect of the murders of Abraham, Heloise
and Donovan (counts 2, 3 and 4), he was sentenced to 15 years’ imprisonment
on each count. In respect of the murder of Liz-Marie (count 5), he received a
sentence of 18 years’ imprisonment. On the two counts of theft, he received a
sentence of 6 and 7 years’ imprisonment respectively. The sentences were
ordered to run concurrently. This amounted to an effective sentence of 18 years
imprisonment.
[2] The State appeals, with the leave of the court below, against the
sentences imposed on counts 2, 3, 4 and 5, on the basis that they are shockingly
and inappropriately light and that they are based on a number of misdirections.
The question to be addressed in this appeal is whether these contentions are
correct.
[3] I will, in due course, refer to material parts of the respondent’s statement
in terms of section 112(2) of the Criminal Procedure Act 51 of 1977 (the CPA) on
the strength of which he was convicted. At this stage it is useful to consider the
facts that emerged from evidence presented by the State in aggravation of
sentence. The accused chose not to testify and led only the evidence of a
psychologist in mitigation of sentence.
[4] For reasons that will become apparent it is necessary to set out the factual
background in some detail.
[5] Liz-Marie was 19 years old at the time of her death. She and the
respondent became romantically involved during 2001 when she was in grade
11. He had left school and was in employment. In February 2003, after she had
matriculated, the relationship was terminated. It was rekindled in April 2003. In
May 2003 they became engaged to be married. The relationship was
tempestuous and, in August 2003, the engagement was called off and Liz-Marie
finally terminated the relationship.
[6] During August 2003 Liz-Marie developed a new love interest, Jaco. He
and Abraham lived with their parents. As Liz-Marie’s relationship with Jaco
developed she went to live with the Greylings after her mother had agreed to it.
Liz-Marie had intended to live on her own in a flat which her mother had hired for
her, but decided against it because of death threats she had received from the
respondent.
[7] Liz-Marie worked as a receptionist for a dentist. According to her mother,
Mrs Helena Pieterse, she was a loving person who served as a role model for
her younger sisters. Mrs Pieterse accepted that the respondent loved her
daughter but did not believe he was obsessed with her. On 8 October 2003 the
respondent visited Mrs Pieterse, to enquire of her whether she thought there was
any hope of Liz-Marie reconsidering her decision to terminate their relationship.
She told him that it was up to Liz-Marie to decide. Her evidence that Liz-Marie
had received several telephonic death threats from the respondent was not
challenged.
[8] According to Mrs Maria Greyling, Jaco and Abraham’s mother, Liz-Marie
and her son were very much in love.
[9] Abraham was 21 years old when he was killed. He was at home at the
fateful time because it was his day off from work. Mrs Greyling was not at home
because she and her husband had errands to run. Upon their return they found
Liz-Marie’s room in a chaotic state. Liz-Marie was on the bed. She had been
gagged and her arms and legs were tied. A ball had been inserted in her mouth.
A meat knife was lying on the ground. Liz-Marie’s body was still warm but she
was dead. She had cuts on her legs and a hole in her chest.
[10] Heloise, a family friend, had come to deliver biscuits (ordered by
Mrs Greyling) when she and Donovan were killed.
[11] Mrs Greyling described Abraham as a son who was a gift from God. He
was very close to her and was sorely missed by the family. As a result of the
murders they could no longer continue to live in the house and were in the
process of selling it. Her husband had been asked to testify but could not face
the trauma that would accompany that exercise.
[12] Mrs Johanna Grobler, Heloise’s adoptive mother, testified. Mrs Grobler
and her husband had adopted Heloise in 1997 and she had been an ‘angel’ to
them. Heloise was 23 years old at the time that she was killed. Donovan was her
only child. Mrs Grobler and her husband could not have children of their own.
According to Mrs Grobler, the impact of Heloise’s death was such that it was as if
she and her husband had been robbed of their own lives. Heloise and Donovan
had been loved by everyone in their family.
[13] The investigating officer, Inspector Doubell, testified. When he first
confronted the respondent concerning the murders, the respondent denied any
involvement. He stated that he loved Liz-Marie too much to have caused her
harm. On 30 October 2003 Doubell was summoned to a hospital in Heidelberg
where he found the respondent threatening to commit suicide. The respondent
was dressed only in a pair of short pants and had cuts on his thigh, both wrists
and his throat. He was wielding a meat knife. After a standoff lasting hours the
police were forced to shoot him in the shoulder to get him to drop the knife.
[14] DNA tests linked a cigarette butt and fragments of nails found at the
murder scene to the respondent and consequently linked him to the offences in
question. Furthermore, blood found on a T-shirt seized by the police from the
respondent was positively identified as Liz-Marie’s blood by way of forensic
testing. Doubell found two knives at the crime scene that appeared to have been
used to commit the murders. One was bloody.
[15] The last witness to testify was Ms Gayle Anne Schmidt, a psychologist.
She first saw the respondent on 13 October 2003 as a patient at Heidelberg
Hospital. He had been referred to her after he had attempted to commit suicide
because he felt he could not live without Liz-Marie. Schmidt consulted with the
respondent on only two occasions, the last being on the day of the murders
before they were committed.
[16] Schmidt recalled the day which Doubell had described, when the
respondent had threatened to kill himself with a knife. She was present when the
respondent stated that he wished to apologise to Liz-Marie’s parents but did not
admit to killing her. He admitted only to killing Abraham. He wanted to tell her
parents that he was sorry about what had happened to her. He also appeared to
be upset because he had read in her diary that she loved a horse more than she
had loved him.
[17] Schmidt testified that, at the time that he was threatening to commit
suicide at Heidelberg Hospital, the respondent did not say what had motivated
him to commit the offences. At that stage he was under stress and was
overwhelmed by thoughts that he described as ‘demons or devils’ in his head.
[18] On the morning of the day on which he committed the murders, when
Schmidt consulted with the respondent, he told her that he had come to terms
with the termination of his relationship with Liz-Marie and was intent on making a
new beginning. He appeared to be wrestling with inner frustration and
aggression. However, when he left, Schmidt was under the impression that he
had indeed come to terms with the termination of his relationship with Liz-Marie.
The respondent told Schmidt that he had spoken to Liz-Marie recently and they
had agreed to be friends.
[19] The day after Liz-Marie’s death Schmidt spoke to the respondent
telephonically. He was tearful and made an appointment to see her later that day.
The appointment was not kept because he was arrested.
[20] The correctness of the post-mortem reports were admitted by the
respondent. In respect of Abraham, the relevant report shows that three stab
wounds were inflicted to the chest, two of which penetrated the lungs. He
sustained a third stab wound to the right shoulder, one wound on the left forearm
and a superficial wound close to the left wrist.
[21] In respect of Heloise, the post-mortem reveals that she sustained multiple
stab wounds. She had been stabbed four times in her chest area and twice in the
left side of her back. From the size of one of the wounds in the left side of her
back it appears to have been a double stab wound. Heloise was also stabbed in
the middle and right side of her back. One of the stab wounds penetrated her
heart. The left lung was pierced twice.
[22] Three-year-old Donovan was stabbed four times. He was stabbed three
times in the chest and once in the back. His heart and left lung were pierced.
[23] Liz-Marie sustained eight stab wounds to the chest. Six wounds
penetrated her right lung. Her heart was pierced. She was stabbed in her right
leg and in her right thigh. All in all, she sustained 14 wounds, four of which were
described as superficial.
[24] In the respondent’s statement in terms of s 112(2) of the CPA, the
following is revealed. He planned to kill Liz-Marie. He had established
telephonically that she had already left work and he intended to get to her home
before she did. The respondent’s encounter with Abraham was unexpected. First
they exchanged harsh words. Then, according to the respondent, Abraham
pushed him from behind as he made his way towards the kitchen door. The
respondent saw a knife which he grabbed and used to stab Abraham in the
chest. Abraham grappled with him and the respondent thereupon stabbed him
several times until he collapsed. At that time Heloise, who had arrived with her
son, started screaming. The respondent attempted to quieten them down.
Heloise and Donovan were both hysterical. He did not hesitate to kill them both.
He did so to prevent them from identifying him. He used black plastic cable to
bind Heloise’s arms and legs to make it look like a robbery. Liz-Marie arrived as
he was cleaning up blood and she started screaming. The respondent forced her
into the bedroom and onto the bed where he stabbed her repeatedly until she
was dead. He removed all her clothing and tied her up with the plastic cables and
an electrical cord. He wanted to create the impression that she had been robbed
and raped.
[25] At the beginning of his statement in terms of s 112(2) of the CPA, the
respondent stated that the termination of his relationship with Liz-Marie ‘het my
verpletter en ek het dag in en dag uit daaroor getob en gebroei’. Immediately
after this he stated that he had decided to kill her but did not provide any
motivation.
[26] Against that background the court below considered the provisions of s 51
of the Criminal Law Amendment Act 105 of 1997 (the Act) which prescribes
minimum sentences for certain offences. Section 51(1)(a) provides that, if a
person is convicted of a murder that was planned or premeditated, that person
shall be sentenced to imprisonment for life. Section 51(3)(a) provides that, if any
court which convicts someone who planned or premeditated a murder is satisfied
that substantial and compelling circumstances exist which justify a lesser
sentence than that prescribed, it shall enter those circumstances on the record of
proceedings and may thereupon impose such lesser sentence.
[27] The court below correctly concluded that the murder of Liz-Marie was
premeditated. Mabuse AJ, however, found that the respondent had murdered her
because of the broken love-relationship and went on to conclude, after referring
to case law, that the emotional trauma brought on by the termination of that
relationship constituted an ‘extenuating circumstance’. In particular, he relied on
S v Rammutla 1992 (1) SACR 564 (BA). The court below did not hold it against
the respondent that he did not testify in mitigation of sentence and held, after
reference to authorities, that extenuating circumstances could be deduced from
the evidence led by the State.
[28] The court below said the following:
‘The court is accordingly satisfied that the evidence by both Liz-Marie’s mother and Gayle
Schmidt proved that the accused killed Liz-Marie because of the broken love-relationship. The
court finds guidance again in the case of S v Rammutla on page 567, where it was stated that “it
has been accepted by our courts that where there has been a love-relationship which has been
broken, the ‘injured’ party may well be so emotionally affected and disturbed that he will resort to
violence resulting in the death of the erstwhile lover. Such an emotional state has been regarded
as an extenuating circumstance.” ’
[29] In respect of the murder of Abraham, Donovan and Heloise, the court
below found that, since the respondent was unaware that they would be on the
scene, those murders could not be said to have been premeditated. The court
below reasoned as follows:
‘[T]he cumulative impact of the accused’s personal circumstances and the conditions that led to
this tragedy can be regarded as substantial and compelling . . . .’
This comprises the court below’s entire reasoning for the sentences imposed in
respect of these three murders.
[30] In my view, the court’s reasoning in respect of the murder of Liz-Marie is
flawed. Her mother stated clearly that she did not regard the respondent as being
obsessed with Liz-Marie. Schmidt testified that, on the morning of the murders,
although wrestling with feelings of frustration, the respondent appeared to have
made peace with the termination of his relationship with Liz-Marie. He told
Schmidt that they were now friends. The respondent himself provided no
motivation for the murder. He chose not to testify in mitigation of sentence. His
statement in terms of s 112(2) of the CPA reflects methodical, rational and
calculating behaviour, not only in respect of the murder of Liz-Marie, but in regard
to the other three murders as well. The relationship with Liz-Marie had been
terminated many weeks before the murders were committed. The court below’s
reliance on the Rammutla case is misplaced. In that matter the murder was not
planned and was committed after violence had been perpetrated against the
accused and occurred in the heat of the moment. The termination of a love-
relationship does not per se constitute a mitigating, extenuating, or substantial
and compelling circumstance. Every case must be carefully considered and
decided on its own facts.
[31] In S v Malgas 2001 (2) SA 1222 (SCA), this court, in considering
‘substantial and compelling circumstances’, stated the following (at 1231A-D):
‘Whatever nuances of meaning may lurk in those words, their central thrust seems obvious. The
specified sentences were not to be departed from lightly and for flimsy reasons which could not
withstand scrutiny. Speculative hypotheses favourable to the offender, maudlin sympathy,
aversion to imprisoning first offenders, personal doubts as to the efficacy of the policy implicit in
the amending legislation, and like considerations were equally obviously not intended to qualify
as substantial and compelling circumstances. Nor were marginal differences in the personal
circumstances or degrees of participation of co-offenders which, but for the provisions, might
have justified differentiating between them. But for the rest I can see no warrant for deducing that
the Legislature intended a court to exclude from consideration, ante omnia as it were, any or all of
the many factors traditionally and rightly taken into account by courts when sentencing offenders.’
[32] Earlier in the Malgas judgment (at 1230E-G), Marais JA said the following
concerning the Act:
‘In what respects was it no longer business as usual? First, a court was not to be given a clean
slate on which to inscribe whatever sentence it thought fit. Instead, it was required to approach
that question conscious of the fact that the Legislature has ordained life imprisonment or the
particular prescribed period of imprisonment as the sentence which should ordinarily be imposed
for the commission of the listed crimes in the specified circumstances. In short, the Legislature
aimed at ensuring a severe, standardised, and consistent response from the courts to the
commission of such crimes unless there were, and could be seen to be, truly convincing reasons
for a different response. When considering the sentence the emphasis were to shifted to the
objective gravity of the type of crime and the public’s need for sanctions against it. But that does
not mean that all other considerations were to be ignored. The residual discretion to decline to
pass the sentence which the commission of such an offence would ordinarily attract plainly was
given to the courts in recognition of the easily foreseeable injustices which could result from
obliging them to pass the specified sentences come what may.’
(Emphasis in the original.)
[33] Although there is no onus on an accused to prove the presence of
substantial and compelling circumstances, it must be so that an accused who
intends to persuade a court to impose a sentence less than that prescribed
should pertinently raise such circumstances for consideration.1 In a given case it
may not be enough for an accused to argue that such circumstances should be
inferred from or found in the evidence adduced by the State. See in this regard
Du Toit et al Commentary on the Criminal Procedure Act at 28-16DD.
[34] The court below did not approach the matter in the manner set out in the
Malgas judgment. It engaged in speculation in favour of the appellant. It did not
1 This is an aspect that trial courts and legal representatives should take into account.
consider whether there were truly convincing reasons for departing from the
prescribed minimum sentence. It did not consider all of the many factors
traditionally and rightly taken into account in the process of sentencing. These
are material misdirections entitling this court to intervene.
[35] To fully appreciate the degree of savagery of the murders, an unpleasant
but necessary exercise is an examination of the post-mortem photographs.
Terrible injuries were inflicted by the respondent. The photograph of three-year-
old Donovan is particularly heart-rending. The total number of stab wounds bear
testimony to the degree of violence and callousness. The murders have had a
devastating effect on relatives of the victims, not least because of the manner in
which they were carried out. The public requires effective sanctions against the
perpetrators of such savagery.
[36] The court below’s scant treatment of the circumstances surrounding the
murders of Abraham, Heloise and Donovan is regrettable. Heloise and Donovan
were murdered to prevent them from identifying the respondent. It is true that
their murders were not planned. However, the post-mortem photographs and
reports show the savage nature of the attack on a young woman and her three-
year-old child who were defenceless. The respondent was an intruder in
Abraham’s home. He was entitled to resist the intrusion. In his statement in terms
of s 112(2) of the CPA the respondent describes how he murdered Abraham:
‘. . . Ek het ‘n mes, een van ‘n stel wat op ‘n kas gelê het, gegryp, omgedraai en die gesegde
Abraham Greyling in die bors gesteek. Dit het hom nie gestuit nie en hy het gepoog om my vas te
gryp. Ek het hom verskeie steekwonde toegedien totdat hy skielik inmekaar gesak het. Deurentyd
het ek geweet en besef dat ek hom kan dood deur hom aldus so met die mes te steek, maar ek
het nie omgegee nie.’
Abraham’s murder was wanton. In respect of these three murders, the court
below did not properly consider the seriousness of the offence and did not pay
sufficient attention to the community interest. Maintaining the sentences imposed
by the court below in respect of any one of the murders committed by the
respondent, would, in my view, bring the administration of justice into disrepute.
The State’s contentions as set out in para [2] above are fully justified.
[37] In respect of the murders of Abraham, Heloise and Donovan, and
considering the seriousness of the offence, the personal circumstances of the
respondent, including his relative youthfulness (he was approximately 24 years
old at the time of trial) and the community interest, as well as the factors referred
to earlier in this judgment, it appears to me that in respect of each of these
murders a sentence of 20 years’ imprisonment is justified.
[38] For all the reasons stated above, the appeal is upheld. In respect of
counts 2, 3, 4 and 5, the sentence of the court below is set aside and substituted
as follows:
‘1
On counts 2, 3 and 4, the accused is sentenced to 20 years’ imprisonment in respect of
each count.
2.
In respect of count 5, the accused is sentenced to life imprisonment.’
_________________
M S NAVSA
JUDGE OF APPEAL
CONCUR:
CLOETE
JA
CACHALIA AJA
|
Supreme Court of Appeal of South Africa
MEDIA SUMMARY – JUDGMENT DELIVERED IN SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
17 March 2006
Status:
Immediate
Please note that the media summary is intended for the benefit of
the media and does not form part of the judgment of the Supreme
Court of Appeal
On 17 March 2006 the Supreme Court of Appeal handed down
judgment in The State v Gert Johannes Roslee setting aside
sentences imposed by the Pretoria High Court on the basis that
there were a number of misdirections and that the sentences were
shockingly light.
On 29 October 2003, Mr Gert Johannes Roslee, the respondent,
murdered his former girlfriend, 19-year-old Elizabeth Magdaleen
Minny. Whilst waiting for her he murdered her new boyfriend’s 21-
year-old brother, Abraham Greyling, as well as a 23-year-old
woman, Heloise van der Westhuizen and her three-year-old son,
Donovan van der Westhuizen.
The Pretoria High Court had sentenced Roslee to an effective
18 years’ imprisonment for all the murders.
This court held that the trial court had erred in not imposing the
minimum prescribed sentence of life imprisonment for the
premeditated murder of Elizabeth Magdaleen Minny. It held further
that the trial court erred in respect of the sentences imposed for
the other three murders by not properly considering the
seriousness of the offences and by not sufficiently taking into
account the community interest. This court held that maintaining
the sentences imposed by the trial court in respect of any one of
the murders committed by the respondent would bring the
administration of justice into disrepute.
In respect of the murders of Abraham, Heloise and Donovan the
sentences were increased from 15 years’ imprisonment to 20
years’ imprisonment on each count.
--ends--
|
3042
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case Nos: 20043/2014 & 229/2014
In the matter between:
DENISE CINDY-LEE JANSEN FIRST APPELLANT
MARCO RUDOLF BARNARD SECOND APPELLANT
and
THE STATE RESPONDENT
Neutral citation: Jansen v The State (20043/14 & 229/14) [2015] ZASCA 151
(2 October 2015)
Coram:
Maya DP, Theron and Mathopo JJA
Heard:
9 September 2015
Delivered:
2 October 2015
Summary: Criminal Procedure ─ Plea and sentence agreements in terms of s
105A of the Criminal Procedure Act 51 of 1977 ─ trial court erred in imposing
a sentence contrary to that contained in the plea agreements without advising
the State and the accused that it was of the opinion that the proposed sentence
was unjust as contemplated in s 105A(9) of the Act.
___________________________________________________________________________
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Webster J
sitting as court of first instance):
1. The appeal is upheld.
2. The convictions and sentences are set aside.
3. The matter is remitted to the Gauteng Division of the High Court, Pretoria for
trial de novo before another judge.
JUDGMENT
Mathopo JA (Maya DP and Theron JA concurring):
[1] The question for determination in this appeal is whether a trial court may
deviate from a plea and sentence agreement presented to it in terms of s 105A of
the Criminal Procedure Act 51 of 1977 (the Act), without advising the parties
that it was of the opinion that the proposed sentence is unjust.
[2] In the Gauteng Division of the High Court, Pretoria (Webster J), the first
appellant, Ms Denise Cindy-Lee Jansen (Ms Jansen), pleaded guilty to charges
of murder and child abuse in terms of s 305(3)(A) read with ss 1 and 305(6) of
the Children‟s Act 38 of 2005, the Children‟s Act (child abuse or neglect). The
second appellant, Mr Marco Rudolf Barnard (Mr Barnard), pleaded guilty to
culpable homicide. These pleas were in terms of their plea and sentence
agreements concluded with the State (the agreements). Attached to the
agreements were the plea explanations which fully set out the factual and legal
bases of the said pleas. Other documents forming part of the agreements were
the post mortem report and relevant information relating to the appellants‟
mitigating and aggravating factors.
[3] It is necessary to briefly set out the relevant background, which was
undisputed, leading to the charges being preferred against the appellants. On 4
March 2014 the appellants, who lived together as husband and wife and were
legally represented, were arraigned in the high court, inter alia, on the charges
mentioned above. They were alleged to have assaulted Ms Jansen‟s two minor
children from a previous relationship, five year old Anthony Jansen (deceased)
and his older brother Stefan Erasmus, on numerous occasions, and subsequently
causing Antony‟s death. The assaults were, inter alia, committed by hitting the
children with various objects including a belt, wooden stick, by burning them
with cigarettes. They were also alleged to have failed to provide them with
proper food and medical care. The deceased had also been locked indoors for
prolonged periods.
[4] In terms of the agreement, Ms Jansen agreed to be sentenced to 18 years‟
imprisonment for count 1 (murder) and 3 years‟ imprisonment in respect of
count 2 (child abuse). The sentences would be served concurrently with the
result that she would serve an effective sentence of 18 years‟ imprisonment.
Barnard agreed to be sentenced to 12 years‟ imprisonment for culpable
homicide, conditionally suspended for five years.
[5] At the beginning of the trial, the prosecutor, acting in terms of s
105A(4)(a),1 informed the judge that the State and the defence had concluded
1 Section 105A(4)(a) reads:
„The prosecutor shall, before the accused is required to plead, inform the court that an agreement contemplated
in subsection (1) has been entered into and the court shall then─
(i) Require the accused to confirm that such an agreement has been entered into; and
plea and sentence agreements. The prosecutor advised the court that the formal
requirements placed upon the State in terms of the Act, had been complied with.
These requirements included consultation with the investigating officer and the
family of the deceased and the protection of the appellants‟ constitutional rights
to a fair trial. In particular, he advised the court that the appellants‟ rights to
remain silent, to be presumed innocent and not give incriminating evidence
were safeguarded.
[6] The prosecutor then read the contents of the agreements into the record.
Thereafter, the charges were put to each appellant. The prosecutor explained to
the court that four of the charges against the first appellant were being
withdrawn with the result that she was only facing the charges of murder and
child abuse. The court was advised that the State only intended proceeding with
the charge of child abuse against the second appellant. The court then put
questions to the appellants in order to ascertain whether they understood the
charges against them and the contents of the agreements and that they had
entered into the agreements freely and voluntarily. After confirming their pleas,
the trial judge handed down a brief judgment in terms of which he convicted the
appellants in accordance with the agreements.
[7] Counsel for the State and the appellants addressed the court in respect of
sentence. They both submitted that the sentences proposed in the agreements
were just and urged the court to impose such sentences. It appears from the
record that the judge indicated he needed time to consider an appropriate
sentence as „this is a very serious offence and one which has resulted in the loss
of a very young life‟. The matter was adjourned, at the instance of the judge, to
6 March 2014.
(ii) Satisfy itself that the requirements of subsection (1)(b)(i) and (iii) have been complied with.‟
[8] On 6 March 2014, the court delivered its judgment on sentence. In this
judgment the court had regard to the nature of the offences, stating that these
crimes would „shock society‟. The court also noted the purpose of sentence and
that „the court has to determine what the appropriate sentence is‟. The court
expressed the view that it „is as a rule not bound by‟ pleas and sentence
agreements and:
„In determining an appropriate sentence the court has to take into account . . . the personal
circumstances of the accused. The court must take into account the gravity of the sentence
and interests of society. The court is of the considered view that the agreed sentence will be
considered as being extremely light by the majority of the members of society.‟
[9] Contrary to the sentences proposed in the agreements the trial court
imposed the following sentences on Ms Jansen:
Counts 1 and 2 were taken together for purposes of sentence. She was sentenced
to fifteen (15) years imprisonment of which three (3) years are suspended for a
period of five (5) years on condition that she is not convicted of a crime of
which violence is an element.
Mr Barnard was sentenced to fifteen (15) years imprisonment of which three (3)
years were suspended for a period of five (5) years on condition that he is not
convicted of a crime of which violence is an element.
[10] The sentences imposed by the trial judge differed materially from those
proposed by the parties. Ms Jansen would receive an effective six years‟
imprisonment less than what was proposed. On the other hand, Mr Barnard
would receive an effective sentence of two years‟ imprisonment more than what
was proposed in the agreement.
[11] Dissatisfied with this, the appellants applied for leave to appeal from the
trial judge. The State also applied for the reservation of a question of law in
terms of s 319 of the Act in the following terms:
„Was it permissible for the trial court, in dealing with a section 105A of Act 51 of 1997 plea
and sentence agreement, to proceed to impose sentences differing from the sentences
proposed by the prosecution and the defence in the written agreement, without informing the
prosecution and the defence that the court is of the view that the proposed sentence is unjust
as contemplated in section 105A(9)(a) of Act 51 of 1997.‟
[12] The trial judge granted leave to appeal to this court and reserved the
question of law for decision on appeal. The present appeal is in essence
confined to the question of law thus reserved.
[13] Before us it was contended on behalf of both sides that the trial court
committed a number of fundamental irregularities. He failed to comply with the
provisions of s 105A(9)(a) by not informing the parties that he was of the view
that the sentence agreements were unjust, and neglected to inform them of the
sentences which he considered just.
[14] Counsel for the State submitted that the trial court should first have
determined whether the sentences they proposed were just before convicting the
appellants. Failure to do so, so it was argued, resulted in the parties not being
able to exercise their options in terms of s 105A(9)(b).
[15] The parties differed only in respect of the remedy which this court should
grant. The State contended that we have enough material before us to impose
sentence. It was argued, inter alia, that the appellants would be prejudiced if the
matter starts de novo whilst the appellants sought a remittal of the matter to the
trial court to afford them an opportunity to commence proceedings de novo.
[16] The purpose of the plea bargaining process is to afford the parties, in
advance, an opportunity to make an informed decision regarding whether to
agree to and abide by the agreement. This process entails consultation with all
the people involved in the offence, the accused, the complainant, the victim and
stakeholders which the prosecution deem relevant for the proper determination
of the sentence. Evidently, once plea negotiations are entered into and, in the
spirit of transparency, the accused will make his defence known to the State
which will, in turn, make available the contents of its dockets to the accused. In
that way both parties will have a fair idea of each other‟s case. The negotiations
are conducted in the spirit of give and take the accused will make certain
concessions and if the State is satisfied with his explanation, it will then accept
the negotiated plea on the basis of the available facts. There is no doubt that a
properly negotiated plea will yield a result which is transparent to all the
stakeholders and one that is in the interests of justice.
[17] It is in the interests of justice that the plea bargaining mechanism
contemplated in s 105A(1) should be encouraged. See S v Esterhuizen &
others.2 In S v Saasin & others3 Majiedt J had occasion to pronounce on the
purpose of this legislation. He said:
„This particular provision has as its objective victim participation in the plea bargaining
process. To my mind this is an absolutely essential cog in the machinery of plea bargaining
and plea agreements ─ it lends legitimacy and credibility to the process. As Du Toit et al,
Commentary on the Criminal Procedure Act, correctly observe at 15-11, it not only
accommodates the personal interests of the victim, but also serves the broader interests of the
criminal justice system and society. The following view expressed by Bekker in 1996 CILSA
168 at 209 is apposite:
“The other interests advanced by giving the victim a right to participate in the plea bargain
are society‟s interests. Society benefits from victim participation in plea bargains in two
ways. The first is that according to the victim the right to participate will result in more
2 S v Esterhuizen & others 2005 (1) SACR 490 (T).
3 S v Saasin & others [2003] ZANCHC 44 para 11.4.
information being provided to the decision-maker. The second benefit which accrues to
society from victim participation in plea bargains is that it promotes the effective functioning
of the criminal justice system. The theory is that if victims are not consulted regarding the
plea bargain and so feel irrelevant and alienated, they will not cooperate in reporting and
prosecuting a crime. As a result, the system, which is dependent on them, functions less
effectively. Therefore, making victims feel their contribution is critical, regardless of its
actual value, will motivate the victim to continue to report crime and cooperate in its
investigation and prosecution.”
Affording victims a say in the plea bargaining process furthermore enhances transparency
and lends credence to the adage that justice must manifestly be seen to be done.‟
[18] Where a court is of the opinion that the sentence is unjust, ss 9(a) and (b)
of the Act are triggered. The provision of s 105A(9)(a)-(d) of the Act read as
follows:
„9(a) If the court is of the opinion that the sentence agreement is unjust, the court shall inform
the prosecutor and the accused of the sentence which it considers just.
(b) Upon being informed of the sentence which the court considers just, the prosecutor and
the accused may─
(i) abide by the agreement with reference to the charge and inform the court that,
subject to the right to lead evidence and to present argument relevant to sentencing,
the court may proceed with the imposition of sentence; or
(ii) withdraw from the agreement.
(c) If the prosecutor and the accused abide by the agreement as contemplated in paragraph
(b)(i), the court shall convict the accused of the offence charged and impose the sentence
which it considers just.
(d) If the prosecutor or the accused withdraws from the argument as contemplated in
paragraph (b)(ii), the trial shall start de novo before presiding officer: Provided that the
accused may waive his or her right to be tried before another presiding officer.‟
[19] Under this provision the parties have an election. The court must first
inform the prosecutor and the accused of the sentence that it considers just.
Upon being informed of the sentence which the court considers just, both
parties may decide to abide by the agreement subject to the right to lead
evidence and to present argument relevant to sentencing or withdraw from the
agreement. If both parties decide to abide by the agreement after being advised
by the trial court that it intends imposing a different sentence to the one agreed
upon, the court will be at large to impose a sentence which it considers just. In
that event the parties cannot then complain that they have been prejudiced
because they would have been given adequate notice. As soon as the trial judge
formed the view that the sentences proposed in the plea agreements were unjust,
he should have so informed the parties and also of the sentence he considered
just, at the outset of the trial. This would have afforded them an opportunity to
consider their options. This is especially so because after convicting them, there
is nothing that they could do save to appeal the decision. They were thus denied
the option of making an informed choice.
[20] This approach is clearly contrary to the objectives of the Act. In S v
Solomons4 para 11, Moosa J held as follows:
„The purpose of making such information known is to enable the parties to make an informed
choice whether to abide by the plea-bargaining process or to resile therefrom. The failure on
the part of the presiding officer to do so, in my view, constituted non-compliance with the
peremptory provisions of subsection 105A(9)(a).‟
For all the abovementioned reasons the appeal must be upheld and the answer to
the question of law is that the high court was wrong as indicated above.
[21] The question that I now turn to, as mentioned in para 15 above, is
whether the above misdirection constituted vitiating irregularity warranting that
this court should set aside the proceedings and order a retrial or implement the
original agreement between the parties. Counsel for the State urged us to follow
the latter course. He submitted that a retrial would prejudice the appellants as
4 S v Solomons 2005 (2) SACR 432 (C) para 11.
they would lose their privileges as sentenced prisoners. Furthermore, that the
family of the deceased would also be prejudiced because they would have to
attend the new proceedings. In the alternative he argued that since the appellants
are only attacking the sentences imposed, this court can invoke the provisions of
s 322(1) of the Act5 and substitute the order of the high court on appeal for the
plea and sentence agreements. I do not agree.
[22] The provisions of s 105A(6)(a) of the Act are clear and peremptory. The
section states that the court shall question the accused to establish whether:
„(i) he or she confirms the terms of the agreement and the admissions made by him or her in
the agreement;
(ii) with reference to the alleged facts of the case, he or she admits the allegations in the
charge to which he or she has agreed to plead guilty; and
(iii) the agreement was entered into freely and voluntarily in his or her sound and sober
senses and without having been unduly influenced.‟
A trial court is best suited to determine whether or not an accused admits the
correctness of the charge and any allegations contained therein. This process
includes ensuring that the accused understands the charge he is facing and that
he entered into the agreement freely and voluntarily whilst in his sound and
sober senses. This obviously necessitates the leading of evidence which cannot
be done by the appellate court. Accordingly the submission that remitting the
matter to the high court will cause delay and prejudice to the appellants and
5 It provides:
„322 Powers of court of appeal
(1) In the case of an appeal against a conviction or of any question of law reserved, the court of appeal may-
(a) allow the appeal if it thinks that the judgment of the trial court should be set aside on the ground of a wrong
decision of any question of law or that on any ground there was a failure of justice; or
(b) give such judgment as ought to have been given at the trial or impose such punishment as ought to have been
imposed at the trial; or
(c) make such other order as justice may require: Provided that, notwithstanding that the court of appeal is of
opinion that any point raised might be decided in favour of the accused, no conviction or sentence shall be
set aside or altered by reason of any irregularity or defect in the record or proceedings, unless it appears to the
court of appeal that a failure of justice has in fact resulted from such irregularity or defect.‟
family members cannot prevail. The matter should be remitted to the trial court
de novo before another presiding officer.
[23] I therefore make the following order:
1. The appeal is upheld.
2. The convictions and sentences are set aside.
3. The matter is remitted to the Gauteng Division of the High Court, Pretoria for
trial de novo before another judge.
______________
R S Mathopo
Judge of Appeal
Appearances
For Appellant:
L A van Wyk
Instructed by:
Combrink Kgatshe Inc, Rustenburg
Symington & De Kok, Bloemfontein
For Respondent:
P W Coetzer
Instructed by:
Director of Public Prosecutions, Pretoria
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
2 October 2015
STATUS
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
Jansen v The State (20043/14 & 229/14) [2015] ZASCA 151 (2 October 2015)
The Supreme Court of Appeal (SCA) today handed down judgment in a criminal appeal regarding
plea and sentence agreements concluded in terms of s 105A of the Criminal Procedure Act 51 of
1977 (the Act).
Ms Denise Cindy-Lee Jansen (Ms Jansen) and Mr Marco Rudolf Barnard (Mr Barnard) the first and
second appellants respectively, who had lived together as husband and wife entered into a plea and
sentence agreement in terms of which they pleaded guilty to charges of: murder, child abuse (Ms
Jansen) and culpable homicide (Mr Barnard). These charges related to numerous incidents of child
abuse and assaults on Ms Jansen’s two minor children and for causing the death of one of them.
In terms of the agreement presented at the trial, Ms Jansen agreed to be sentenced to 18 years’
imprisonment for murder and 3 years’ imprisonment for two counts of charges of child abuse to be
served concurrently for an effective imprisonment term of 18 years; whilst Mr Barnard agreed to be
sentenced to 12 years’ imprisonment for culpable homicide, two years of which were suspended for a
period of 5 years on condition that he is not found guilty of committing an offence in which violence is
an element during the period of suspension – for an effective imprisonment term of ten years.
The trial court (Webster J of the Gauteng Division of the High Court, Pretoria) imposed different
sentences to those agreed to by the appellants and State in the plea and sentence agreement without
advising the parties that the agreed sentence was unjust as contemplated in s 105A of the Act. The
appellants applied for leave to appeal against sentence and the State requested the court to reserve
the question of law – whether it is permissible for the trial court to impose sentences differing from
those proposed in the plea and sentence agreement without informing the prosecution and defence if
the court was of the view that the proposed sentence is unjust in terms of s 105A(9)(a) of the Act.
On appeal, it was contended that the trial judge inter alia failed to inform the parties that he
considered the sentence to be unjust and neglected to afford them the opportunity to exercise their
options in terms of s 105A(9)(a)-(b) of the Act.
The SCA held the trial court must first consider the agreed sentence prior to convicting an accused
person and that this process entails an examination of the indictment, the accused’s right to be
presumed innocent, and the right to remain silent and not to give self-incriminatory evidence – all of
which are constitutional rights that afford the accused the right to withdraw from the agreement
should he or she wish to do so without any adverse inference or finding against him or her. The Court
held that it is also the duty of the trial court to satisfy itself that there was compliance with the
requirements of s 105A(1)(a) of the Act.
The SCA further held that where a court is not satisfied about the justness of the sentence
subsec (9)(b)(i) of the Act triggers in. However before invoking the provisions of this subsection, the
parties must first be afforded an opportunity to withdraw from the agreements. If both parties decide
to abide by the agreement despite being advised by the trial court that it intends imposing a different
sentence to the one agreed upon, then the court will be at large to impose a sentence which it
considers just. As soon as the trial judge formed the view that the sentences proposed in the plea
agreement were unjust, he should have so informed the parties at the outset of the trial. This would
have afforded them an opportunity to consider their options, importantly whether they wished to
withdraw from or continue with the agreement. This is especially so because after convicting them,
there is nothing that they could do save to appeal the decision. The SCA found that the appellants
were thus denied their fundamental right to be heard.
The SCA held that The provisions of s 105A(6)(a) of the Act are clear and peremptory. Only a trial
court can determine whether or not an accused admits the correctness of the charge and any
allegations contained therein. For these reasons, the matter should be remitted to the trial court for
hearing afresh before another judge.
The SCA accordingly set aside that convictions and sentences imposed by the trial court and remitted
that matter to the Gauteng Division of the High Court, Pretoria for a trial afresh.
--- ends ---
|
3722
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 144/2021
In the matter between:
THE CITY OF CAPE TOWN
APPELLANT
and
THE SOUTH AFRICAN
HUMAN RIGHTS COMMISSION
FIRST RESPONDENT
THE HOUSING ASSEMBLY
SECOND RESPONDENT
BULELANI QOLANI
THIRD RESPONDENT
THE ECONOMIC
FREEDOM FIGHTERS
FOURTH RESPONDENT
THE PERSONS WHO CURRENTLY
OCCUPY ERF 544, PORTION 1,
MFULENI
FIFTH RESPONDENT
THE MINISTER OF HUMAN
SETTLEMENTS
SIXTH RESPONDENT
THE MINISTER OF
COOPERATIVE GOVERNANCE
& TRADITIONAL AFFAIRS
SEVENTH RESPONDENT
THE NATIONAL COMMISSIONER
OF THE SOUTH AFRICAN
POLICE SERVICE
EIGHT RESPONDENT
THE MINISTER OF POLICE
NINTH RESPONDENT
WESTERN CAPE PROVINCIAL
COMMISSIONER
TENTH RESPONDENT
Neutral Citation: City of Cape Town v The South African Human Rights
Commission (Case no 144/2021) [2021] ZASCA 182 (22 December 2021)
Coram: MATHOPO, SCHIPPERS, NICHOLLS, MBATHA and
MABINDLA-BOQWANA JJA
Heard:
15 November 2021
Delivered: This judgment was handed down electronically by circulation
to the parties’ legal representatives by email, publication on the Supreme
Court of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be have been at 14h00 on 22 December 2021.
Summary:
Civil Procedure – appealability of interim orders – not
appealable when subject to alteration by high court – exception is where
grave injustice would occur – claim for compensation final in nature –
cannot be granted in interim proceedings
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town
(Meer and Allie JJ concurring):
1. The appeal against paragraphs 1- 4 of the order of the court a quo
is dismissed with costs, including the costs of two counsel.
2. The appeal against paragraph 5 of the order of the court a quo
succeeds. The order is set aside and replaced with the following:
‘The second intervening party’s claim against the first respondent
for the return of all building material and personal possessions,
seized by the its Anti Land Invasion Unit, alternatively, to
provide each household with equivalent building materials and to
pay each occupant R2000 as compensation for loss of personal
possessions, is dismissed.’
JUDGMENT
Nicholls JA (Mathopo, Schippers, Mbatha and Mabindla-Boqwana
JJA concurring)
[1] This is an appeal against an interim order granted by the Western
Cape Division of the High Court, Cape Town (high court). South Africa,
like most countries in the world, declared a national state of disaster due to
the Covid-19 pandemic. During the period 26 March – 30 April 2020, the
country was under a ‘hard lockdown’ in terms of section 23(1)(b) of the
Disaster Management Act 57 of 2002, followed by various levels of
lockdown, which persist until today. Regulations in terms of the Act
severely curtailed evictions.1 In July 2020, a video recording of a naked
man (later identified as Mr Bulelani Qolani) being dragged out of his
dwelling in an informal settlement by officials of the City of Cape Town,
went viral on social media platforms.
[2] These events prompted the South African Human Rights
Commission (the SAHRC) together with Mr Qolani and the Housing
Assembly – a social justice movement, to launch an urgent application in
the high court. In essence, the relief sought was aimed at preventing the
City of Cape Town (the City) from evicting persons and demolishing
structures, whether occupied or unoccupied, during the national state of
disaster, without a court order. This was couched as interim relief (Part A
of the notice of motion) pending a decision on Part B which primarily dealt
with the constitutionality of the City’s conduct and its Anti-Land Invasion
Unit (ALIU) which carried out the evictions and demolitions. Further relief
sought in Part B was whether the defence of counter-spoliation permitting
the eviction from, and demolition of, a structure whether occupied or
unoccupied, was constitutional and valid in terms of the law.
[3] At the commencement of the hearing in the high court, the Economic
Freedom Fighters (EFF) and the occupiers of Erf 544, Mfuleni
(the Occupiers) were granted leave to intervene as interested parties. Apart
from supporting the SAHRC and others, they sought additional relief that
1Regulation 36(1) of the Alert Level 3 Regulations Government Gazette No: 43364 GN 608 which
applied from 1 June 2020 provided that:
‘(1) Subject to sub-regulation (2), a person may not be evicted from his or her land or home during the
period of Alert Level 3 period.
(2) A competent court may grant an order for the eviction of a person from his or her land or home in
terms of the provisions of the Extension of Security of Tenure Act, 1997 (Act no 62 of 1997) and the
Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, 1998 (Act No 19 of 1998)
. . .’
the City return all building materials and personal possessions seized from
them, alternatively, provide each household, whose dwelling had been
destroyed, with the equivalent building materials and that each occupant of
the property be paid R2000 as compensation for the loss of their personal
possessions.
[4] Judgment in the urgent application, Part A, was handed down on
25 August 2020 in the high court (per Meer and Allie JJ). The court a quo,
applying a purposive interpretation of the Prevention of Illegal Eviction
from and Unlawful Occupation of Land Act 19 of 1998 (PIE), granted the
interim relief sought, pending the determination of Part B. The orders
sought by the intervening parties were also granted, subject to minor
amendments.
[5] The City applied for leave to appeal the interim orders to the
high court which was refused. The appeal is with the leave of this Court.
[6] The City is the appellant before this Court; SAHRC is the first
respondent; the Housing Assembly is the second respondent; Mr Bulelani
Qolani is the third respondent; the fourth respondent is the EFF and the
Occupiers are the fifth respondents. The sixth to tenth respondents are the
Minister of Human Settlements, the Minister of Co-operative Governance
and Traditional Affairs, the Minister of Police, National Commissioner of
Police, the Western Cape Provincial Commissioner of Police, respectively.
These state respondents have not participated in the appeal and have
elected to abide by the decision of the Court. Any appeal relating to the
conduct of the police is accordingly abandoned.
[7] The hearing of Part B spanned seven days of argument and was
finalised on 5 November 2021 by a full court of the Western Cape.
Judgment was reserved, and is expected to be delivered early next year.
The respondents are in agreement that, with Part B having been heard, this
appeal is now to all intents and purposes moot. The City of Cape Town
persists with its appeal despite the imminent judgment of the full court.
[8] This Court in Zweni v Minister of Law and Order2 (Zweni) set out
the principles which make an order susceptible to appeal. These are that
the decision must be final in effect and not susceptible to alteration by a
court of first instance; it must be definitive of the rights of the parties; and
it must have the effect of disposing of at least a substantial portion of the
relief claimed in the proceedings. Interim orders, by their very nature, are
generally not final and will meet none of the criteria set out in Zweni,
rendering them unappealable in most cases.3 The rationale informing this
consideration is self-evident as courts are loath to allow court time and
resources to be squandered on appeals which will be subject to
reconsideration by the court a quo when the final relief is determined.
However, this is not an inflexible rule and the standard is always whether
it is in the interests of justice to hear the appeal.4
2 Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 532I-533B.
3 City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19; 2016 (6) SA
279 (CC) para 40; Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 523J-533A; Cloete and
Another v S; Sekgala v Nedbank Limited [2019] ZACC 6; 2019 (5) BCLR 544 (CC); 2019 (4) SA 268
(CC); 2019 (2) SACR 130 (CC) para 39.
4 Philani-Ma-Afrika and Others v Mailula and Others [2009] ZASCA 115; 2010 (2) SA 573 (SCA);
[2010] 1 All SA 459 (SCA) para 20. See also International Trade Administration Commission v SCAW
South Africa (Pty) Ltd [2010] ZACC 6; 2012 (4) SA 618 (CC); 2010 (5) BCLR 457 para 47-55; National
Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012(6) SA
223 (CC); 2012 (11) BCLR 1148 (CC) para 24; and Machele and Others v Mailula and Others [2009]
ZACC 7; 2010 (2) SA 257 (CC); 2009 (8) BCLR 767 (CC) para 21 - 22.
[9] As stated by the Constitutional Court in Cloete v S; Sekgala v
Nedbank Limited:5
‘[57] . . . this Court has held that in considering whether to grant leave to appeal, it is
necessary to consider whether “allowing the appeal would lead to piecemeal
adjudication and prolong the litigation or lead to the wasteful use of judicial resources
or costs”. Similarly, in TAC I, this Court stated that “it is undesirable to fragment a case
by bringing appeals on individual aspects of the case prior to the proper resolution of
the matter in the court of first instance”. This is one of the main reasons why
interlocutory orders are generally not appealable while final orders are.
[58] This Court has held that it will only interfere in pending proceedings in the lower
courts in cases of “great rarity – where grave injustice threatens, and where intervention
is necessary to attain justice”.’ (Footnotes omitted.)
[10] After confirming that the interests of justice were paramount in
assessing the appealability of an interim order, the Constitutional Court in
National Treasury and Others v Opposition to Urban Tolling Alliance and
Others6 went on to set out what factors a court should consider in assessing
where the interests of justice lay:
‘. . . To that end, [a court] must have regard to and weigh carefully all the germane
circumstances. Whether an interim order has a final effect or disposes of a substantial
portion of the relief sought in a pending review is a relevant and important
consideration. Yet, it is not the only or always decisive consideration. It is just as
important to assess whether the temporary restraining order has an immediate and
substantial effect, including whether the harm that flows from it is serious, immediate,
ongoing and irreparable.’
[11] The interests of justice standard will inevitably involve a
consideration of any irreparable harm. To successfully appeal an interim
5 Cloete and Another v S; Sekgala v Nedbank Limited [2019] ZACC 6; 2019 (5) BCLR 544 (CC);
2019 (4) 268 (CC); 2019 (2) SACR 130 (CC).
6 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18;
2012 (6) SA 223 (CC) para 25.
order an applicant will have to show that it will suffer irreparable harm if
the interim appeal were not granted.7 Even so, stated the Constitutional
Court in International Trade Administration Commission v SCAW South
Africa (Pty)8, irreparable harm although important, is not the sole
consideration and the interests of justice require an evaluation of a number
of factors:
‘. . . The test of irreparable harm must take its place alongside other important and
relevant considerations that speak to what is in the interests of justice, such as the kind
and importance of the constitutional issue raised; whether there are prospects of
success; whether the decision, although interlocutory, has a final effect; and whether
irreparable harm will result if the appeal is not granted . . .’.
[12] The first enquiry is to ascertain whether the orders granted by the
high court have a final effect. For this it is necessary to compare the orders
granted in respect of Part A and the orders sought in Part B, to ascertain to
what extent they overlap.
[13] The interim orders granted in Part A (the order) are:
‘Pending Part B
1. That the First Respondent, its Anti-Land Invasion Unit (ALIU) and any
private contractors appointed by the First Respondent to do the same or
similar work or to perform the same or similar functions as the ALIU, are
interdicted and restrained from evicting persons from, and demolishing, any
informal dwelling, hut, shack, tent or similar structure or any other form of
temporary or permanent dwelling or shelter, whether occupied or
unoccupied, throughout the City Metropole, while the state of disaster
promulgated by the Third Respondent in terms of section 23(1)(b) of the
7 Machele and Others v Mailula and Others [2009] ZACC 7; 2010 (2) SA 257 (CC); 2009 (8) BCLR
767 (CC) para 27. See also Minister of Health v Treatment Action Campaign (No 1) [2002] ZACC 16;
2002 (5) SA 703 (CC) para 12.
8 International Trade Administration Commission v SCAW South Africa (Pty) Ltd [2010] ZACC 6; 2012
(4) SA 618 (CC); 2010 (5) BCLR 457 (CC) para 55.
Disaster Management Act 57 of 2002, as amended, remains in place, except
in terms of an order of court duly obtained;
2. That to the extent that the First Respondent and its authorised agents (such
as the ALIU and private contractors aforementioned) evict and/or demolish
any informal dwelling, hut, shack, tent or similar structure or any other form
of temporary or permanent dwelling or shelter, whether occupied or
unoccupied, in terms of a court order, that they do so in a manner that is
lawful and respects and upholds the dignity of the evicted persons, and that
they are expressly prohibited from using excessive force, and/or from
destroying and/or confiscating the materials which is the property of the
evictees;
3. That to the extent that any evictions and/or demolitions are authorised by
court order, that the South African Police Services, when its members are
present during an eviction or demolition is directed to ensure that the said
evictions are done lawfully and in conformity with the Constitution, in
accordance with the SAPS’s Constitutional duty to protect the dignity of the
persons evicted.
4. That the First Respondent is interdicted and restrained from considering,
adjudicating and awarding any bids or tenders received in response to
Tender 308S/2019/20 for “The Demolition of Illegal and Informal structures
in the City of Cape Town”.
5. That the First Respondent is to return within a week of the date of this order
all building materials and personal possessions seized by its Anti-Land
Invasion Unit from the second applicant between the period 1 May 2020 to
date.
5.1 The Attorney for the Second Intervening Party is directed to furnish
the First Respondent with a list of names of those persons claiming
compensation in the sum of R2000 each in lieu of loss of personal
belongings
5.2 The First Respondent is to pay R2000 to each person whose
entitlement to compensation is agreed upon. In the event of
disagreement by the First Respondent as to entitlement to
compensation once the list is presented, the parties may approach
the Court for relief.
6. That the First Respondent shall pay the costs of the application save for the
costs in respect of 25 July 2020. The Fourth, Fifth and Sixth Respondents
shall bear the costs occasioned by their opposition to the relief sought at
prayer 2.3 of the Notice of Motion.’
[14] In Part B the relief sought by the respondents, in summary, is:
1. A declaration that the evictions and demolitions, referred to Part
A, without a valid court order, are unlawful and inconsistent with
the Constitution.
2. That to the extent that the evictions and demolitions take place in
terms of a court, this is done in the presence of the police who
should ensure that they are conducted lawfully in a manner that
protects their dignity and accords with the Constitution.
3. A declaration that the decision of the City to mandate the ALIU
to demolish structure which it believes to be unoccupied, is
unlawful, unconstitutional and be set aside.
4. That the procedure of using a visual assessment to determine
whether or not a structure is occupied as a home, and therefore
eligible to be demolished, be declared unlawful, unconstitutional
and be set aside.
5. That the common law principle of counter spoliation, insofar as
it authorises the eviction from, and the demolition of, any
structure whether occupied or unoccupied be declared invalid
and unconstitutional.
7. That the decision to adjudicate Tender 308S/2019/20 for “The
Demolition of Illegal and Informal Structures in the City of Cape
Town” be declared unlawful, unconstitutional and be set aside.
[15] A cursory comparison of the orders sought in Part A with those in
Part B immediately reveals that the only issues excluded from the
determination of the full court is the question of the return of the building
materials seized by the ALIU; the compensation of R2000 in lieu of loss
of personal belongings and the question of costs. This much was conceded
by counsel for the City. Nonetheless this Court is called upon by the City
to address all the interim orders made against it, without exception, on the
basis that the court a quo did not apply the correct test in finding that the
requirements for interim interdictory relief had been met.
[16] The next enquiry is whether there will be irreparable harm or a grave
injustice to the City if any of the interim orders are not set aside. It is
difficult to conceive of a situation where judicial oversight of evictions and
demolitions could ever amount to irreparable harm. Or indeed a declarator
that, if an eviction or demolition is carried out in terms of a court order, the
ALIU should act lawfully and constitutionally, and the police, if present,
should ensure that this is done. This is precisely how the police and ALIU
are legally obliged to conduct themselves, irrespective of any court order.
The police respondents have not appealed, presumably in acknowledgment
of this fact. Significantly, the City is not precluded from evicting persons
and/or carrying out demolitions. It is merely prohibited from doing so
without judicial oversight. There can be no irreparable harm if the City is
compelled to seek a court order before evicting persons during the national
state of disaster, and pending Part B.
[17] The interpretation of PIE, particularly whether it applies to
unoccupied structures, and the unconstitutionality of counter-spoliation, its
scope and meaning in the context of evictions, are issues to be determined
in Part B. For this Court to entertain an appeal in respect of those issues
which have already been argued, and will be determined by the full court
in the Western Cape, would not only usurp the function of that court, but
lead to parallel judgments on the same issue, delivered a few months apart.
This gives rise to the potential for conflicting decisions between the high
court and this Court, clearly a most undesirable outcome to be avoided, if
at all possible. It is exactly this piecemeal adjudication that the
Constitutional Court has deprecated.9
[18] Insofar as the adjudication of the tender is concerned, the City argues
that paragraph 4 of the order was predicated upon incorrect facts but was,
in any event, unnecessary. This is because any harm that may be
apprehended would be covered under paragraph 2 of the order. This might
be so but the tender, too, is the subject matter of Part B. The adjudication
of the tender will be determined by the full court which would render any
decision that this Court may give on an interim basis, irrelevant.
[19] None of the relief sought in paragraphs 1- 4 of the order is final in
effect. Nor will any irreparable harm or grave injustice occur should the
interim orders remain unaltered until the final relief is determined. The
interests of justice do not dictate that the interlocutory orders in these
paragraphs are appealable and the appeal in respect of these interim orders
falls to be dismissed.
[20] The only issue, other than costs, which the determination of Part B
will not finally resolve, is that of the monetary compensation of R2000 in
lieu of loss of personal belongings and the return of the building materials.
The relief the Occupiers sought in their notice of motion was the return of
their building materials and personal possessions.10 In the alternative, an
9 Cloete and Another v S; Sekgala v Nedbank Limited [2019] ZACC 6; 2019 (5) BCLR 544 (CC); 2019
(4) 268 (CC); 2019 (2) SACR 130 (CC).
10 It should be noted that para 5 of the order directed the City to return items seized by the ‘second
applicant’ – the Housing Assembly. This is clearly an error and should have read the ‘second
intervening party’- the Occupiers.
order was sought that the City provide each household whose dwelling had
been destroyed with equivalent building materials, and pay each occupant
the sum of R2000 as compensation for loss of their personal possessions.
Notwithstanding the above, the order granted by the high court was not cast
in the alternative. Instead, it directed the City to return all building
materials and personal possessions within one week, and that R2000 be
paid as compensation for loss of personal possessions.
[21] For this award the high court relied on s 172(1)(a)11 of the
Constitution which empowers a court to make an order that just and
equitable where there has been a breach of constitutional rights, including
the award of constitutional damages. While courts enjoy a wide discretion
as to what remedy would be effective, suitable and just in any given
situation,12 the high court could not avail itself of an award of constitutional
damages on the facts of this case. In the first place the relief granted was
final and not of an interim nature. The order has an immediate effect and
will not be reconsidered on the same facts in the final proceedings. While
paragraph 5.2 of the order makes provision for recourse to the high court,
this relates to the entitlement of a particular individual rather than the
principle itself which remains final.
[22] Once the relief sought is final, the Plascon Evans rule13 applies and
the respondent’s version must prevail, together with the admitted facts put
up by the applicant, unless these are far-fetched and clearly untenable. The
11 Section 172 of the Constitution provides:
‘(1) When deciding a constitutional matter within its power, a court—
(a) must declare that any law or conduct that is inconsistent with the Constitution is invalid to
the extent of its inconsistency’.
12 Thubakgale and Others v Ekurhuleni Metropolitan Municipality and Others [2021] ZACC 45 para
43.
13 Plascon- Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] 2 All SA 366 (A); 1984 (3) SA 623
(A); 1984 (3) SA 620.
City admits that it seized the building materials of the Occupiers. However,
it denies taking any of their personal possessions when it demolished the
structures.
[23] This denial alone should be the end of the matter, particularly where
there is no evidence of the nature of the personal effects, the value thereof
and from whom they were taken. For payment of compensation the
Occupiers placed reliance on this Court’s decision in Ngomane v City of
Johannesburg Metropolitan Municipality and Another14 (Ngomane),
where constitutional damages were awarded. Ngomane dealt with the
destruction and confiscation of the property of a group of homeless people
living under a bridge in the city of Johannesburg. After finding that the
removal and destruction of their personal effects was an arbitrary
deprivation of their right to privacy enshrined in s 14(c) of the Constitution,
which included the right not to have their property seized, the Court
ordered compensation of R1500 per person. Despite there being other
remedies at their disposal, in light of the applicants' desperate
circumstances, this Court determined that an award of constitutional
damages was the appropriate remedy.
[24] The fundamental difference in Ngomane is that the Court there was
dealing with final relief and the conduct of the City of Johannesburg was
found to be unconstitutional. Here not only has the City denied taking any
personal possessions, but any interim findings of unconstitutionality by the
high court are subject to reconsideration by the full court. The final word
on whether the evictions and demolitions were unlawful, or amounted to
an arbitrary deprivation of property, has not been spoken. This is what the
14 Ngomane and Others v City of Johannesburg Metropolitan Municipality and Another [2019] ZASCA
57; [2019] 3 All SA 69 (SCA); 2020 (1) SA 52 (SCA) para 27.
full court will finally determine. There was no basis, at that stage, for the
high court to have awarded financial compensation to the Occupiers. Here
there was a paucity of detail whereas in Ngomane there was evidence of
the nature of the items removed and destroyed and a list of their owners.
Accordingly, the appeal in regard to the payment of compensation must
succeed.
[25] The high court also directed the City to return all building materials
seized by the ALIU ‘between the period 1 May 2020 to date’15. As with the
personal possessions, the details of building materials seized, and from
whom they were taken, are scanty. In the main, the confiscations relate to
the demolitions at Mfuleni, commonly known as Zwelethu, Ocean View,
and the demolition of Mr Qolani’s property.
[26] Mr Viwe Sigenu, the deponent on behalf of the Occupiers, stated
that seven evictions had taken place in Zwelethu from the end of May 2020
to 13 July 2020. Structures had been demolished and ‘on some days’ the
ALIU would confiscate building materials and personal possessions. Not a
single owner of any building materials was identified. The City’s response
was that the area spans two properties, one owned by the Cape Nature
reserve and the other by the City. The Occupiers are aware that the
Cape Nature property is not owned by the City as they were served with an
application by the Western Cape Nature Conservation Board. This resulted
in an interim interdict authorising the City to take reasonable steps to
demolish any illegally erected structures on the Cape Nature property, to
prevent any persons from entering the area and to remove such persons and
their belongings.16
15 The date of the order was 25 August 2020.
16 Western Cape Nature Conservation Board v The Illegal Trespassers of Erf 544 and Others
(Case Number 8913/2020) (WCC).
[27] The Housing Assembly referred to an eviction operation which took
place in Ocean View on 15 May 2020. That day, Ms Kashiefa Achmat, the
chairperson of the Housing Assembly stated that she was present when the
ALIU demolished structures and confiscated materials. No detail is
provided as what building materials were confiscated, and from whom they
were taken. The City’s response is that it acted on a complaint of an
unlawful land invasion and ten unoccupied structures were dismantled and
most of the building material removed. Moreover, it contends that the
removal of unoccupied structures was expressly contemplated in a court
order of the same division dated 17 April 2020.17
[28] The eviction of Mr Qolani and the demolition of his structure took
place on 1 July 2020. The version of the City was that the structure
allegedly occupied by him, was in fact unoccupied. ALIU officials stated
that his structure had not been erected when they attended the site the day
before, on 30 June 2020.
[29] In short, the City alleged that the various demolitions that took place
over that period, concerned structures that were unoccupied, and it was
therefore entitled to demolish them. All building materials removed are
kept in storage for a period of 21 days, after which they are disposed of.
The Occupiers are entitled to make arrangements to collect their building
materials from the City’s depot in Ndabeni. This is not denied.
[30] Much of the content of the City’s answering affidavit and
supplementary answering affidavit was disputed in reply. This underscores
the difficulty in granting the relief sought in its present formulation. As
17 Habile and Others v The City of Cape Town (Case No 5576/2020) (WCC).
Harms JA said in NDPP v Zuma,18 motion proceedings ‘are all about the
resolution of legal issues based on common cause facts’ and ‘cannot be
used to resolve factual disputes because they are not designed to determine
probabilities’. For these reasons, the appeal against paragraph 5 of the
high court’s order must succeed.
[31] This does not mean that the door is closed to the Occupiers. If, after
a decision is made in respect of Part B, the conduct of the City is found to
be unlawful, it is open to them to apply for the appropriate relief.
[32] What remains is the appeal against costs. The City complains that
costs are not generally awarded in interlocutory proceedings as the court
finally hearing the matter may be better placed to determine whether the
application was well-founded. Costs are always within the discretion of the
court unless it has misdirected itself, thereby reaching a decision that could
not have reasonably been made if it had properly applied itself to the
relevant facts and principles.19 The high court gave reasons for its decision.
There is no indication that the high court failed to exercise its discretion
judicially. In any event, the appeal against costs was not pursued with much
enthusiasm by counsel for the City.
[33] Concerning the costs of this appeal, the costs should follow the
result, and the respondents are, to an overwhelming extent, the successful
parties. We were urged to allow costs for three counsel. There is no
justification for this.
18 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA); 2009 (1)
SACR 361 (SCA); 2009 (4) BCLR 393 (SCA); [2009] 2 All SA 243 (SCA) para 26.
19 Trencon Construction (Pty) Ltd v Industrial Development Corporation of SA Ltd and Another [2015]
ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) at para 88, quoting from National
Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others 2000 (2) SA
1 (CC); 2000 (1) BCLR 39 (CC) para 11.
[34] In the result, the following order is made:
3. The appeal against paragraphs 1- 4 of the order of the court a quo
is dismissed with costs, including the costs of two counsel.
4. The appeal against paragraph 5 of the order of the court a quo
succeeds. The order is set aside and replaced with the following:
‘The second intervening party’s claim against the first respondent
for the return of all building material and personal possessions,
seized by the its Anti Land Invasion Unit, alternatively, to
provide each household with equivalent building materials and to
pay each occupant R2000 as compensation for loss of personal
possessions, is dismissed.’
____________________
C H NICHOLLS
JUDGE OF APPEAL
APPEARANCES:
For appellant:
S Rosenberg SC (with him, M Adhikari and
K Perumalsamy)
Instructed by:
Fairbrudges Wertheim Becker Attorneys, Cape Town
McInttyre van der Post, Bloemfontein
For 1st to 3rd respondents: N Arendse SC (with him S Magardie,
M Bishop and E Webber)
Instructed by:
Legal Resources Centre, Kenilworth
Webbers Attorneys, Bloemfontein
For 4th to 5th respondents: T Ngcukaitobi SC (with him, T Ramogale)
Instructed by:
Ian Levitt Attorneys, Johannesburg
England Slabbert Attorneys Inc, Cape Town
Lovius Block Inc., Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
22 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
City of Cape Town v The South African Human Rights Commission and others (Case no
144/2021) [2021] ZASCA 182 (22 December 2021)
Today the Supreme Court of Appeal (SCA) dismissed in large part, with costs, an appeal
brought by the City of Cape Town, against the interim decision of the Western Cape Division
of the High Court, Cape Town (the high court). The SCA upheld an appeal against a claim for
compensation.
In July 2020, a video recording of a naked man (Mr Bulelani Qolani) being dragged out of his
dwelling in an informal settlement by officials of the City of Cape Town went viral on social
media. Following this, the South African Human Rights Commission (the SAHRC), Mr Qolani
and the Housing Assembly (a social justice movement) launched an urgent application in the
high court to prevent the City of Cape Town (the City) from evicting persons and demolishing
structures, whether occupied or unoccupied, during the national state of disaster, without a
court order. The application was for interim relief (Part A), pending a decision on Part B, which
primarily dealt with the constitutionality of the City’s conduct and its Anti-Land Invasion Unit
(ALIU), which carried out the evictions and demolitions, and whether the defence of counter-
spoliation permitting the eviction and demolition of a structure, occupied or unoccupied was
constitutional. The high court also granted the Economic Freedom Fighters (EFF) and the
occupiers of Erf 544, Mfuleni (the Occupiers) leave to intervene as interested parties. The latter
sought additional relief that the City must provide each household, whose dwelling was
destroyed, with the equivalent building materials and that each occupant of the property be paid
R2000 as compensation for the loss of their personal possessions. The high court granted
Part A, pending the determination of Part B. The orders sought by the intervening parties were
also granted, subject to minor amendments.
In the SCA the City of Cape Town was the appellant; SAHRC was the 1st respondent; the
Housing Assembly the 2nd respondent; Mr Bulelani Qolani was the 3rd respondent; the 4th
respondent was the EFF and the Occupiers were the 5th respondents. The 6th to 10th
respondents were state respondents who did not participate in the appeal.
The hearing of Part B was finalised on 5 November 2021 by a full court of the Western Cape
and judgment was reserved. The respondents agreed that this appeal was now to all intents and
purposes moot. The City persisted with its appeal despite the imminent judgment of the full
court, on the basis that the court a quo did not apply the correct test in finding that the
requirements for interim interdictory relief had been met.
The SCA relied on the principles set out in Zweni v Minister of Law and Order [1993] 1 All
SA 365 (A) that an order is appealable if the decision is final in effect and not susceptible to
alteration by a court of first instance; if it is definitive of the rights of the parties; and if it has
the effect of disposing of a substantial part of the case. The SCA held that on comparing the
interim orders sought to be appealed with those sought in Part B, it was clear that the decision
was not final in effect as these orders would be reconsidered by the full court in Part B. The
only issues excluded from the determination of the full court was the question of the return of
the building materials seized by the ALIU; the compensation of R2000 in lieu of loss of
personal belongings and the question of costs. Nonetheless, the SCA was called upon to address
all the interim orders made, without exception.
Next the SCA considered whether there would be irreparable harm or a grave injustice to the
City if any interim orders were not set aside. The SCA found that it was difficult to conceive
of a situation where judicial oversight of evictions and demolitions could ever amount to
irreparable harm. The City was not precluded from evicting persons but merely prohibited from
doing so without judicial supervision. The orders were not final in effect and there would be
no irreparable harm if the interim orders were not set aside. The appeal in respect of those
interim orders had to be dismissed.
The SCA found that the only issue, other than costs, which the determination of Part B would
not finally resolve, was the monetary compensation of R2000 in lieu of loss of personal
belongings and the return of the building materials. The SCA found that the relief sought
therein was final and not of an interim nature and should not have been awarded in interim
proceedings. In addition, there was insufficient detail on the papers as to the nature of the items
taken and from whom they had been taken. The appeal was successful in this regard.
~~~~ends~~~~
|
3131
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 597/05
Reportable
In the matter between:
MERVYN DENDY APPELLANT
and
UNIVERSITY OF THE
WITWATERSRAND FIRST RESPONDENT
NEIL GARROD SECOND RESPONDENT
ANDREW ST QUINTIN SKEEN THIRD RESPONDENT
CORAM:
SCOTT, FARLAM, VAN HEERDEN, JAFTA et
PONNAN JJA
HEARD:
12 MARCH 2007
DELIVERED:
28 MARCH 2007
SUMMARY:
Constitution – Delict – Injuria – Alleged violation of plaintiff’s
constitutional right to dignity – conduct complained of not such as to violate dignity of
reasonable person – unnecessary to develop common law in terms of s 39 (2) of
Constitution.
Neutral citation: This judgment may be referred to as Dendy v University of the
Witwatersrand [2007] SCA 30 (RSA).
________________________________________________________
FARLAM JA
[1] This is an appeal from a judgment of Boruchowitz J, sitting in the
Johannesburg High Court, in which exceptions to two claims brought by the
appellant against the first respondent, the University of the Witwatersrand,
were upheld. The judgment of the court a quo has been reported: see Dendy
v University of the Witwatersrand and Others 2005 (5) SA 357 (W).
[2] The claims against which the exceptions were successfully taken
concern alleged injuries to the appellant’s right to dignity in terms of s 10 of
the Constitution, and/or at common law. The first claim was said to have
arisen from the manner in which the appellant’s application for appointment to
a chair of law at the university was dealt with, in that, so it was alleged,
various procedural irregularities took place. The appellant contended that
these irregularities constituted a violation of certain of his rights as entrenched
in the Bill of Rights contained in chapter 2 of the Constitution. Details of the
alleged violation are set out in paragraphs 2.12 and 2.13 of the appellant’s
particulars of claim, which are quoted in extenso in para 8 of the judgment of
the court a quo. The second claim concerned an alleged failure by the
university or its agents to furnish the appellant with the reasons that his
application for a chair of law was unsuccessful and with a copy of the minutes
of the meeting of the committee which considered his application. This failure,
so it was contended, also constituted a wrongful violation of certain of the
appellant’s constitutional rights. Details of this alleged violation are set out in
paragraph 3.24 of the appellant’s particulars of claim, which is quoted in para
51 of the judgment of the court a quo. In both claims it was alleged that as a
result of conduct complained of the appellant ‘felt insulted and humiliated . . .
and a reasonable person in the position of the [appellant] would have felt so
insulted and humiliated.’
[3] Exception was taken to both claims on the ground that the facts
pleaded in support of the claims were insufficient to disclose a cause of
action, not reasonably capable of injuring the appellant’s dignity or causing
him insult or humiliation and not sufficient to justify a remedy in damages.
[4] The court a quo, in a careful and comprehensive judgment, rejected the
appellant’s submission that the common law had to be developed in terms of s
39(2) of the Constitution because it failed to promote the spirit, purport and
objects of the Bill of Rights.
[5] The learned judge held (at para 27) that the common law position
applicable to this case had been authoritatively laid down by Melius de Villiers
in The Roman and Roman Dutch Law of Injuries (1899) p 27 in a passage
which was approved by the Transvaal Supreme Court in 1908 (Rex v Umfaan
1908 TS 62 at 66) and by this court on a number of occasions, culminating in
Delange v Costa 1989 (2) SA 857 (A) at 860I-861A. The passage in question
reads as follows:
‘(T)here are three essential requisites to establish an action of injury. They are as follows:-
I.
An intention on the part of the offender to produce the effect of his act;
II.
An overt act which the person doing it is not legally competent to do; and which at the
same time is
III.
An aggression upon the right of another, by which aggression the other is aggrieved
and which constitutes an impairment of the person, dignity or reputation of the other.”
[6] The judge continued (at para 28):
‘Prior to Delange there was judicial controversy as to whether injury to dignity must be tested
subjectively or objectively. Compare Walker v Van Wezel [1940 WLD 66 at 71] and Jackson v
SA National Institute for Crime Prevention and Rehabilitation of Offenders [1976 (3) SA 1 (A)
at 12]. In Delange the Court recognized the need for objective limits to be placed on the
action for injury to dignity in order to keep it within manageable proportions. It accepted that
an entirely subjective test of dignity had the potential for opening the floodgates to successful
actions by hypersensitive persons who felt insulted by statements or conduct which would not
insult a person of ordinary sensibilities. And so it fashioned what is in effect a hybrid test, one
that is both subjective and objective in nature. To be considered a wrongful infringement of
dignity, the objectionable behaviour must be insulting from both a subjective and objective
point of view, that is, not only must the plaintiff feel subjectively insulted but the behaviour,
seen objectively, must also be of an insulting nature. In the assessment of the latter, the legal
convictions of the community (boni mores) or the notional understanding and reaction of a
person of ordinary intelligence and sensibilities are of importance [Neethling’s Law of
Personality at 194-5]. In Delange Smalberger JA summarized the position as follows [at
862A-G]:
“(B)ecause proof that the subjective feelings of an individual have been wounded, and his
dignitas thereby impaired, is necessary before an action for damages for injuria can succeed,
the concept of dignitas is a subjective one. But before that stage is reached it is necessary to
establish that there was a wrongful act. Unless there was such an act intention becomes
irrelevant as does the question whether subjectively the aggrieved person’s dignity was
impaired. I do not understand the judgment of Jansen JA to suggest that all that is required
for a successful action for damages for injuria are words uttered animo injuriandi towards
another which offend such person’s subjective sensitivities, and in that sense impair his
dignitas. It this were so it could lead to the courts being inundated with a multiplicity of trivial
actions by hypersensitive persons. (See Burchell 1977 SALJ at 7-8; Neethling
Persoonlikheidsreg 2nd ed at 193.) According to Melius de Villiers op cit at 37,
‘(so) long as an act is outwardly lawful it cannot be an injury, with whatever intention or motive
it may have been committed. Even when a person entertaining an injurious intention believes
an act which he commits to be injurious when it really is not such, his intention will not affect
the character of the act.’
Likewise the character of the act cannot alter because it is subjectively perceived to be
injurious by the person affected thereby.
In determining whether or not the act complained of is wrongful the Court applies the criterion
of reasonableness – the “algemene redelikheidsmaatstaf” (Marais v Richard en ‘n Ander 1981
(1) SA 1157 (A) at 1168C). This is an objective test. It requires the conduct complained of to
be tested against the prevailing norms of society (ie the current values and thinking of the
community) in order to determine whether such conduct can be classified as wrongful. To
address the words to another which might wound his self-esteem but which are not,
objectively determined, insulting (and therefore wrongful) cannot give rise to an action for
injuria. (Walker v Van Wezel (supra) at 68.)’
[7] The learned judge held (at para 29) that the legal position as laid down
by this court in Delange v Costa was consistent with the Constitution and
needed no adaptation to bring it into harmony therewith.
[8] Applying the law as laid down in Delange’s case he held (at para 32)
that the only ‘overt’ act complained of was the decision not to appoint the
appellant to a chair of law and said that there was
‘nothing inherent in the decision not to appoint the [appellant] which could conceivably be
characterised as being of an offensive or insulting character. Objectively considered the
defects of a procedural nature about which he complains cannot be characterised as
offensive or insulting when tested against the objective criterion of reasonableness. Moreover
the decision in question was “outwardly lawful”.’
[9] The learned judge also held (at para 33) that the appellant’s argument
overlooked the principle affirmed in Delange that only conduct that is offensive
or insulting can form the basis of an action for injuria. He held (at para 34)
that, while the constitutional violations alleged may be wrongful, the conduct
upon which they were premised was not of an overt character.
[10] The judge also upheld a contention advanced before him by counsel
for the university to the effect that the plaintiff was not entitled to bring an
action for damages to obtain redress for the violations of which he complained
because he had had at his disposal the remedy of review. He said (at para
35):
‘The conduct of the Selection Committee, if proved, would have been reviewable under the
common law and the Constitution [footnote omitted]. The setting aside of the decision of the
Selection Committee would, in my view, have constituted sufficient vindication of the rights
that had been infringed, and would in large measure have assuaged the plaintiff’s wounded
feelings.’
[11] His reasons for upholding the exception to Claim B are set out in paras
49 to 59 of his judgment. He held (at para 54) that the only ‘overt act’
complained of was the refusal to furnish the appellant with the reasons for his
non-appointment and copies of the minutes. This refusal was not of an
offensive or insulting character and an application of the principles in Delange
thus led on this claim also to the upholding of the exception. Here also he held
(at para 56) that another reason for upholding the exception was the fact that
there were effective alternative remedies at the appellant’s disposal, with the
result that he had no right of action in damages by reason of the violation
complained of.
[12] The appellant advanced a number of wide-ranging arguments in his
submissions before this court, most of which he had advanced before the
court a quo and which are summarized in its judgment.
[13] Among the arguments advanced was the contention that the reliance
by the court a quo on the fact that the decision of the selection committee was
‘outwardly lawful’ and not offensive or insulting was incorrect. He submitted in
this regard that this doctrine of the common law, which was affirmed in
Delange’s case, required development and modification in terms of s 39(2) of
the Constitution to bring it in line with the increased importance accorded
under the Constitution to human dignity. He also contended that the court a
quo had erred in holding that the remedy in damages was not available to him
and that he should instead have instituted review proceedings in respect of
Claims A and B or, in the case of Claim B, brought an application for access
to the reasons for the committee’s decision under ss 32(1) and 33(2) of the
Constitution. In this regard he pointed out that Boruchowitz J (at para 45 of his
judgment) had said that ‘[a] successful review or the grant of interdictory relief
obliging [the university] to furnish reasons would go a long way to assuage his
wounded feelings and at the same time serve to vindicate the infringement of
his fundamental rights.’ In this regard he submitted that, even if the decision of
the selection committee were set aside on review and the university ordered
to give him the reasons and the minutes, this would not have the effect of
erasing the hurt, humiliation and insult suffered when the violations took place.
[14] I am satisfied that the two claims under consideration cannot succeed
for a reason which renders it unnecessary to consider the correctness of
these submissions. I shall assume (without deciding) that these submissions
are correct.
[15] Although as pointed out by the Constitutional Court (in National
Coalition for Gay and Lesbian Equality v Minister of Justice 1999 (1) SA 6
(CC) at para 28) - ‘(d)ignity is a difficult concept to capture in precise terms’1, it
is clear, as was pointed out by the court a quo (at para 14 of its judgment) that
‘(f)or present purposes . . . there is little difference between the right to dignity
as it is comprehended under the Constitution and its common-law
counterpart.’ That is because what the appellant is claiming is an award of
damages to assuage his wounded feelings arising from the insult and
humiliation he suffered as a result of the procedural irregularities of which he
complains and the refusal to give him the reasons for the committee’s
1 See also Stuart Woolman, ‘Dignity’ in Woolman et al Constitutional Law of South Africa 2 ed
Original Service, paras 36.2 and 36.3; Johann Neethling, ‘Die betekenis en beskerming van die eer,
dignitas en menswaardigheid in gemeenregtelike en grondwetlike sin’ in C Nagel (ed) Gedenkbundel
vir JMT Labuschagne 85 and Gay Moon and Robin Allen QC, ‘Dignity Discourse in Discrimination
Law. A Better Route to Equality?’ [2006] EHRLR 610.
decision and the minutes of its meeting.
[16] Although, as I have said, the appellant submitted that part of the ratio of
the Delange decision is no longer good law, he accepted as still valid the
double requirement recognised in Delange that the conduct complained of
must not only be insulting from a subjective point of view but must also be
insulting when viewed objectively. That is why he pleaded that a reasonable
person in his position would have felt insulted and humiliated by the conduct
of one or more of the members of the selection committee and of those
officials of the university who refused to give him the reasons for the
committee’s decision and the minutes.
[17] As this is an exception the court has to accept the correctness of the
facts pleaded. This means, amongst other things, that it must be accepted
that the appellant did feel insulted and humiliated as a result of the conduct
complained of in Claims A and B. But this court is able, at this stage already,
to decide whether a reasonable person in the appellant’s position would have
felt insulted and humiliated thereby. The appellant emphasised in argument
before us that his claims were not based on his failure to be appointed to a
chair in law, but rather on the manner in which the decision not to appoint him
was arrived at and the subsequent refusal to give him the reasons and
minutes he asked for. I can understand that he must have been disappointed
and distressed when he learnt that he had not been appointed. But, as I have
said, he does not claim damages because of such feelings of disappointment
and distress, nor could he.
[18] The court must also accept for the purposes of deciding the exception
that the irregularities complained of took place and that at some stage the
appellant became aware of them. (He could not have felt insulted and
humiliated until he became aware of the irregularities.) In my opinion the
reaction of a reasonable person in the position of the appellant who became
aware of the manner in which the decision not to appoint him had been
arrived at and that that decision could accordingly be set aside on review in
consequence thereof would not have had feelings of insult and humiliation but
rather feelings of elation and relief. The same applies in relation to the refusal
of the reasons and the minutes. A reasonable person in the position of the
appellant would have realised that the refusal was not sustainable and that
the university would, if taken to court, be ordered to provide the reasons and
minutes. Here again, the reasonable person’s reaction would not have been
one of insult and humiliation.
[19] As feelings of insult and humiliation were facta probanda on both
Claims A and B it follows, in my view, for the reasons I have given that both
claims fail to disclose a cause of action. It follows that the appeal must be
dismissed with costs.
[20] The following order is made:
The appeal is dismissed with costs, including those occasioned by the
employment of two counsel.
……………..
IG FARLAM
JUDGE OF APPEAL
CONCURRING
SCOTT
JA
VAN HEERDEN
JA
JAFTA
JA
PONNAN
JA
PONNAN JA
[21] I have had the benefit of reading the judgment of my Brother Farlam
with which I am in agreement. A further aspect that I wish to address and to
which I now turn, is the contention by the appellant that the court is obliged by
the Constitution to develop the common law so as to give a person in his
position a claim for damages for breach of his constitutionally entrenched
rights. According to the appellant, the common law should be developed in
order to render the actio injuriarum available to a natural person if the
defendant wrongfully and intentionally violates one or more of the plaintiff’s
constitutionally entrenched rights in such a manner as to cause the plaintiff to
suffer hurt, humiliation or insult in circumstances in which a reasonable person
in the plaintiff’s position would likewise feel hurt, humiliated or insulted. This
development would then, so the appellant asserts, enable such a plaintiff to
recover from the defendant a solatium in the form of monetary compensation
for the hurt, humiliation or insult thus suffered by him or her.
[22] That courts are enjoined to develop the common law, if this is
necessary, is beyond dispute. That power derives from sections 8(3) and 173
of the Constitution. Section 39(2) of the Constitution makes it plain that, when
a court embarks upon a course of developing the common law, it is obliged to
‘promote the spirit, purport and objects of the Bill of Rights’ (S v Thebus 2003
(6) SA 505 (CC) at para 25). This ensures that the common law will evolve,
within the framework of the Constitution, consistently with the basic norms of
the legal order that it establishes (Pharmaceutical Manufacturers Association
of SA: In re Ex parte President of the Republic of South Africa 2000 (2) SA
674 (CC) at para 49). The Constitutional Court has already cautioned against
overzealous judicial reform. Thus, if the common law is to be developed, it
must occur not only in a way that meets the section 39(2) objectives, but also
in a way most appropriate for the development of the common law within its
own paradigm (Carmichele v Minister of Safety and Security 2001 (4) SA 938
(CC) at para 55). (See also City of Tshwane Metropolitan Municipality v RPM
Bricks (Pty) Ltd [2007] SCA 28 (RSA) para 20.)
[23] A court, faced with such a task, is obliged to undertake a two-stage
enquiry. First, it should ask itself whether, given the objectives of s 39(2), the
existing common law should be developed beyond existing precedent. If the
answer to that question is a negative one, that should be the end of the
enquiry. If not, the next enquiry should be how the development should occur
and which court should embark on that exercise. (See S v Thebus at para 26.)
[24] An integral part of the first enquiry, it seems to me, is to enquire in any
given matter whether the common law is deficient, and, if so, in what respect.
The appellant is in essence a disgruntled applicant for promotion. He
complains of a range of procedural irregularities in the assessment of his
candidacy, but not of the resultant decision. His further complaint relates to
the failure of the University to furnish him with reasons for his non-
appointment or to supply him with copies of the minutes of the meeting at
which the decision was taken. Those complaints could have been vindicated
respectively by the remedies of review or a relatively simple application to
compel production of the documentation and the reasons sought. Those
remedies were available to the appellant and on his own version he was
aware of them, yet he chose to forego them. Instead he seeks to fashion a
novel claim, which he contends is mandated by the court’s obligation to
develop the common law in terms of s 39(2) of the Constitution. It bears
noting that the novelty is entirely self–created, the appellant having
consciously chosen to eschew a range of legal remedies that have
traditionally served to vindicate the complaints encountered here. Those
remedies in one form or another were available to the appellant at all stages
of the process. The common law, which has not been shown to be wanting,
was therefore broad enough to provide the appropriate relief in this case. The
appellant elected instead to saddle what has proven to be an unruly horse. It
therefore in this instance could hardly be contended that the common law was
deficient. Much less, in any specific respect. It follows in my view that the first
postulated enquiry must yield a negative response. In any event, in his
formulation of the development contended for, the appellant accepts that the
alleged violation of a plaintiff’s constitutionally entrenched rights must be
hurtful, humiliating or insulting from both an objective and a subjective
standpoint. Like Farlam JA, I am of the view that the appellant fails at the
objective threshold. He thus fails to bring himself within the ambit of his own
formulation of the development contended for. It therefore follows that this
issue warrants no further consideration.
………………..
V M PONNAN
JUDGE OF APPEAL
CONCURRING:
VAN HEERDEN JA
JAFTA 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 March 2007
STATUS:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal
The Supreme Court of Appeal today dismissed an appeal brought by Mr Mervyn
Dendy, a former associate professor at the University of Witwatersrand, against a
judgment of the Johannesburg High Court in which exceptions to two claims brought
by him against the University were upheld.
Following on an unsuccessful application by Mr Dendy for promotion to a chair of
law at the university he claimed damages from the university alleging that his
constitutional right to dignity had been violated because of the manner in which his
application had been considered by the selection committee and because his request
for the reasons for the committee’s decision and a copy of the minutes of its meeting
had been refused. He alleged in this regard that he was humiliated and insulted by the
conduct of the university’s representatives and that a reasonable person in his position
would also have been humiliated and insulted.
The Supreme Court of Appeal upheld exceptions to these claims on the ground that a
reasonable person would not have felt humiliated and insulted in the circumstances.
Three members of the court also held that in any event it was not necessary to develop
the common law in terms of s 39 (2) of the Constitution to provide the remedy of an
action for damages on the facts pleaded in Mr Dendy’s particulars of claim.
|
3346
|
non-electoral
|
2020
|
`
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 93/2019
In the matter between:
LESLIE BERGH
FIRST APPELLANT
BULL’S EYE CONSULTING
SECOND APPELLANT
BENGUELASOFT
THIRD APPELLANT
TIM PAUW
FOURTH APPELLANT
NAOMI HAVENGA
FIFTH APPELLANT
and
THE AGRICULTURAL RESEARCH COUNCIL
FIRST RESPONDENT
Neutral citation:
Bergh and Others v The Agricultural Research Council (Case no
93/2019) [2020] ZASCA 30 (1 April 2020)
Coram:
Navsa, Wallis, Van der Merwe and Schippers JJA and Mojapelo
AJA
Heard:
28 February 2020
Delivered:
1 April 2020
Summary:
Copyright – computer program – claim based on authorship and on
s 5(2) of the Copyright Act 98 of 1978 – claim not proved – court below failed to provide
reasons for order – deplorable – bringing administration of justice into disrepute.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Kose AJ
sitting as court of first instance):
The appeal is upheld with costs, including the costs of two counsel.
The order of the court below is set aside and substituted as follows:
‘The application is dismissed with costs, including the costs of two counsel.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Navsa JA (Wallis, Van der Merwe and Schippers JJA and Mojapelo AJA
concurring):
[1] This is an appeal against an extensive order granted by the Western Cape
Division of the High Court, Cape Town (Kose AJ), in favour of the respondent, the
Agricultural Research Council (the ARC), a juristic person established in terms of s 2
of the Agricultural Research Act 86 of 1990 (the Act). The order against six
respondents followed on a claim of breach of copyright and unlawful competition in
relation to BeefPro, a computer program that serves as a cattle or herd management
tool. Five of those respondents are the present appellants. The sixth, the South
African Stud Book, is an animal improvement voluntary association (Stud Book) and
also a ‘registering authority’ in terms of the Animal Improvement Act 62 of 1998 (the
ANI Act). Stud Book did not participate in the appeal. We were informed by counsel
for the ARC that no relief had ultimately been sought against Stud Book and that before
the application was finalised, the case against Stud Book was withdrawn.
[2] The order reads as follows:
‘1. The respondents are
1.1. interdicted and restrained from infringing the copyright in the BeefPro computer program,
also known as BenguFarm, including the modules developed from and adaptations of BeefPro
(“the program”) by performing, or causing to be performed, any of the following acts:
1.1.1. reproducing the computer program in any manner or form;
1.1.2. making adaptations of the computer program;
1.1.3. letting or offering or exposing for hire by way of trade, directly or indirectly, a copy or an
adaptation of the computer program;
1.1.4. selling, letting, or by way of trade offering or exposing for sale or hire, or distributing in
the Republic for the purpose of trade, copies or adaptations of computer program,
1.2. ordered to deliver up to the applicant all copies and adaptations of the computer program
in their possession;
1.3. are interdicted and restrained from competing unlawfully with the applicant by:
1.3.1 representing that any of the respondents own or authored BeefPro or that they are
entitled to adapt, distribute or sell copies thereof;
1.3.3 using, in relation to BeefPro, the term BenguFarm or any other term; and
1.3.4 excluding the applicant and the national database, INTERGIS, from the flow of data
uploaded by the users of the BeefPro program to Logix, the database administered by the
sixth respondent.
2.1 an enquiry is to be held for purposes of determining reasonable damages and royalties to
be paid by the respondents’ infringement of the ARC’s copyright in the computer program.
2.2 The following directions are given regarding the said enquiry:
2.1 The applicant is to deliver a declaration within 20 days hereof.
2.2 Thereafter the Uniform Rules of Court applicable to trial actions shall apply.
2.3 No order as to costs is made in regard to the proceedings thus far.
3. The respondents are ordered, jointly and severally, to pay the costs of this application,
including costs of counsel.’
[3] The order was issued on 8 August 2018, close to two years after oral argument
had been presented by the parties. Repeated requests for reasons for the order were
met with no response. Thus, this appeal has to be adjudicated, more than four years
after oral argument was finalised, without the benefit of a judgment by the court below.
This is a truly deplorable aspect to which I will revert later in this judgment. In the
absence of a reasoned judgment it is necessary to set out the facts in greater detail
than would otherwise be the case.
[4] The order, it will be seen, did not exclude Stud Book. This might be due to the
lengthy passage of time before the order was issued. Although the relief claimed by
the ARC was dependent on its claim to ownership of the BeefPro program, this appeal
is not about the complexities of copyright law. Rather, it turns on what the evidence
adduced in the court below reveals about the terms under which the BeefPro program
was commissioned and whether a basis existed for the ARC to claim ownership
thereof.
[5] The ARC operates within a legislative framework. The relevant parts of the
legislation under which it conducts operations and the factual background culminating
in the present appeal are set out hereafter.
[6] The objects of the ARC are set out in s 3 of the Act:
‘The objects of the ARC are, through research, development and technology transfer, to
promote agriculture and industry and thereby to contribute to the improvement of the quality
of life of the people of the Republic, and having regard to the protection of the environment to
perform such other functions as may be assigned to the ARC by or under this Act.’
[7] The relevant parts of s 4(1) and s 4(2) deal with the powers, functions and duties
of the ARC and read as follows:
‘4(1) In order to achieve its objects, the ARC may-
(o) as an end-product of research, development and technology transfer undertaken or caused
to be undertaken by ARC-
(i) produce and sell reports, computer programmes and other intellectual property;
…
(iii) produce, process and sell products;
…
(q) do everything which in the opinion of the Council is conducive to the achievement of its
objects or is calculated, directly or indirectly, to enhance or render profitable the value of the
property or rights of the ARC.
4(2) The ARC shall, in addition to its functions in terms of this Act or any other law-
(a) and subject to its objects, undertake the investigations, research, development and
technology transfer which the Minister may assign to it;
(b) advise the Minister on research, development and technology transfer in the field of
agriculture; and
(c) co-ordinate on a voluntary basis information on agricultural research and development in
the Republic by implementing and keeping a central register of agricultural research and
development projects, and institute such measures as it may deem fit to achieve such goal.’
[8] Animal improvement is within the ARC’s remit under the ANI Act. According to
that Act ‘animal improvement’ means:
‘[S]cientifically based identification of genetically superior animals by means of the integrated
registration and genetic information system or in a manner approved by the registrar and the
discerning use thereof to improve the production or performance ability of the animal
population in the interest of the Republic.’1
[9] The ARC, in terms of its statutory mandate and powers, operates an ‘integrated
registration and genetic information system’ dubbed INTERGIS. It is a computer
system commissioned and developed by the State, to integrate the pedigrees and
performance data of animals as envisaged in the ANI Act.
[10] In fulfilling its statutory role, the ARC utilises, inter alia, a Microsoft Windows
based cattle or herd management system, the aforesaid BeefPro computer program,
which, it is claimed, it developed and introduced to the market in 2005. The ARC
conducts that system on the INTERGIS platform. The ARC’s complaint, which formed
the basis of its approach to the court below for the order set out hereinbefore, was the
‘misappropriation’ of BeefPro by the appellants, which it alleged the appellants were
utilising for purposes of conducting a parallel system to INTERGIS, called Logix. The
appellants, so the ARC claimed, were employing BeefPro for financial benefit and
consequently undermined the ARC in the performance of its statutory duties. All the
more so, it was contended, because cattle farmers presently supplied data that ought
1 Definition of ‘animal improvement’ in s 1 of the ANI Act.
to be destined for the INTERGIS system to the appellants, which the appellants then
use in their Logix system, rendering INTERGIS redundant.
[11] In the ARC’s view, the exclusion of INTERGIS in the manner described in the
preceding paragraph detrimentally affects the national interest. Furthermore, since
BeefPro, which the ARC is adamant it authored and developed, qualifies as a work in
terms of the Copyright Act 98 of 1978, the appellants, by misappropriating it in the
manner described above, were guilty of copyright infringement or engaged in unlawful
competition, and the ARC was thus entitled to seek an interdict in the terms granted
by the court below.
[12] It was contended on behalf of the ARC that the appellants had misrepresented
to the public that they had developed BeefPro, thereby causing users searching for
BeefPro to be diverted to BenguFarm, a website conducted by the third appellant,
Benguela Soft CC, a close corporation (Benguela). That, according to the ARC, was
but one instance of unlawful competition.
[13] The professed interrelated aims of the litigation, initiated by the ARC in the court
below, were said in the founding papers by the ARC to be: First, to protect the
intellectual property rights (including copyright) vesting in BeefPro through an interdict
and delivery up of the infringing works and damage; second, to restore, as far as
possible, the ability of the ARC to properly fulfil its statutory duties in respect of animal
recording and improvement in the national interest; third, to protect the ARC against
unlawful interference with those duties by the appellants; and lastly, to protect the ARC
from unlawful competition by or at the instance of the appellants.
[14] In addressing the importance of the INTERGIS system in relation to the ARC’s
statutory obligations, more particularly in contributing to animal improvement by the
collection and collation of relevant data, it was explained by the ARC that genetically
superior animals could only be identified through a process of recording their pedigree
and performance. This was essential to the improvement of animal management.
[15] The ARC referred to the Animal Improvement Schemes established by the
Minister, on 5 January 2007, which imposed a system for animal recording and
submission of the recorded data to the INTERGIS platform. The ARC contended that
the schemes made it obligatory for participants to submit recorded data to INTERGIS.
[16] The applicable legislation, so it was asserted on behalf of the ARC, sets a
framework that contemplates only one national databank, namely, INTERGIS,
established with the cooperation of the Department of Agriculture, Forestry and
Fisheries. Emerging farmers who stood to benefit from the schemes are entitled to
participate in the schemes which, as stated above, were intended to regulate and
improve animal breeding.
[17] According to the ARC the scope of the Act and the associated regulations as
well as the AI Schemes dictate that only one national databank is recognised, namely
INTERGIS. Once an animal is recognised as part of a breed, or considered suitable
to be a donor animal, or for importation or exportation, the statutory framework makes
it obligatory for its details to be registered on INTERGIS.
[18] There are two streams of data that feed into INTERGIS. One from herd
management programmes, such as BeefPro, and the second, from data submitted by
registering authorities provided for in the ANI Act. BeefPro can operate as a
standalone programme but was developed to be compatible with and integrate with
INTERGIS.
[19] In seeking the interdictory and associated relief granted by the court below, the
ARC described what it considered to be the infringing conduct of the appellants. The
first appellant, Mr Leslie Bergh, is an erstwhile senior employee of the ARC, having
held the title, of amongst others, Assistant Director: National Beef Recording and
Improvement Scheme. His contract of employment with the ARC was terminated on
11 September 2013. Mr Bergh had been employed by the ARC and its predecessors
for approximately 32 years. He now consults to the agricultural industry through Bull’s
Eye, the second appellant.
[20] According to the ARC, Mr Bergh’s employment was terminated after a
disciplinary hearing at which he was found guilty of acting in conflict with the ARC’s
interests and misappropriating ARC property for his personal benefit. This included,
the ARC said, his development of adaptations of Beefpro, more particularly an
adaptation referred to as SheepPro. The sanction of dismissal was apparently upheld
by the CCMA.
[21] According to the ARC it is clear from Mr Bergh’s website that he:
• is registered as a professional scientist with the South African Council for Natural Science
Professions;
is a member of the South African Society for Animal Science;
has 32 years’ experience in animal recording, performance testing, genetic evaluation,
selection, breeding and related management aspects of beef cattle;
has in-depth knowledge of Stud Book as well as of the animal recording systems Logix
and INTERGIS;
was and is the “driving force” in the development, marketing, support and training of
BenguFarm livestock management software since its inception in 2005.
published numerous articles, presented many lectures and talks, conducted many
training courses and served in an advisory capacity on the boards of several breeders’
societies.
[22] Mr Tim Pauw is the sole and managing member of Benguela. The ARC
claimed that Bull’s Eye, Benguela and Mr Pauw were all infringing its copyright in
BeefPro by making, adapting, selling and distributing copies thereof under the name
BenguFarm. The fifth appellant is Ms Naomi Havenga, also a former senior employee
of the ARC. It was claimed that she assisted Bergh and Benguela in their infringing
conduct by taking responsibility for data bureau services and that she administers
BeefPro under the name of BenguFarm. It is uncontested that Mr Havenga and Mr
Bergh are well known to cattle breeders.
[23] Against the background sketched above, the ARC was emphatic that the
creation and development of BeefPro, an original work, requiring knowledge of animal
science, was at its instance and under its control and that it was thus the author.2 It is
a computer program, requiring technical skill to write the source code, and it
2 ‘Author’ is defined in the Copyright Act, in relation to a computer program, as ‘the person who
exercised control over the making of the computer program’. Section 2(1)(i) of that Act makes computer
programmes eligible for copyright.
incorporated literary works in the form of tables and compilations of data. Thus it was
a work worthy of copyright protection. The ARC sought to pre-empt any suggestion by
Mr Pauw and/or Mr Bergh that they had authored the program by stating that, in the
event of such an assertion, Mr Bergh could only have done so in the course of his
employment with ARC and that Mr Pauw could only have acted under his instructions
and control, with the result that copyright vested in the ARC, in terms of s 21(1)(d) of
the Act.3
[24] Furthermore, the ARC contended that in the event of a claim of joint ownership
by Mr Bergh and Mr Pauw, its consent for the use, distribution and sale of BeefPro
would nevertheless have been required. That was not provided and would not be
forthcoming.
[25] The complaint by the ARC about infringement of copyright and unlawful
competition on the part of the appellants, as asserted above, included complaints
about the use of SheepPro and an allied program called GenePro, which the ARC
claimed was developed at its instance and under its control.
[26] The ARC, in applying for the interdict it obtained, also alleged that shortly after
Mr Bergh left the ARC’s employ he and Mr Pauw diverted the administration of BeefPro
from the ARC to Stud Book and with the co-operation of the other appellants promoted
Bull’s Eye as a provider of consultation services in relation thereto, including recording
3 Section 21(1)(a), under the heading ‘Ownership of copyright’, provides that ‘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 21(1)(d), on the other hand, provides that in the case
of a work that is made ‘in the course of the author’s employment by another person under a contract of
service or apprenticeship, that other person shall be the owner of any copyright subsisting in the work
by virtue of section 3 or 4’.
and performance testing, dealing with breeding values, selection and related
management. According to the ARC, Bull’s Eye was promoted as offering training in
relation to BeefPro and data recording and also in relation to GenePro services. In
advertising such services it was claimed that Ms Havenga had joined the team and
that she would be instrumental in setting up and maintaining services such as data
capturing, the submission of data to Stud Book and administering BeefPro. Benguela
announced that BeefPro was being rebranded and the product offering would take
place under the BenguFarm name. Benguela offered an introductory course in relation
to the product, formerly known as BeefPro. Mr Bergh, Ms Havenga and Bull’s Eye
offered training courses and continued to do so.
[27] The ARC also accused Stud Book of acting as an agent for the sale and
activation of BenguFarm software, which included the rebranded BeefPro adaptations.
In this regard, the ARC pointed to the service agreement it once had with Stud Book,
for the latter to administer and operate INTERGIS. A few months after the departure
of Mr Bergh and Ms Havenga, Stud Book cut off the ARC’s access to INTERGIS and
appropriated collected data to itself by using the benefits of BeefPro and operating the
new database under the Logix system. By doing so it had deprived the ARC of data
that the latter contended it was solely entitled to. Breeders could now access Logix to
gainfully use the gathered data. Breeders began sending their info to Logix rather than
to the ARC as they were obliged to. This meant, so the ARC said, that it was cut off
from data which it has a statutory right to gather and hold. Stud Book was reaping
commercial benefits by subverting the ARC’s national database.
[28] As to its entitlement to an interdict, the ARC summarised the position as follows:
(a) The appellants were unlawfully and without permission, licence or authorisation,
using BeefPro to infringe the ARC’s intellectual property rights, in contravention of
provisions of the Act and were engaging in unlawful competition.
(b)
The appellants were undermining the ARC’s statutory role and functions,
interfering with its relationships with its clients, more particularly, breeders’
associations, and influenced them to cancel their agreements with the ARC and
transfer their business to Stud Book.
(c)
That it had provided proof of the injury suffered in relation to the loss of business
and loss of income from the sale of BeefPro and concomitant services as well as loss
of goodwill and reputation and an interdict was its only effective remedy.
[29] In addition to interdictory relief the ARC had sought an order in terms of s 24(1B)
of the Copyright Act, namely, an enquiry into past losses that it had sustained. As is
apparent from the order set out above it obtained the additional relief sought.
[30] As stated above, the appellants were accused of collaborating with Stud Book
in order to divert data to Logix and it was claimed that with Stud Book they flagrantly
impinged upon the Arc’s intellectual property rights. Notwithstanding the ARC’s
withdrawal of its claims against Stud Book, the latter’s response to those claims
provides historical as well as legislative context and provides insight into the approach
to court for interdictory relief. As the claim against Stud Book was withdrawn after it
had filed its response it formed part of the record before us.
[31] Stud Book, in resisting the relief sought by the ARC, described its own history
in relation to legislative enactments, its interaction with the ARC and the termination
of that relationship. It explained that it was established as a voluntary organisation in
1905 by a number of stud breeders, with the aim of organising the breeding industry
in South Africa and that it started recording the births and pedigrees, being the
particulars of the sires and dams of every stud or ‘pure bred’ animals of various breeds
in so-called stud books. Recording was done in this manner up to book 30, which was
published in 1953. A predecessor of the Act4 had given some structure to the
identification, breeding and ownership particulars that were required to be recorded.
[32] Stud Book explained that with the beginning of the computer era the data
referred to above was captured on servers. Initially, the State allowed Stud Book the
use of its mainframe. The State became concerned about this data being captured
together with sensitive State data on the mainframe and this led to then Department
of Agriculture funding a project that saw Stud Book participating in the development of
a computer system for the recording of the relevant information. When that did not
progress as anticipated, it led to the purchase of a computer program developed by
CR Delta in Holland to serve as the basis of the development of a world class recording
system. This developed into the INTERGIS system. The project was funded on the
basis that the system would be developed, managed and operated as a joint venture
between Stud Book and the Department. To this end a written joint venture agreement
was concluded during July 1999. As the recording system was developed it was
realised that more details than merely the pedigree had to be recorded to evaluate an
animal’s genetic potential. This led to the recording of two legs, namely, registration
recording (births, parentage and ownership) and production performance recording
4 The Registration of Pedigree Livestock Act 22 of 1920.
(weight, growth rate, milk production, etc), so that the data could be effectively utilised
by breeders.
[33] The Livestock Improvement Act 25 of 1977 came into operation on 1 May 1979.
In that legislation Stud Book was recognised as the entity responsible for the
registration and publication of data concerning the pedigrees of farm livestock. The
ANI Act came into operation on 21 November 2003 and referred to ‘animal’ rather than
‘livestock’ in order to include other species not provided for under the latter term.
[34] An important change brought about by the ANI Act is that Stud Book was no
longer the only entity that could register animals for the purposes envisaged by the
ANI Act. That statute now provided that a breeders’ society or a group of such societies
could apply to the Registrar of Animal Improvement to become its or their own
registering authority, without making use of Stud Book as a registering authority. In
terms of s29(3)(a) Stud Book is:
‘deemed to be a registering authority which is registered in terms of s 8(7)(a)(ii) of this Act and
which has the power of a registering authority with reference to any kind of animal ... .’
[35] Stud Book pointed out that, in the normal course, recording of animal data is
not compulsory in South Africa. Some breeders’ associations made it compulsory for
members to record certain data and others not. Consequently, one will find some
breeders recording production data and others not. It is correct, though, that when a
farmer makes a decision to become a breeder of registered animals of a specific breed
he is required, in terms of the ANI Act, to become a member of the specific breed’s
breeders’ society. The society must then allocate him a herd designation mark, which
is unique. When an application to become a breeder is submitted to a registering
authority that registering authority must, on behalf of such a breeder, register a prefix
or a suffix on the INTERGIS with the ARC. That prefix/suffix is also unique across all
breeds and has to be recorded on a central database to prevent duplication. The
breeder can then record the birth of his or her animals with the registering authority.
[36] In relation to performance data the Minister has, in terms of s 20 of the ANI Act,
established schemes for various species. There are specifications, rules and fees
connected to the State’s established schemes, which are managed by the ARC. When
a breeder participates in these schemes he or she is obliged to provide their collected
performance data to the manager of INTERGIS, which presently is the ARC. The
scheme relevant to the present case is the Beef Recording and Improvement Scheme,
clause 13 of which provides that all beef farmers, stud breeders, commercial and
emerging farmers may participate in the scheme. Participation is optional and not
obligatory, as suggested by the ARC.
[37] In terms of s 8(1)(b)(vii) of the Regulations under the ANI Act, a registering
authority is authorised to operate an independent performance and testing scheme.
To enable it to do so all it was required to prove is that the data recording and
processing system it utilises complies with international standards. Stud Book
described how, after the development of INTERGIS as a joint venture, its servers were
housed in the Stud Book building in Bloemfontein. The management and operation
was done by Stud Book’s IT team, in terms of a separate operational agreement with
the ARC. It provided for the ongoing development, data capturing and processing of
the information provided to INTERGIS.
[38] Since 2008, according to Stud Book, it started receiving complaints from
breeders, breeders’ societies and performance test advisory committees about
vacancies at the ARC not being filled and about a deterioration of production recording
by the ARC. Stud Book requested a meeting with the ARC’s Chief Executive Officer.
The meeting took place on 1 April 2009. The CEO admitted that the ARC was
experiencing difficulties in meeting its obligations in respect of the recording of data,
due largely to a shortage of funds. At Stud Book’s request a professional organisation
prepared a business plan for the ARC. After two years of interaction no solution was
reached. There was no improvement in the services rendered by the ARC. The ARC
unilaterally terminated the operational agreement with Stud Book and took a decision
to relocate INTERGIS to Pretoria. That took place and Stud Book claimed monies it
said the ARC owed for services rendered and for rent. Notwithstanding the termination
of the operational agreement, the ARC had continued to submit data to Stud Book. A
dispute concerning the continued existence of the joint venture referred to earlier was
referred to mediation, during 2011. In light of what is set out above Stud Book
considered the ARC as having repudiated the joint venture agreement and terminated
the relationship. Because the monies owing by the ARC had not been paid Stud Book
ceased all data recording services it had previously rendered to the ARC.
[39] Thereafter, Stud Book obtained its own server and other technical equipment
and transferred a complete copy of the INTERGIS system onto its own new system,
which it considered it was entitled to do as an erstwhile party to the joint venture. It
consequently started to render a one-stop service to breeders, including registration
and production recording from 1 January 2012. It called its new system Logix.
[40] A significant number of breeders’ societies started utilising Stud Book’s
services. Stud Book recruited the staff necessary to provide the aforesaid services,
such as animal scientists, technical advisors and the like. In resisting the relief sought
by the ARC, Stud Book acknowledged that Mr Pauw, a private programmer, had been
requested by the ARC to develop a modern beef farm management program. Stud
Book played no part in the development of such a program and does not have access
to its source code. BeefPro was introduced to the public during 2005 by the ARC.
Whenever a copy of BeefPro was sold to a farmer all Stud Book did was load the
program, which Mr Pauw had installed onto its system. Stud Book is adamant that it
does not market or sell BeefPro.
[41] Stud Book was aware of the rebranding of BeefPro as BenguFarm-Beef.
According to Stud Book, farm management software is merely a convenience, as data
can be submitted by farmers of breeders’ associations by email which can then, just
as easily, be loaded onto Logix. BeefPro provides users with a choice to submit to any
of INTERGIS, Breedplan or Logix. The farmer has this choice. Stud Book never
doubted Mr Pauw’s authorship of the BeefPro or BenguFarm program. It was of the
firm view that he had developed the program. It is apparent from the description of the
Stud Book’s defence that on many issues there were fundamental disputes between
it and the ARC, which, for present purposes, need not be dealt with.
[42] I now turn to the defence put up by the other respondents in the court below,
the present appellants, principally through Mr Pauw, a software developer. During
2004 he was introduced to Mr Thinus Viljoen, who was employed by the ARC in
Stellenbosch. Mr Viljoen knew of Mr Pauw’s work in creating a cattle management
program for dairy farmers and informed him that the ARC was looking to develop a
software program for beef cattle farmers and that it had approached a number of
software developers. In 2005 he was contacted by Mr Bergh who asked him to travel
to Pretoria to explore the possibility of developing a software program for beef cattle
management. He met with Mr Bergh and Dr Van der Westhuizen, representing ARC,
and informed them that he was eager to develop such a program and had the
necessary expertise to do so.
[43] The ARC was unable to finance the development of the envisaged programme.
Mr Pauw was adamant that he had made it clear to the ARC that a great deal of time,
effort and skill would have to be expended to develop such a program and that he was
willing to undertake it, but only on the understanding that copyright in the program and
any adaptation would vest in him. Mr Pauw insisted that Mr Bergh and Dr Van der
Westhuizen on behalf of the ARC agreed to this, with further discussion to ensue on
the nature and content of the program. The risk of failure, in attempts to develop a
viable program, considering the time and effort required, was entirely his. This was
especially so since it was agreed that he would not be remunerated at all. The benefit
for the ARC of such an arrangement was that the bureaucratic constraints of seeking
approvals and acquiring funding did not apply. Furthermore, the ARC did not have
staff with the necessary skills and experience to develop such a program.
[44] It was agreed, so said Mr Pauw, that Mr Bergh would be the contact person at
the ARC with whom he would liaise in order to develop the program. It was
contemplated that the program would be sold for an annual licence fee, as this would
incentivise Mr Pauw as the developer to continue improving the program. Mr Pauw,
consequently registered Benguela as the corporate vehicle through which he would
conduct his relationship with the ARC. Mr Bergh was advised of this. After Benguela
was formed it would acquire Mr Pauw’s rights and obligations.
[45] Mr Pauw set out the material terms of an oral agreement that he had reached
with the ARC, represented by Dr Van der Westhuizen and Mr Bergh, as follows:
(a) the parties undertook to execute and complete a project for the development of a beef
cattle herd management computer program;
(b) the ARC would develop marketing material for the program and carry the costs in relation
thereto, unless Benguela agreed to do so;
(c) the ARC would supply Benguela with the relevant specifications, technical detail and other
relevant information in order for Benguela to create and develop the program;
(d) the ARC would manage the collection and administration of the selling price and annual
software licence fees in relation to the program and pay the agreed percentage of eighty five
percent of those fees to Benguela;
(e) the ARC would bear all costs for market research, the development and registration of
the name and logo of the program, the development and printing of marketing material, training
of ARC employees (to install, train and deliver after sales service to clients), administration
and record keeping;
(f) Benguela would supply the necessary hardware and software for development and
maintenance of the program;
(g) Benguela would be responsible for the development and creation of the program;
(h) Benguela would retain the copyright in the program and its adaptations and improvements
for the duration of Benguela;
(i) Benguela would bear all costs for the development, alterations, enhancements,
improvements and extensions of the program and the registration, development and
maintenance of the program’s website as requested by the ARC.
[46] According to Mr Pauw, there was a sense of urgency on the part of all
concerned to ensure that the program was developed as soon as possible so as to
beat any competitor in bringing a Windows based program for beef cattle management
to the market. Thus, the work was carried out with some expedition. Mr Pauw was
provided with an office at the ARC’s premises in Irene, with the only financial
contribution made by the ARC being an amount of R9 000 towards his rental for the
time he spent in Pretoria. He did not work under supervision and was not subject to
any working conditions at all. Mr Pauw also provided a written document in terms of
which he assigned his rights to Benguela.
[47] Mr Pauw described in detail the work that he had done in developing the
BeefPro program and described how the program functioned. Mr Pauw stated that in
the last month prior to BeefPro’s release to the public it was not uncommon for him to
spend between 16 to 18 hours a day working on it, almost every day of the week. The
initial programs and adaptations and improvements all constituted copyright protected
works. The ARC had no interest in how he went about developing the program. The
name BeefPro was arrived at after suggestions were solicited from interested parties,
including farmers and members of breeders’ societies. Since its release to the market
in August 2005, BeefPro has continued to undergo further developments to enable it
to remain competitive, which Mr Pauw was responsible for. He expended time, energy
and skill in doing this.
[48] Mr Pauw explained that the agreement concluded in March 2005, set out in
para 44 above, regulated the relationship between him and the ARC. The first written
record of the agreement occurred in October 2005, when Mr Bergh sent him a
document recording the parties’ respective obligations. The document provided that
the ARC would render assistance in further development of the program by providing
necessary information and that it would assist in the sale and distribution of the
program, collect licencing fees and pay a percentage to Benguela. Importantly, the
document noted that copyright in the program would be retained by Benguela.
[49] After receiving the document from Bergh, Pauw responded by email that he
agreed with the terms set out therein, with one alteration, which for present purposes
is immaterial. The agreement was not signed. Mr Pauw contended that even though
the agreement had not been signed the material terms were adhered to by Benguela
and the ARC and that was how the relationship continued to be regulated.
[50] During March 2007 Mr Bergh sent Mr Pauw another draft agreement. Although
more detailed than the first, it was in essence the same. Mr Pauw responded by email
accepting the material terms. Once again, the relationship continued as before. It was
in their mutual interests that BeefPro continued to be marketed and developed on an
ongoing basis. In the latter part of 2009, the ARC sought to renegotiate the agreement
but Mr Pauw was not receptive to the idea. In seeking a new agreement, Dr Greyling,
on behalf of the ARC, raised the question of the transfer of intellectual property in
relation to BeefPro. I pause to record that Dr Greyling was employed as Research
Team Manager of the ARC’s Beef Cattle Improvement Program on 1 January 2009,
some four years after the arrangements had been made in relation to the development
of BeefPro. An exchange of emails demonstrates, so Mr Pauw contended, that the
ARC accepted that there was an existing arrangement in place. Mr Pauw was
emphatic that the ARC was never the holder of copyright in BeefPro, nor had it ever
historically claimed that right.
[51] In its replying affidavit the ARC relied on s 5(2) of the Copyright Act5 and stated
that any work made under the direction and control of the state vested in the state.
Thus, it submitted, copyright in BeefPro belonged to it. The ARC pointed to the draft
agreement provided by Mr Pauw, in terms of which Benguela undertook to provide the
ARC with the source code for BeefPro. Furthermore, the ARC referred to a draft
agreement, sent by Mr Bergh and not disclosed by Mr Pauw, in terms of which
copyright in relation to BeefPro was claimed by the ARC. The relevant clause (referred
to as para 9) of that agreement reads as follows:
‘Any Intellectual property generated in terms of this agreement will vest in the ARC as per
Section 24 Agricultural Research Act, 86 of 1990, which IP is held on behalf of the Minister of
Agriculture and will be managed by the ARC in terms of the guidelines provided by the national
Department of Agriculture to the ARC from time to time.’
[52] Mr Pauw responded to that document by email, dated 26 January 2006. The
relevant parts of that email read as follows:
‘1. Par 4.2, p5 [Payment] en ook par 3.1, p12: Ek sien hier staan betaling aan die LNR?
2. par 9, p13 [Intellectual Property] Ek het met jou voorheen hieroor gepraat. Dit lyk hier of
BeefPro die LNR se intellektuele eiendom is? Ek sou dit anders wou hȇ indien moontlik. Dit
5 Section 5(2) provides:
‘Copyright shall be conferred by this section on every work which is eligible for copyright and which is
made by or under the direction or control of the state or such international organisations as may be
prescribed.’
gaan hier oor as ek in die toekoms die besigheid, nl BenguelaSoft, of enige gedeelte (lees
BeefPro) daarvan sou wou verkoop. Ons het gesé in so ‘n geval moet die ooreenkoms tussen
BenguelaSoft en die LNR net so na die derde party oorgedra word. Die derde party neem dus
BenguelaSoft se pligte ten opsigte van die LNR oor en die LNR se verpligtinge ten opsigte
van BenguelaSoft gaan oor na die derde party.
As die program die LNR se intellektuele eiendom is, dan moet daar, en ek dring in elk geval
daarop aan, dat die LNR se verpligtinge, nl die persentasie van aankope en jaargelde aan
BenguelaSoft betaalbaar, in die kontrak gestippuleer word. Ek vertou jou 100% Leslie, maar
ek moet myself beskerm in die geval wat jy weggaan of iemand hoër op sé dinge kan nie so
gebeur soos tans nie. Met ‘n kontrak wat gelde betaalbaar aan BenguelaSoft spesifiseer, sal
ek wel die besigheid van die hand kan sit en myself beskerm teen moontlike toekomstige
probleme.’
[53] The ARC relied on yet a further email by Mr Pauw, dated 9 March 2006, in
relation to a draft agreement sent to him, in which he said the following:
‘Leslie, ek hoop dit is reg. Baie van die goed waaroor ons gister gepraat het, het jy in elk geval
by die betrokke party se verpligtinge bygesit. Die veranderinge is in rooi. By 3.2.1.13 en
3.2.1.14 net “BeefPro” bygesit, anders raak ek geregtig op al die LNR se inkomste! Is 3.2.2.7
[nie] teenstrydig met 3.2.2.11 nie? Groete Tim’
It is necessary to have regard to clauses 3.2.1.13 and then 3.2.1.14, which is referred
to in Mr Pauw’s email. They read as follows:
‘3.2.1.13 To manage the collection and administration of the moneys received by the ARC
from selling BeefPro and to pay 85% (eighty five percent) of these moneys (VAT excluded) to
BenguelaSoft within 30 days after the applicable invoice was received and provided that the
invoiced service has been delivered satisfactorily to the ARC.
3.2.1.14 To manage the collection and administration of the moneys received by the ARC from
the agreed upon annual BeefPro license fees (R500.00, VAT included) and to pay 85% (eighty
five percent) of these moneys to BenguelaSoft within 30 days after the applicable invoice was
received and provided that the invoiced service has been delivered satisfactorily to the ARC.’
[54] It was contended on behalf of the ARC that the emails by Mr Pauw, referred to
in the preceding paragraphs, gives a lie to his assertion of copyright vesting in him. It
was submitted that if he had indeed authored the BeefPro program free from the
control and supervision of the ARC, he would not had been negotiating about the
ownership or transfer of copyright in the work.
[55] Dr Greyling accused Mr Pauw of not disclosing the emails referred to in paras
51 and 52 above. He did not, however, explain why he or the ARC had made no
reference in their founding affidavits to the emails by the ARC and the associated draft
agreements that Mr Pauw disclosed in his answering affidavit. Nor did he explain why,
after these two emails were exchanged, drafts sent to Mr Pauw on 9 March 2007 and
16 March 2007 reverted to the original terms that provided that copyright in BeefPro
vested in Benguela.
[56] This appeal does not concern the rights of the ARC as against farmers and
breeders, in relation to data and the submission thereof, obligatory or otherwise. This
appeal is also not about whether the ARC is entitled to a monopoly in respect of certain
data, which it seems to be suggesting. The parties were agreed that a finding on
entitlement to copyright is dispositive of the appeal. The ARC sought relief on the basis
that it owned the copyright in BeefPro. The question to be addressed is whether it
discharged the onus of proving its ownership.
[57] Insofar as the ARC’s claim to copyright based on an employment contract with
Mr Bergh is concerned, the problem is that it is clear that Mr Bergh did not develop the
program. He was emphatic in his support of Mr Pauw’s assertion of how the latter had
developed the program, based on his skill and experience, as was Dr Van der
Westhuizen. No proof was provided by the ARC of any employment relationship with
Mr Pauw. No evidence was adduced by the ARC in relation to any remuneration paid
to Mr Pauw. He, on the other hand, was emphatic that he had received no
remuneration and that only R 9 000 was paid in respect of certain rental because, in
developing the program, he was required to be present in Pretoria.
[58] In relation to the ARC’s claim of copyright based on s 5(2) of the Act, Dr Greyling
stated, in general terms, that BeefPro was ‘created for and at the instance of ARC’
and that the knowledge of the employees of ARC was essential to its creation. Later,
Dr Greyling said the following:
‘The computer code for BeefPro was written by Pauw, acting on instructions and according to
detailed specifications provided by Bergh who, in turn, was acting in his capacity as employee
of ARC and as directed by it.’
Dr Greyling also stated that Mr Bergh was a ‘project leader’ in relation to the
development of BeefPro.
[59] As stated earlier, the Copyright Act defines the ‘author’ of a computer
programme as: ‘the person who exercised control over the making of the computer
program’6. The onus to prove that it exercised control over the making of BeefPro
rested on ARC. Roux de Villiers, in an article entitled ‘Computer programs and
6 See s 1 of the Copyright Act.
copyright: The South African Perspective,7 identified three situations in relation to a
computer program:
‘Three possible situations can be identified: a programmer writes a program while not being
under any obligation to a third party to do so; a programmer writes a program in fulfilment of
his or her obligations under an employment contract (locatio conductio operarum); or a
programmer writes a program in fulfilment of his or her obligations to do so under a
commission or contract for work (locatio conductio operis).’
[60] The author of the aforesaid article then goes on to deal with each situation in
turn:
‘In the first situation, where the programmer is under no obligation to write the program, the
programmer is apparently in control of the making of the program and will be the author thereof
as well as the first copyright owner. In the second situation, where the programmer is
employed, it is generally not decisive who the author of the program is, because the first
ownership of copyright in the work will tend to vest in the employer of the programmer
irrespective of who the author is. It is extremely likely that in most cases the employer will, in
any event, be the author of the program, since it would be exercising “control” over the
employee’s actions as part of the employment relationship. The real problem arises in the third
situation, where the programmer is commissioned to write the program, which also happens
to be the situation that occurs most often in practice.’8
[61] In the present case, it is common cause that Mr Pauw was commissioned by
the ARC to write the BeefPro program. What has to be determined is whether the ARC
proved that it exercised control over the development of BeefPro. In Haupt t/a Soft
7 R de Villiers ‘Computer programs and copyright: The South African Perspective’ (2006) 123 SALJ
315-317 at 320.
8 At 320. (Citations omitted).
Copy v Brewers Marketing Intelligence (Pty) Ltd and Others [2006] ZASCA 40; 2006
(4) SA 458 (SCA) this court had occasion to consider the meaning of ‘control’ in
relation to the definition of author of a computer program as provided for in s 1 of the
Copyright Act. Streicher JA said the following:9
‘“Control” in the definition must therefore have been intended to have a wider meaning than
“control” in the employment situation, that is, a person may, because of his control over the
making of a computer program, be the author of that program even if the creator of the program
is an independent contractor. According to The Shorter Oxford English Dictionary “to control”
means “to exercise restraint or direction upon the free action of” and “control” means “the fact
of controlling, or of checking and directing action”. In this case Haupt instructed Coetzee as to
the end result that was to be achieved, Coetzee then did the technical work required to achieve
that end result and, from time to time, effected improvements. However, Coetzee was, all
along, in constant contact with Haupt and he accepted and executed detailed instructions from
Haupt. As he progressed, he submitted his work to Haupt for it to be checked and approved
by him. In the properties section of the Data Explorer program, Coetzee indicated that the
copyright was owned by Soft Copy, the name under which Haupt was trading. The allegation
by Haupt in his founding affidavit that it was always agreed between the parties that Haupt
was the owner of the program was not disputed. This being the understanding between the
parties, Haupt could, at any time, direct in which direction the development of the program
should proceed, or could terminate further development if he wished to do so. Haupt was,
therefore, in a position of authority over Coetzee insofar as the development of the program
was concerned. He was in command and Coetzee subjected himself to such command. It is
true that Haupt was in no position to instruct Coetzee as to how, technically, to achieve his
requirements, but I agree with the High Court that one does not need to be a computer
programmer to be able to control the writing of a computer program. For these reasons I am
9 At para 41. (Citations omitted.)
of the view that Haupt controlled the writing of the computer programs written after 31 July
1998.’
[62] The fundamental problem for the ARC is that the principal actors in relation to
the commissioning of BeefPro, namely Mr Van der Westhuizen, Mr Bergh and Mr
Pauw provided first-hand evidence as to how it came about and as to its terms. They
all stated that Mr Pauw had developed the program, working independently and
bringing his own skills and experience to bear, only seeking certain information from
the ARC in order to ensure that the program served its purpose. He did not follow
instructions from, or work under the supervision of Mr Bergh, or anyone else at the
ARC. As the independent developer of the program he did not have to obtain, on an
ongoing basis, the approval of anyone at the ARC. The technical aspects of his work
did not have to be checked by someone in authority at the ARC.
[63] The present case is markedly different from Haupt. Mr Pauw did not take
detailed instructions from Mr Bergh or anyone else at the ARC. His work was not
subject to checking and approval and he was not being paid for his efforts. The
program reflected Benguela as the copyright owner, in line with what was asserted by
Mr Bergh, Mr Pauw and Dr Van der Westhuizen. I agree, in general, with the view
expressed in the De Villiers article, that the mere provision of functional requirements
and a periodic review of progress being made in the development of the program and
testing it finally to see if it met its purpose, without more, does not establish control
over the making of it or vest authorship therein.
[64] Furthermore, Mr Pauw was adamant that an oral agreement had been
concluded in terms of which he reserved ownership of the program. Mr Pauw’s
assertion that the ARC could not finance the development of the program, is not in
contestation. Mr Pauw’s claim to copyright is substantiated by the fact that the draft
agreements, latterly disclosed by the ARC in the replying affidavits, provide for
Benguela, to receive 85% of the income from the sale of each BeefPro program and
the ARC undertook to pay the annual licence fee to Beguela in relation to paid up
registrations of BeefPro software. The agreements also provided expressly that the
copyright in BeefPro vested in Benguela. The agreements also made provision for the
source code to be made available to the ARC. The latter’s reliance on the source code
to BeefPro being provided to it does not, in the circumstances set out above, assist it
in its claim to copyright.
[65] Dr Greyling, the principal deponent on behalf of the ARC, was unable to provide
first-hand countervailing evidence. Nowhere in his affidavit does he state that he has
personal knowledge of material events in relation to the development of BeefPro. The
ARC’s reliance on the emails by Mr Pauw, referred to in its replying affidavit, in terms
of which he sought to negotiate terms in relation to the transfer of intellectual property,
is of no assistance. He was not writing as a lawyer, but as a software developer
seeking to ensure that he retained his source of income derived from the sale of the
program he had developed. If anything, the exchange of emails and the contents of
the draft agreement prepared by the ARC, referred to in paras 51 to 53, give a lie to
the ARC’s contention that it is the owner of BeefPro. In light of what is set out above,
it is clear that the ARC failed to discharge the onus in relation to its claim of copyright.
It failed to show that in developing the program, Mr Pauw acted under its control. In
the circumstances set out above there can be no question of joint ownership as
contended for, in the alternative, by the ARC.
[66] The ARC’s reliance on s 5(2) of the Copyright Act is misplaced. The ARC is a
juristic person established in terms of the Act. It is controlled by a ‘Council’, constituted
in terms of s 9 of the Act. It is not the state. Even if it could be contended that it is the
state because of the funding it receives and because of the powers of the relevant
Minister in relation to its activities, the problem for the ARC is that it is clear from what
is set out above that it failed to discharge the onus of showing that Mr Pauw acted
under the control of the ARC or under the direction of any other entity. The appeal
must thus succeed.
[67] Finally, it is necessary to return to an aspect referred to briefly at the
commencement of this judgment, namely, the failure by Kose AJ to provide reasons
for the order. In A A Maake v Director of Public Prosecutions10 this court said the
following:
‘It is not only a salutary practice but obligatory for judicial officers to provide reasons to
substantiate conclusions. The magistrate did not do so in respect of the maximum sentence
imposed by him. In an article in The South African Law Journal entitled “Writing a Judgment”
former Chief Justice M M Corbett pointed out that this general rule applies to both civil and
criminal cases. In civil cases it is not a statutory rule but one of practice. In Botes and Another
v Nedbank Ltd 1983 (3) SA 27 (A) at 27H-28A, this court held that in an opposed matter where
the issues have been argued litigants are entitled to be informed of the reasons for the judge’s
10 A A Maake v Director of Public Prosecutions [2010] ZASCA 51; 2011 (1) 263 (SCA) para 19.
(Footnotes omitted).
decision. See also in regard to the obligation to provide reasons Road Accident Fund v
Marunga 2003 (5) SA 164 (SCA) at 171E-172C.’
[68] In the article by the late Chief Justice referred to in the preceding paragraph,
the following is stated:
‘In addition, should the matter be taken on appeal, the court of appeal has a similar interest in
knowing why the judge who heard the matter made the order which he did. But there are
broader considerations as well. In my view, it is in the interests of the open and proper
administration of justice that the courts state publicly the reasons for their decisions. Whether
or not members of the general public are interested in a particular case – and quite often they
are – a statement of reasons gives some assurance that the court gave due consideration to
the matter and did not act arbitrarily. This is important in the maintenance of public confidence
in the administration of justice.’11
[69] In the present case it cannot be emphasised enough that it is indeed deplorable
that the litigants were made to wait for approximately two years for an order to issue,
at which point no reasons were supplied and requests for reasons were met with no
response. This can only bring the administration of justice into disrepute. It is hoped
that this court will in the future not have to deal with circumstances such as these.
[70] The following order is made:
The appeal is upheld with costs, including the costs of two counsel.
The order of the court below is set aside and substituted as follows:
11 M M Corbett ‘Writing a judgment’ (1998) 115 SALJ 116 at 117.
‘The application is dismissed with costs, including the costs of two counsel.’
_________________
M S Navsa
Judge of Appeal
APPEARANCES
For Appellants:
A R Sholto-Douglas SC, with C Bester
Instructed by:
ENSafrica, Sandton
Webbers, Bloemfontein
For Respondent:
L J van Tonder SC, with A M Heystek
Instructed by:
DMK Kirsch Inc, Sandton
Phatshoane Henney Attorneys
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Bergh and Others v The Agricultural Research Council (Case no 93/2019) [2020] ZASCA 30
(1 April 2020)
From:
The Registrar, Supreme Court of Appeal
Date:
1 April 2020
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgment of, nor is it binding on, the Supreme Court of Appeal
Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against an order of the
Western Cape Division of the High Court, Cape Town (Kose AJ, sitting as the court of first instance).
The appeal was upheld with costs.
The matter concerned a Microsoft Windows based computer program (BeefPro), that serves as a cattle
or herd management tool, which the respondent, the Agricultural Research Council (the ARC), claimed
it developed and introduced to the market in 2005.
The ARC, a juristic person established in terms of the Agricultural Research Act 86 of 1990 to promote
agriculture and industry, operates an ‘integrated registration and genetic information system’
(INTERGIS). In fulfilling this role, the ARC utilises BeefPro and conducts this system on the INTERGIS
platform. The basis of its approach to the court below with a claim against the appellants for breach of
copyright and unlawful competition was that the appellants had misappropriated BeefPro, so the ARC
alleged, and utilised it for purposes of conducting their own database (Logix), a parallel system to
INTERGIS. The appellants were allegedly employing BeefPro for financial benefit and consequently
undermined the ARC in the performance of its statutory duties. The ARC contended that cattle farmers
were supplying data to the appellants that ought to be destined for the INTERGIS system, which the
appellants then used in their Logix system. This rendered INTERGIS redundant.
Furthermore, since BeefPro qualified as a work in terms of the Copyright Act 98 of 1978, by
misappropriating it the appellants were guilty of copyright infringement or engaged in unlawful
competition. As a result, so the ARC contended, it was entitled to seek an interdict in the terms granted
by the high court. The ARC also sought an order directing an enquiry into past losses that it had
sustained, in terms of s 24(1B) of the Copyright Act, which the high court granted in addition to the
interdictory relief.
The SCA noted that the relief sought by the ARC was on the basis that it owned the copyright in BeefPro.
The question was thus whether the ARC had discharged the onus in proving its ownership.
The SCA held that the fundamental problem for the ARC was that Mr Pauw, who was commissioned
by the ARC to write BeefPro, developed the program by working independently and bringing his own
skills and experience to bear, only seeking certain information from the ARC to ensure that the program
served its purpose. Mr Pauw did not follow instructions from or work under the supervision of an
employee of the ARC. His work was not subject to checking and approval and he did not receive any
remuneration for his efforts. The SCA held that the mere provision of functional requirements and a
periodic review of the progress made, with a final test to ensure that the program served its purpose,
did not without more establish control over the making of the program, or vest authorship therein.
Furthermore, Mr Pauw had insisted from the outset that copyright should vest in him. Written exchanges
between him and the ARC substantiated his contention. The SCA concluded that the ARC had failed
to discharge the onus in relation to its claim for copyright. It was not established that Mr Pauw acted
under the ARC’s control in developing the program.
The SCA was also critical of the failure by the high court to supply reasons for its order.
In the result, the appeal was upheld with costs, including the costs of two counsel.
__________________________
|
3038
|
non-electoral
|
2015
|
IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20217/2014
In the matter between:
SANELA DLANJWA
Appellant
and
THE MINISTER OF SAFETY AND SECURITY
Respondent
Neutral citation: Dlanjwa v The Minister of Safety and Security (20217/2014)
[2015] ZASCA 147 (01 October 2015)
Coram:
Maya ADP, Bosielo, Leach, Tshiqi and Mbha JJA
Heard:
17 August 2015
Delivered:
01 October 2015
Summary: Delict – dependants’ action for damages arising from loss of support –
policeman injuring his wife and taking his own life with service firearm – probabilities
that wife reported his violent conduct against her and his threats of suicide to the
police – police negligent in failing to dispossess him of firearm – wrongfulness
established.
_________________________________________________________________
ORDER
_________________________________________________________________
On appeal from: Eastern Cape Local Division, Mthatha: (Tshiki and Van Zyl JJ,
Alkema J dissenting, sitting as a court of appeal)
1 The appeal is upheld with costs.
2 The decision of the Full Court is set aside and replaced with the following order:
‘The appeal is dismissed with costs.’
JUDGMENT
Maya ADP (Bosielo, Leach, Tshiqi and Mbha JJA concurring):
[1] This is an appeal against the judgment of a full court of the Eastern Cape Local
Division, Mthatha (Tshiki and Van Zyl JJ, Alkema J dissenting) (the High Court). The
majority overturned a judgment of a single judge (Petse J) who had been called upon
solely to decide the merits of the appellant’s damages claim in the sum of R5 858 500
against the Minister of Safety and Security (the Minister) and his erstwhile co-
defendant, the Station Commander of Ngangelizwe Police Station, Mthatha (the
second defendant). The trial court had held the Minister and the second appellant
liable. The full court overturned that order. The appeal is with this court’s special
leave.
[2] The litigation arises from a tragic domestic violence incident which occurred on
19 April 2006 and left the appellant with horrendous gunshot injuries inflicted by her
late husband, Sergeant Thandikhaya Dlanjwa (the deceased). The deceased was
employed by the South African Police Service (SAPS) and was stationed at Central
Police Station, Mthatha. After shooting the appellant with a service firearm (the
firearm), the deceased turned the firearm on himself with fatal consequences. The
appellant then sued the minister and the second defendant, in her personal capacity, for
general damages, medical expenses, loss of earnings and loss of support arising from
her injuries and the deceased’s suicide. She also sued for loss of support on behalf of
her infant triplets born of her marriage with the deceased.
[3] In her summons the appellant alleged that the shooting and commission of
suicide by the deceased were caused by the negligence of the second defendant and/or
certain police officials attached to his station. These police officers were negligent, so
it was asserted, in that the deceased was granted permission to possess the firearm
when not on duty without observance of the relevant official procedures. Furthermore,
it was claimed, these police officers failed to (a) dispossess the deceased of the
firearm, (b) initiate disciplinary steps against him and (c) have him criminally charged
despite her previous requests and their knowledge that the deceased abused alcohol,
had a violent temper and suicidal tendencies, had assaulted her, pointed a firearm at
her and threatened to shoot her and thereafter kill himself, which led her to obtain a
protection order against him. Thus, it was alleged, the police failed to take measures to
protect the appellant from being injured by the deceased and prevent him from killing
himself, which they should have foreseen, in breach of the legal duty they owed her.
[4] The action was defended and went to trial at which both sides adduced
evidence. The gist of the appellant’s testimony was that during 2005 her marriage to
the deceased, whom she married in June 2004 after a brief courtship, had quickly
soured. They squabbled mainly over her awkward working hours at a local Kentucky
Fried Chicken outlet. Her duties included night shifts ending at 22h00, after which she
would struggle to get public transport, causing her to arrive home late. The deceased, a
heavy drinker, suspected that she was cuckolding him and even questioned his
paternity of her pregnancy with their triplets. He also had trouble at work, where he
dealt with stolen vehicles, and had been under on-going investigation. As a result, he
was occasionally arrested and once had the firearm confiscated although she
subsequently saw it in his possession. The bickering soon graduated to physical
assaults which she reported to his mother to no avail. He would also point the firearm
at her and threaten to shoot her. She always forgave him however because he would
promise to desist from his violent conduct and she was protecting him as she did not
want him to be arrested.
[5] The appellant’s account in relation to the events which occurred just before the
shooting incident was inconsistent during her cross-examination regarding the dates
when the deceased pointed the firearm at her for the first time, her initial approach to
the police for assistance and the number of times he threatened her with the firearm.
But she was unswerving on the substance of her clashes with the deceased. She
narrated that in February 2006 she returned from work around midnight, accompanied
by a friend who had fetched her from work when public transport did not arrive. The
deceased was extremely angry. He would not accept her explanation for her late arrival
and wanted to assault her. Out of fear that he might do so and use the firearm as he had
previously threatened, she approached Ngangelizwe Police Station to request
assistance and have him disarmed. The policeman who attended her told her that he
knew the deceased and that he had a violent disposition. For that reason he did not
want to be involved and instead dispatched two of his colleagues to see her home
safely. These policemen drove her home in a police vehicle and managed to pacify the
deceased who then allowed her back in the house without incident.
[6] There was a brief lull which, however, broke on 6 March 2006. She returned
from work during the afternoon and found the deceased angry because her cellular
phone, which she had left at home, was off when he called her earlier. He pointed the
firearm at her and tried to assault her. She managed to escape and sought refuge from
their landlady who then tried to reason with the deceased. Although he appeared to
calm down she did not trust him and fled with her friend who was one of the triplet’s
nannies, Vuyokazi. They spent the night at a friend’s house and the appellant reported
the incident at the second defendant’s station in the morning. She still did not wish to
have the deceased arrested and merely wanted him disarmed. There she was advised to
obtain a protection order. She promptly did so after presenting a statement written by
her that ‘[the deceased] hit me and he promise (sic) to shoot both of us … I gave him
the many (sic), he always want (sic) the money to buy beers, he hit me and hit my child
[born out of wedlock] he always hit me and promise to kill himself and me (sic)’. The
deceased was also ordered to vacate the common home although this was rescinded on
the return day of the protection order on the basis of the deceased’s plea that he could
not afford alternative accommodation. The magistrate then ordered them to undergo
counselling.
[7] Uneasy calm prevailed in the following two weeks until the cataclysmic events
of 19 April. She knocked off duty in the afternoon and socialised with Vuyokazi and a
few colleagues at a shebeen. She and Vuyokazi returned home late in the evening. She
was playing with the babies in the nursery when the deceased, who carried a firearm,
called her from the door. Sensing danger, she refused to go to him. He entered the
room and struck her on the head with the firearm. As she fell, she heard a gunshot and
lost consciousness and only came around the following day in hospital. She had
sustained gunshot wounds on her face, chest and leg and learnt that the deceased had
killed himself.
[8] Various police officers testified for the defence. They included Warrant Officer
Dyantyi who, as it turned out, had attended to her on her first visit to the police station,
Warrant Officer Madyibi, one of the two officers dispatched by Dyantyi to take her
home and Warrant Officer Dinwayo who claimed to have attended to the appellant
together with a colleague, Seargent Zikolo, during the second visit. The essence of
these officers’ evidence was that although the appellant approached the police as she
alleged, she never reported that the deceased had assaulted her and was in possession
of the firearm which he was using to threaten and point at her. According to Madyibi
and Dyantyi, on her first visit to the police station the appellant merely reported that
the deceased refused to let her into their house because she had returned home in the
wee hours of the morning. The incident was not recorded in the Occurrence Book
(OB) because it was trifling. Regarding the second visit Dinwayo alleged that the
appellant only reported that the deceased threatened to assault her, whereupon she was
advised of her options to lay criminal charges or obtain a protection order against him.
The appellant chose to seek a protection order only as she did not want him to be
arrested. This incident was recorded in the station’s OB.
[9] It was not disputed that the firearm, a Z88 9mm pistol, was recovered at the
shooting scene and belonged to the State. But it was denied that it had been officially
allocated to the deceased. Lieutenant-Colonel Ndzalela who was in charge of the
compilation and maintenance of the assets inventories at the material time, and the
deceased’s supervisor, Captain Bhabha of the Vehicle Identification and Safeguarding
Section, opined that he had obtained it unlawfully. Incidentally, it came to light at the
trial that no inventory of the state firearms and ammunition allocated to the deceased’s
police station had been conducted at its armoury for about five years. This was in
breach of police regulations which required annual stock-taking of all state assets at
police stations. As appears from the relevant records, which included a tattered
Firearms Register, showed the firearm had not been allocated to the deceased at the
material time. The last entry recorded that it was returned to the armoury by one of his
colleagues on 30 October 2001. It was recorded as missing, together with 76 other
firearms, only on 3 April 2007 when an inventory was conducted for purposes of
handing over the command of the station to a new commissioner. According to
Ndzalela, Inspector Nonjokovu who visited the shooting scene and recovered the
firearm never reported its recovery to its source, the deceased’s station.
[10] The trial court decided the case on this evidence. As the appellant had not
adduced any testimony to prove that the firearm had been officially allocated to the
deceased as alleged in her pleadings, the court properly accepted that no liability had
arisen for the police to monitor the deceased’s fitness to possess a firearm. The court
thus focussed its inquiry on whether the appellant had reported the deceased’s
possession of the firearm to the police and that he used it to threaten her, to found a
legal duty to protect her. In the court’s view, the inconsistencies in the appellant’s
version did not detract from its credence. This was so, it found, because ‘she was in
the main consistent in her version and the central features of her version withstood
intense gruelling … cross-examination’ whereas the defence version of the events of 7
March 2006, given about five years later, was not supported by objective documentary
evidence as no written statements had been taken from her. The court did not believe
that the appellant would not tell the police that the deceased had assaulted and
threatened to shoot her but report that to the magistrate, whom she approached on the
suggestion of the police only a few hours later. The court concluded that the police
were obliged to investigate the appellant’s report and take requisite steps to protect her
from harm, notwithstanding her election to seek only a protection order. Their failure
to do so was, therefore negligent and wrongful and the appellant had discharged the
onus resting on her.
[11] The majority of the full court disagreed with all the findings made by the trial
court. It found that the trial court’s evaluation of the evidence was flawed because it
weighed the probabilities of the case ‘without also addressing the credibility and
reliability of the evidence’, thus entitling it to consider these issues afresh. It disagreed
entirely with the trial court’s credibility findings made in respect of the appellant. The
appellant was found an untruthful and unreliable witness. Her explanation that she
wanted to protect the deceased and did not want him to be arrested but merely
disarmed of the firearm because he was the family’s breadwinner, and that she
reported him on Vuyokazi’s advice, was held against her. Its view, this explanation
was contradictory – she could not have reported his conduct to the police because had
she done so he would have been arrested and charged at the risk of his job. The police
who attended her on 7 March 2006 had no reason not to record that the deceased had
threatened her with a firearm. And she muddled up the dates on which the deceased
pointed the firearm at her, because she was lying. It found that it made no sense for her
to report the deceased to the police in February 2006 simply because he was angry and
not do so previously when he had actually pointed the firearm at her and threatened to
shoot her. Her explanation for reporting the incident of the evening of 6 March 2006
only on the following morning was also discounted because she initially said there was
no transport and later said she had no money.
[12] The majority of the full court held that the appellant would not have accepted
the police’s failure to disarm him and not take that up with ‘the relevant senior
authorities’ if she had made that request and truly wanted to have him disarmed.
Moreover, when she applied for the protection order she had not completed the
portion of the application form which requires the magistrate to order the police to
seize any arms or dangerous weapons in the offender’s possession. And acceding to
the deceased’s plea to the magistrate to return to the marital home, without insisting on
an order that he should first be disarmed, and the absence of such an order by the
magistrate, was further proof that she neither reported the deceased’s possession of the
firearm nor sought its seizure from the magistrate as well. Regarding the appellant’s
report to the magistrate which mentioned the assaults and shooting threats the full
court said that the appellant ‘could differentiate between the police and the
magistrate’s office and she was aware of what she could say to the magistrate’s office
officials as opposed to what she could tell the police …[so] the mere fact [that her
statement] contains information about the firearm and threats by the deceased to shoot
[her] and himself could not necessarily mean that the same information was relayed to
the Ngangelizwe police’. In the circumstances, the probabilities overwhelmingly
pointed to the conclusion that she never informed the police that the deceased pointed
a firearm at her and threatened her as she alleged. Furthermore, the police became
aware of the existence of the protection order, which was not served on them, only
after the institution of her damages claim. Therefore, they had no legal obligation to
prevent the harm caused by the deceased and the appellant failed to prove her case.
[13] On further appeal before us, the crisp issue was whether the appellant had
informed the police that the deceased had assaulted her, pointed the firearm at her and
threatened to shoot her.1 Her counsel contended that the majority of the full court
failed to deal with the flaws in the defence version, failed to attach due weight to the
probabilities in the appellant’s favour and unduly concerned itself with the irrelevant
1 Indeed, her evidence that the deceased had always been in possession of a service firearm which he had pointed at her and
that he threatened to shoot her was not gainsaid. And as was observed in the minority judgment, it would have been far-
fetched and fanciful to suggest that the appellant fabricated the deceased’s threats which he executed a mere six weeks after
incidents, which occurred in 2005, and discrepancies purportedly inherent therein
instead of focussing on the events of February and March 2006 on which her cause of
action was founded. Counsel for the defence, on the other hand, strenuously defended
the full court’s judgment which he contended properly assessed the evidence in its
totality. In his submission, the appellant’s version was correctly rejected as it was
hopelessly contradictory whereas the police witnesses could not be impeached in any
manner. He further slated the appellant for not calling Vuyokazi, whom she claimed
had been present at all material times relating to the events of 7 March, as a witness
and argued that an adverse inference should be drawn from that omission.
[14] As the majority judgment held, the appellant, who was a single witness, bore the
onus to prove her claim on a balance of probabilities. And it is from those probabilities
that the court would select a conclusion which seems to be the more natural or
plausible (ie acceptable, credible, suitable) conclusion from amongst several
conceivable ones, even though that conclusion be not the only reasonable one.2 In light
of the irreconcilable versions that emerged from the evidence, the choice or preference
of one version over the other ought to have been preceded by an evaluation and
assessment of the credibility of the relevant witnesses, their reliability and of course
the probabilities.3
[15] Contrary to the majority’s finding, the defence version is not without material
flaws. The first difficulty arises from the failure by the police to take statements from
the appellant during both her visits to the police station, in breach of the Standing
she reported him to the authorities in precisely the same manner in which the appellant described.
2 West Rand Estates Ltd v New Zealand Insurance Co Ltd 1925 AD 245 at 263; Govan v Skidmore 1952 (1) SA 732 (N)
at 734C-D; Jordaan v Bloemfontein Transitional Local Authority and another [2003] ZASCA 127; 2004 (3) SA 371
(SCA).
3 National Employers’ General Insurance Co Ltd v Jagers 1984 (4) SA 437 (E) at 440D-H; Stellenbosch Farmer’s
Winery Ltd and Another v Martell et Cie and others [2002] ZASCA 98; 2003 (1) SA 11 (SCA) paras 5-7; Dreyer and
another NNO v AXZS Industries (Pty) Ltd [2005] ZASCA 88; 2006 (5) SA 548 (SCA) para 30.
Orders and Instructions which required the police to record all complaints and
occurrences in the OB. The evidence of the relevant officers, who by their own
admission worked at an extremely busy station, was therefore based solely on their
free recall of the events which had occurred some five years ago. That fact alone
renders their evidence unreliable.
[16] There are other problems. In my view, Dyantyi’s evidence regarding the
February incident cannot be given any credence whatsoever. By his own admission, he
relied entirely on Madyibi’s recollection of the events, which he considered trivial. In
his words ‘the incident happened long ago … [and I] had completely forgotten about it
and … was caused to remember’. He insisted that she said nothing about a firearm
because he would otherwise have recorded her complaint had she done so. He thus had
no independent recall of the appellant’s visit and his testimony amounted to no more
than a hearsay account.
[17] But even if his account were admissible, it would remain unreliable. His
explanation for his failure to record the complaint was most unsatisfactory. The
awkward hour at which the appellant called at the police station in itself bore out her
fear of the deceased which could not have been engendered by the mere threat of an
assault she was alleged to have reported. Dyantyi’s very response in dispatching two
police officers to ensure the appellant’s safe passage, bearing in mind that her evidence
that he told her that he knew of the deceased’s violent disposition was left
unchallenged in her thorough cross-examination, clearly shows that he did not find the
situation trifling. Madyibi was not present when the appellant consulted with Dyantyi
and was merely asked to escort her home and placate the deceased. He had no
knowledge of what she reported to Dyantyi so his unreliable account does not advance
the defence version even if it was accepted.
[18] Only Dinwayo testified about the appellant’s visit at the police station of 7
March 2006. Interestingly, the relevant entry in the station’s OB made no reference to
her and indicated that the appellant was attended only by Zikolo who had since died
when the trial started. This evidence tallied with the admission made by the defence in
the pre-trial process and no mention of Dinwayo’s involvement had been made to the
appellant during her cross-examination as well. The OB entry itself yielded no useful
detail as it merely read ‘Sanela Dlanjwa … was here complaining of domestic violence
by her husband and the Act of domestic violence was explained and understood. She
chose to apply for Protection Order’. One simply does not know what Zikolo meant by
‘domestic violence’ and the vague entry certainly cannot redound against the
appellant’s version as to the content of her report to him. It can safely be inferred from
his response though that he considered her complaint serious enough to warrant the
institution of a criminal charge or a protection order.
[19] As the trial court and the minority judgments properly acknowledged, the
appellant’s version was not without blemish and bore some inconsistencies. But, the
proper test is not whether a witness is truthful or reliable in all that she says, but
whether on a balance of probabilities the essential features of the story which she tells
are true.4 Importantly, the appellant did not deviate from her essential statement that
she told the police about the deceased’s violent conduct upon which her first request to
the police was based and that she reported him again in March 2006 because he had
pointed the firearm at her and threatened to shoot her.
4 Santam Bpk v Biddulph [2004] ZASCA 11; 2004 (5) SA 586 (SCA) para 10.
[20] I agree with the trial court’s finding, endorsed by the minority in the full court
that, in any event, whilst the appellant may have contradicted herself on some aspects,
such contradictions, read in context, were more apparent than real. She was
subjected to a long, drawn-out and often repetitive and confusing cross-examination.
As indicated above, the contradictions related mainly to the dates on which she
claimed the deceased first pointed the firearm at her and her reports thereof to the
police. A question put to her that in her evidence in chief she alleged the deceased
pointed the firearm at her for the first time in February 2006, which is not borne out by
the record, seemingly spawned the confusion which ensued during lengthy questioning
on the aspect.
[21] The fact however is that the appellant had indicated from the onset that she
struggled to recall dates relating to the abuse and her injuries. She did indicate though
that the physical assaults (which involved being struck with a belt even during her
pregnancy), the shooting threats and pointing with a firearm had started ‘in 2005 and
rolling over to the following year’ and that the deceased had pointed the firearm at her
more than once before she approached the police. In reaction to relentless cross-
examination on this aspect, the trial court intervened to point out that her testimony
had been tentative about the dates. And indeed, I find her inability to recall the precise
dates when she was threatened with the firearm quite understandable in the
circumstances.
[22] In answer to dogged questioning as to why she had not immediately reported the
deceased for pointing her with the firearm she replied that ‘[t]he problem is he would
ask for forgiveness and … he was my husband and I would decide to forgive him and I
would give myself that hope that this thing would … come to an end … I did not want
him to be arrested my main aim was that when he said he was going to change I
wanted him to change’. I have no difficulty at all accepting this guileless statement.
Neither do I find anything untoward about her evidence that she wanted to protect him
which, to my mind, is actually compatible with this explanation. In my view, that she
did not want the deceased to be arrested, about which she was candid, is in no way
irreconcilable with her request for the confiscation of the firearm. If she wanted to hide
the fact of her abuse at the hands of the deceased and was focussed on not getting him
into trouble with the law, she would not have approached the police at all.
[23] Moreover, I find nothing improbable about her statement that she was unfamiliar
with the relevant legal procedures which the defence argued was another indicator of
her mendacity. She was a young (at 25 years of age), clearly unsophisticated woman
(judging from the evidence especially her handwritten statement in the magistrate’s
court). Dinwayo’s evidence and Zikolo’s OB entry make clear that she knew nothing
about her remedies under the Domestic Violence Act5 until the police explained its
provisions to her whereafter she made an election. And it must be said that her
explanation that she approached the police on the advice and insistence of her friend,
Vuyokazi.
[24] I fail to understand why the appellant must be indicted for not having
complained to senior officers at the police station when the deceased was not disarmed
as the defence counsel urged us to do. The duty lay squarely on the police to
investigate her complaints once she reported that she feared for her safety. As the trial
court pointed out, the Constitution, in s 12 (1)(c) which guarantees the right to freedom
and security of the person, including the right to be free from all forms of violence, and
the South African Police Service Act,6 impose a positive obligation on the police to
ensure the safety and security and protect the members of the public in general and
women and children in particular from violent crime.7 That the appellant did not seek
5 116 of 1998.
6 68 of 1995.
7 Van Eeden v Minister of Safety and Security (Women’s Legal Centre Trust, as Amicus Curiae) [2002] ZASCA 132;
police help more aggressively and even her unwillingness to lay charges against the
deceased did not detract from that obligation.
[25] The remarks of this court in an analogous case, Minister of Safety and Security
v Van Duivenboden,8 are instructive. There, the court said:9
‘Simply from the events that occurred on 27 September 1994 [when the plaintiff approached the
police and reported that she feared her husband but expressed an unwillingness to lay charges as to
do so would jeopardize her marriage and merely asked them to confiscate his firearms] it was known
to a number of police officers, more than a year before [the plaintiff] was shot, that while he was in a
drunken state Brooks had threatened to shoot himself and any person who attempted to intervene,
including the police. That by itself warranted Brooks being declared unfit to possess firearms for a
period of not less than two years. All that was required for the requisite procedure to be commenced
was for any one of the police officers to reduce that information to writing under oath and to
forward the statement to the person responsible for holding such enquiries. There was no proper
explanation in the evidence for why that was never done … [W]hy none of those police officers took
any steps … to initiate any enquiry, was not explained. It is that omission that lies at the heart of the
respondent’s claim’.
Here, the police contented themselves, initially, simply with attempting to broker peace
between the appellant and the deceased and, on the second occasion, merely advised
her of her options without even bothering to take a proper statement from her, in clear
dereliction of their duties.
[26] As mentioned above, one of the police witnesses, Warrant Officer Mnyatheli,
testified that the police were unaware of the protection order (and its contents which
would have told them the grounds upon which it was issued) until the institution of the
action. Curiously though, the station’s Domestic Violence Register, which formed part
2003 (1) SA 389 (SCA) para 13; Carmichele v Minister of Safety and Security and another (Center for Applied Legal
Studies Intervening) [2001] ZACC 22; 2001 (4) SA 938 (CC) para 62.
8 Minister of Safety and Security v Van Duivenboden [2002] ZASCA 79; 2002 (6) SA 431 (SCA).
9 At para 11.
of the bundle of documents admitted at the trial as truthful evidence of its contents in
terms of the parties’ agreement at the pre-trial conference, recorded that the protection
order had been served at the police station on 9 March 2006, just a few days after she
reported the incident and weeks before the shooting. Disturbingly, Mnyatheli admitted
that he had tampered with the contents of the register by deleting and changing various
items therein with erasing fluid, including the date on which the order was received at
the station, and falsely recording that the ‘issuing member’ of the document was the
sheriff who obviously was not a police official. These shenanigans naturally cast a long
shadow over Mnyatheli’s evidence. But, even if one accepts his version that the police
were unaware of the protection order as true, this would not assist the defence case
because according to the relevant entry in the register, the protection order was served
at the police station ten days before the tragedy. The only inference to be drawn from
that fact is that the police there became aware of the shooting threats before the
tragedy and did nothing to stop it in breach of their statutory duty.
[27] I also find no merit in the argument that the absence of a request for the
firearm’s seizure in her application form for a protection order means that the appellant
did not apply to have the deceased disarmed. As the trial court correctly pointed out,
her evidence that the official who attended her at the magistrate’s court told her which
parts of the form to complete, and that the relevant portion was filled in by that officer,
was borne out by the patently different handwriting on the document and could not be
impeached. Therefore she cannot be blamed for the omission. This is particularly so
having regard to the provisions of s 9 of the Domestic Violence Act which the
magistrate clearly ignored in light of the appellant’s statement. In terms of s 9(1)
thereof
‘The court must order a member of the South African Police Service to seize any arm or dangerous
weapon in the possession or under the control of a respondent, if the court is satisfied on the
evidence placed before it, including any affidavits supporting an application referred to in section 4
(1), that –
(a) the respondent has threatened or expressed the intention to kill or injure himself or herself, or
any person in a domestic relationship, whether or not by means of such arm or dangerous weapon; or
(b) possession of such arm or dangerous weapon is not in the best interests of the respondent or any
other person in a domestic relationship, as a result of the respondent’s –
(i) state of mind or mental condition;
(ii) inclination to violence; or
(iii) use of or dependence on intoxicating liquor or drugs.’
Clearly, these provisions enjoined the magistrate to order the seizure of the firearm
allegedly used by the deceased to threaten the appellant whether or not she made that
request.
[28] Another blow to the defence version, in my opinion, is the glaring improbability
in the contention that the appellant did not mention the involvement of a firearm to the
police and yet reported it to the magistrate whom she approached on the advice of the
very police shortly thereafter. And this because she could differentiate between the two
institutions and realised that there was no risk of the deceased’s arrest from the
magistrate as alluded to above. I do not understand the latter submission because the
business of both the magistracy and the police service is law enforcement so the
deceased was not safe from the reach of the law once reported to the magistrate. In
any event, its basis is far from clear as the evidence certainly does not support it.
[29] Regarding the criticism levelled against the appellant’s failure to call Vuyokazi
to testify, it is so that if a party fails to place the evidence of a witness who is available
and able to elucidate the facts before the trial court, this failure may lead to an
inference that she fears that such evidence will expose facts unfavourable to her.10
But the inference will depend upon the facts peculiar to the case where the question
arises and the strength or weakness of the case is a relevant factor for consideration.11
Also, if it appears that the witness was equally available to both parties, that inference
might be drawn against both parties.12 It seems to me, for all the reasons stated above,
that the probabilities strongly favour the appellant’s version. In that case, there is no
room to draw the inference sought on the respondent’s behalf. Furthermore, the
appellant’s cause of action was founded also on the events of February 2006 which did
not involve Vuyokazi.
[30] The requirements for a claim based on wrongful omissions of police officers are
established. The plaintiff must prove that (a) the police owed her or him a legal duty to
act; (b) they breached that duty and did so negligently; and (c) there was a causal
connection between such negligent breach of the duty and the harm suffered by the
plaintiff.13 The existence of a legal duty was always common cause. The only issues
that were in contention related to the requirements set out in (b) and (c). In my view,
the appellant established them and both negligence and wrongfulness on the part of the
police were proved. The appeal must therefore succeed.
[31] We were asked to award the appellant costs including the costs occasioned
consequent to the employment of two counsel if the appeal succeeded. However, such
10 Munster Estates (Pty) Ltd v Killarney Hills (Pty) Ltd 1979 (1) SA 621 (A).
11 Titus v Shield Insurance Co Ltd 1980 (3) SA 119 (A) at 133E-F.
12 Webranchek v LK Jacobs & Co Ltd 1948 (4) SA 671 (A) at 682; Rand Cold Storage & Supply Co Ltd v Alligianes 1968
(2) SA 122 (T) at 123, 124.
13 Carmichele, fn 7, para 25.
an award is not warranted in the circumstances of this case even though the matter is
obviously important to the parties. By the time the matter went on appeal both in the
full court and before us, the issues had crystallised into the simple factual question
described above ie whether the appellant told the police that the deceased had pointed
the firearm at her and threatened to shoot her.
[32] In the result the following order is made:
1 The appeal is upheld with costs.
2 The order of the Full Court is set aside and replaced with the following:
‘The appeal is dismissed with costs.’
____________________
M M L MAYA
Judge of Appeal
APPEARANCES
For the Appellant:
N Dukada SC (with MN Hinana)
Instructed by:
Fikile Ntayiya & Associates, Mthatha
Rampai Attorneys, Bloemfontein
For the Respondent:
P H S Zilwa SC
Instructed by:
NS Nombambela Inc., Mthatha
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
01 October 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Dlanjwa v The Minister of Safety and Security (20217/2014) [2015] ZASCA 147 (01
October 2015)
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) upheld an appeal by the appellant, Mrs Dlanjwa against
an order by the majority of the full court, Eastern Cape Local Division, Mthatha (Tshiki and Van Zyl
JJ, Alkema J dissenting). The judgment of the full court had overturned a judgment of a single judge
(Petse J) which upheld the appellant’s claim for damages , on the merits (on the merits) in the sum of
R5 858 500, against the Minister of Safety and Security (the Minister) and his erstwhile co-defendant,
the Station Commander of Ngangelizwe Police Station, Mthatha (the second defendant).
The appellant’s claim arose from a tragic domestic violence incident which occurred on 19 April 2006
and left the appellant with horrendous gunshot injuries inflicted by her late husband (the
deceased),who was employed as a Sergeant by the South African Police Service (SAPS). After
shooting the appellant with a service firearm which, apparently had not been officially allocated to
him, the deceased had turned the firearm on himself with fatal consequences.
The appellant then sued the Minister and the second defendant, in her personal capacity, for general
damages, medical expenses, loss of earnings and loss of support arising from her injuries and the
deceased’s suicide. She also sued for loss of support on behalf of her infant triplets born of her
marriage with the deceased. The appellant contended that the shooting and commission of suicide by
the deceased were caused by the negligence of police officials attached to Ngangelizwe police
station, Mthatha because they had failed to, amongst other things, dispossess the deceased of the
firearm, despite her previous requests and their knowledge that the deceased pointed a firearm at her
and threatened to shoot her and thereafter kill himself, which had led her to obtain a protection order
against him. Thus, the appellant alleged, the police failed to take measures to protect her from being
injured by the deceased and prevent him from killing himself, which they should have foreseen, in
breach of the legal duty they owed her. The respondent denied that there had been breach of a legal
duty by the police officers concerned, on the main basis that the appellant did not inform the police of
the deceased’s’ threats to shoot her and that he pointed the firearm at her.
In the SCA, the issue for determination was whether, it being common cause that a legal duty to act
existed, the other requirements for a claim based on wrongful omissions of police officers had been
met ie (a) that the police officers breached that legal duty and did so negligently; and (b) there was a
causal connection between such negligent breach of the legal duty and the harm suffered by the
appellant. In order to determine whether these requirements had been proved, the SCA had to
establish whether the appellant had told the police that the deceased had pointed the firearm at her
and threatened to shoot.
The SCA held that it was probable that the appellant reported the deceased’s violent conduct against
her and his suicide threats and the threats to shoot her, to the relevant police officials at the second
defendant’s police station and that the police was negligent in failing to dispossess the deceased of
the firearm. The court accordingly held that the requirements for a claim based on wrongful omissions
of police officers had been established, and concluded that both negligence and wrongfulness on the
part of the police were proved.
|
1835
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 766/2010
In the matter between:
SALLY ANN COLLETT
Appellant
and
FIRSTRAND BANK LTD
Respondent
NATIONAL CREDIT REGULATOR
Amicus Curiae
Neutral citation:
Collett v Firstrand Bank (766/2010) [2011] ZASCA 78
(27 May 2011)
Coram:
Mpati P, Brand, Maya, Malan and Tshiqi JJA
Heard:
4 May 2011
Delivered:
27 May 2011
Summary:
Debt review in terms of s 86 of National Credit Act 34 of 2005 –
right of credit provider to terminate review under s 86(10) – reading
in ‗or High Court‘ in s 86(11)
_____________________________________________________________________
ORDER
On appeal from: Eastern Cape High Court, Grahamstown (Eksteen J sitting as court of
first instance):
The appeal is dismissed.
_____________________________________________________________________
JUDGMENT
MALAN JA (Mpati P, Brand, Maya and Tshiqi JJA concurring)
[1] This appeal concerns the construction of s 86(10) and (11) and s 87 of the
National Credit Act 34 of 2005. Eksteen J sitting in the Eastern Cape High Court,
Grahamstown, granted summary judgment against the appellant in an amount of
R677 254,92 with interest and costs and made an order declaring certain immovable
property executable. The action was based on a mortgage bond hypothecating the
property declared executable. A ‗mortgage agreement‘ is a ‗credit transaction‘ and the
NCA applies to it.1
[2] The appellant was in default with her repayments under the bond and by reason
of her failure to pay any or all of the agreed instalments the whole of the outstanding
amount became due. On 4 January 2010 she applied for debt review in terms of s
86(1). The application was made to Gerhard Stoltz Debt Counsellors and the
respondent was notified of it the same day. On 15 February 2010 Stoltz advised the
respondent that the application was successful and that the debt obligations of the
appellant were in the process of being restructured. A debt restructuring proposal was
circulated to all the appellant‘s credit providers, including the respondent. None of the
credit providers accepted the proposal. On 29 March 2010 Stoltz referred the matter to
the East London Magistrate‘s Court in terms of s 86(8) for an order that the appellant be
1 Section 8(4)(d) and s 1 sv ‗mortgage‘ and ‗mortgage agreement‘.
declared over-indebted; that her debt commitments be re-arranged; that the credit
agreements of those credit providers who terminated their reviews under s 86(10) be
resumed and be included in the debt review; and for costs.
[3] After the matter had been referred to the Magistrate‘s Court and on 7 April 2010,
that is more than 60 days after the appellant‘s application, the respondent terminated
the debt review in so far as it related to the mortgage bond. It did so pursuant to the
provisions of s 86(10). The hearing before the Magistrate‘s Court in terms of s 87, set
down for 10 June 2010, was postponed to 12 August 2010. Summons was issued on 21
June 2010 and served on the appellant on 1 July 2010.
[4] Section 86 sets out the procedure to be followed by the debt counsellor on
receipt of a consumer‘s application for debt review. Section 87 concerns the re-
arrangement of a consumer‘s obligations and the powers of the Magistrate‘s Court to
which the matter has been referred. Sections 86 and 87 are contained in Part D of
Chapter 4 of the NCA, which is entitled ‗Over-indebtedness and reckless credit‘. The
procedure when applying for debt review is contained in s 86 and has been described
elsewhere.2 The sections referred to read as follows:
‘86. (10) If a consumer is in default under a credit agreement that is being reviewed in terms of this
section, the credit provider in respect of that credit agreement may give notice to terminate the review in
the prescribed manner to—
(a)
the consumer;
(b)
the debt counsellor; and
(c)
the National Credit Regulator,
at any time at least 60 business days after the date on which the consumer applied for the debt review.
(11) If a credit provider who has given notice to terminate a review as contemplated in subsection (10)
proceeds to enforce that agreement in terms of Part C of Chapter 6, the Magistrate‘s Court hearing the
matter may order that the debt review resume on any conditions the court considers to be just in the
circumstances.
2 Nedbank Ltd & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) paras 10 ff.
87. Magistrate’s Court may re-arrange consumer’s obligations.—(1) If a debt counsellor makes a
proposal to the Magistrate‘s Court in terms of section 86(8)(b), or a consumer applies to the Magistrate‘s
Court in terms of section 86(9), the Magistrate‘s Court must conduct a hearing and, having regard to the
proposal and information before it and the consumer‘s financial means, prospects and obligations, may—
(a)
reject the recommendation or application as the case may be; or
(b)
make—
(i)
an order declaring any credit agreement to be reckless, and an order contemplated in
section 83(2) or (3), if the Magistrate‘s Court concludes that the agreement is reckless;
(ii)
an order re-arranging the consumer‘s obligations in any manner contemplated in section
86(7)(c)(ii); or
(iii)
both orders contemplated in subparagraph (i) and (ii).
(2) The National Credit Regulator may not intervene before the Magistrate‘s Court in a matter referred to
it in terms of this section.‘
Section 88 deals with the effect of debt review or a re-arrangement order or
agreement.3
[5] In her affidavit opposing the application for summary judgment the appellant did
not deal with the merits of the respondent‘s case but only questioned the respondent‘s
right to have instituted action. She stated:
‗As I applied for Debt Review prior to the Applicant issuing Summons against me, and furthermore, as my
Debt Counsellor has referred my application to the Magistrate‘s Court prior to the Plaintiff‘s Summons and
within the prescribed 60 business day period, it should be clear the Plaintiff did not have the right to issue
Summons against me.‘
3 Section 88(3) is of importance: ‗Subject to section 86 (9) and (10), a credit provider who receives
notice of court proceedings contemplated in section 83 or 85, or notice in terms of section 86 (4) (b) (i),
may not exercise or enforce by litigation or other judicial process any right or security under that credit
agreement until—
(a)
the consumer is in default under the credit agreement; and
(b)
one of the following has occurred
(i)
An event contemplated in subsection (1) (a) through (c); or
(ii)
the consumer defaults on any obligation in terms of a re-arrangement agreed between the
consumer and credit providers, or ordered by a court or the Tribunal.
[6] The question to be decided is therefore whether a credit provider is entitled to
terminate a debt review in terms of s 86(10) after the debt counsellor has referred the
matter to the Magistrate‘s Court for an order envisaged by s 86(7)(c) (and s 87(1)(b))
and while the hearing in terms of s 87 is still pending. In the court below Eksteen J held
in the affirmative. The conclusion of the court below is supported by several provincial
division judgments.4 However, as has become typical of the jurisprudence developing
around the NCA, there is a host of decisions that have taken a different view.5 It is not
possible to do justice to all the considerations advanced in these conflicting decisions.6
They deal with the approach to take when construing the NCA; the question when the
entitlement to terminate the debt review arises and ends; and the meaning of s 86(11),
in particular, which court may order a resumption of the debt review which was
terminated.
[7] The view that the credit provider may not terminate the debt review after referral
to the Magistrate‘s Court is perhaps best articulated by Griesel J speaking for the full
court in Wesbank a division of Firstrand Bank Ltd v Papier (with the NCR as Amicus
Curiae).7 He, quite correctly, pursued a contextual approach to the legislation.8 He
referred to Part D of Chapter 4 of the NCA as introducing the concepts of ‗over-
indebtedness and reckless credit‘ and stated that, ‗[t]he object of this part of the Act is to
provide protection and assistance to an over-indebted consumer in an environment that
encourages participation in good faith by both parties. The mechanisms provided by the
Act are contained in ss 85-88 and consist of debt review, on the one hand, and debt re-
4 SA Taxi Securitisation (Pty) Ltd v Nako & others [2010] ZAECBHC 4; Firstrand Bank Ltd v Fillis 2010
(6) SA 565 (ECD); Firstrand Bank Ltd v Evans (2010) ZAECPEHC 55; Firstrand Bank Ltd t/a First
National Bank v Seyffert 2010 (6) SA 429 (GSJ). Some of the problems encountered with the
implementation of the NCA are discussed in National Credit Regulator Debt Review Task Team May
2010.
5 Standard Bank of South Africa Ltd v Kruger; Standard Bank of South Africa Ltd v Pretorius 2010 (4) SA
635 (GSJ); SA Securitisation (Pty) Ltd v Matlala [2010] ZAGPJHC 70; Wesbank a division of Firstrand Ltd
v Papier (with the NCR as Amicus Curiae) 2011 (2) SA 395 (WCC). In some matters the question was left
open (eg BMW Financial Services SA (Pty) Ltd v Mudaly 2010 (5) SA 618 (KZD) para 23). Others are not
particularly clear on the issue (eg Changing Tides 17 (Pty) Ltd NO v Erasmus & another; Changing Tides
17 (Pty) Ltd NO v Cleophas & another; Changing Tides 17 (Pty) Ltd NO v Fredericks & another [2009]
ZAWCHC 175).
6 A useful comparison of some of the judgments was undertaken by D Pillay J in Firstrand Bank Ltd v
Mvelase 2011 (1) SA 470 (KZP) paras 51 ff.
7 2011 (2) SA 395 (WCC).
8 Para 21 and see Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs 2004 (4) SA 490 (CC)
para 90.
arrangement, on the other.‘9 Proceeding on this basis he held that s 86(10) dealt with
one aspect of the elaborate process as described in the heading to s 86; ‗Application for
debt review‘. This process commences with an application by the consumer in terms of
s 86(1), followed by the notification of the application by the debt counsellor to all credit
providers and credit bureaux.10 The consumer and each credit provider must then, as is
required by s 86(5), comply with the requests of the debt counsellor and participate in
the debt review in good faith.
[8] The debt counsellor must within 30 days determine whether the consumer
‗appears to be over-indebted‘.11 If he determines that the consumer is not over-indebted
he must reject the application12 and advise the consumer of his right to approach the
court directly in terms of s 86(9) within 20 business days.13 Where the debt counsellor
determines that the consumer appears to be over-indebted he must14 ‗issue a proposal‘
recommending that the Magistrate‘s Court make any of the orders provided for by s
86(7)(c) (and s 87(1)(b)). Griesel J concluded that a referral in terms of s 86(7)(c) sets in
motion a ‘debt re-arrangement by the court‘ as opposed to a ‗voluntary re-arrangement‘
in terms of s 86(8)(a). Because neither the NCA nor the regulations contain any time
period within which the referral to court must be made he opined that, having regard to
the context, the answer became clear:
‗The process of ―debt review‖ requires of the debt counsellor to determine, within 30 days, whether or not
a consumer is over-indebted. If not, the debt counsellor must advise the consumer of his or her right ―to
approach the court‖ within a further 20 business days for the necessary order. This leads me to the
conclusion that the period of 60 days referred to in s 86(10) was introduced with the abovementioned time
9 Para 15. This argument was first developed in Standard Bank of South Africa Ltd v Kruger; Standard
Bank of South Africa Ltd v Pretorius 2010 (4) SA 635 (GSJ) paras 13 ff.
10 Section 86(4)(b).
11 Section 86(6)(a) read with reg 24(6).
12 Section 86(7)(a).
13 Regulation 25(5). Section 86(9) provides: ‗If a debt counsellor rejects an application as contemplated in
subsection (7)(a), the consumer, with leave of the Magistrate‘s Court, may apply directly to the
Magistrate‘s Court, in the prescribed manner and form, for an order contemplated in subsection (7)(c).‘
14 Nedbank & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) para 29.
frame in mind so as to allow the consumer and/or debt counsellor sufficient time to ―approach the court‖
for the necessary relief in terms of s 87.15
…
Given the fact that a consumer has a period of 50 business days, calculated from the date of his
application to the debt counsellor, within which to ―approach‖ the magistrate‘s court for an order in terms
of s 87, it could never have been contemplated that the rest of the process – including a hearing before
the magistrate and a re-arrangement order in terms of s 87 – should all be finalised within the remaining
ten business days.16
…
On the interpretation advanced on behalf of the plaintiff herein, the position is quite simple: the credit
provider would be entitled, in each case where a period of 60 days has elapsed without a re-arrangement
order in terms of s 87 having been made, unilaterally ―to derail the entire debt review process‖.‘17
[9] To my mind this is too limited an approach. Section 86(10) must be construed in
view of the other provisions of the NCA, particularly s 86(11). An application by a
consumer to apply for debt review, be declared over-indebted and have his debts
arising from credit agreements re-scheduled are novel concepts introduced by the
NCA.18 Their purpose is to assist not only consumers who are over-indebted,19 but also
those who find themselves in ‗strained‘ circumstances.20 A consumer who finds himself
in either of these circumstances may apply for debt review in terms of s 86(1). He may
do so whether or not he is in arrears under any particular credit agreement. Where the
consumer is not in default of any of his obligations, the credit provider is unable to
terminate the process because s 86(10) gives the right to terminate the debt review only
where the consumer is in default. In such a case the credit provider must await the
hearing in terms of s 87. Nor can the credit provider proceed to enforce the credit
agreement because the consumer is not in default. Where the consumer, however, is in
default the credit provider is entitled to enforce that credit agreement provided the
15 Para 25.
16 Para 26.
17 Para 28.
18 Nedbank & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) paras 20 ff.
19 Section 79 of the NCA.
20 Section 87(7)(b) of the NCA (see H C J Flemming Flemming’s National Credit Act 2ed 139 ff).
consumer has not made application for debt review pursuant to s 86(1) and the credit
provider has complied with the requirements of s 129 and 130. In terms of s 86(2) an
application for debt review concerning a particular credit agreement may not be made if
the credit provider has ‗proceeded to take the steps contemplated in section 129 to
enforce that agreement‘.21
[10] The purpose of the debt review is not to relieve the consumer of his obligations
but to achieve either a voluntary debt re-arrangement22 or a debt re-arrangement by the
Magistrate‘s Court.23 The purposes of the NCA include the promotion of responsibility in
the credit market by encouraging responsible borrowing, avoidance of over-
indebtedness and fulfilment of financial obligations by consumers‘.24 Its approach to
over-indebtedness is ‗based on the principle of satisfaction of all responsible consumer
obligations‘.25 By providing for a consistent and harmonised system of debt restructuring
the NCA ‗places priority on the eventual satisfaction of all responsible consumer
obligations‘.26 It follows that the NCA serves not only the interest of consumers: its
construction calls for a careful balancing of all relevant interests.27
[11] The debt counsellor is charged to determine whether the consumer ‗appears‘ to
be over-indebted,28 and must issue a proposal recommending any or all of the orders
set out in s 86(7)(c). The debt counsellor‘s involvement in the debt review is no end in
itself but part of an on-going process culminating in the order of the Magistrate‘s Court
under s 87 (or a voluntary re-arrangement under ss 86(7)(b) and 86(8)(a)). Only then
can the debt review be said to be complete. The role of the debt counsellor does not
end with his referral of the matter to the Magistrate‘s Court. His ‗proposal‘ takes the form
of an application governed by the Rules of the Magistrates‘ Court and he is required to
21 Nedbank & others v National Credit Regulator & another (662/09 & 500/10) [2011] ZASCA 35 (28
March 2011) paras 4 ff.
22 Section 86(7)(b).
23 Sections 86(7) and 87.
24 Section 3(c)(i).
25 Section 3(g).
26 Section 3(i).
27 See Nedbank Ltd & others v National Credit Regulator & another para 2; Firstrand Bank Ltd v Mvelase
2011 (1) SA 470 (KZP) paras 20-21; Rossouw & others v First National Bank t/a FNB Home Loans
(640/2009) [2010] ZASCA 130 (30 September 2010); 2010 (6) SA 439 (SCA) para 17; BMW Financial
Services (South Africa) (Pty) Ltd v Mudaly 2010 (5) SA 618 (KZD) para 16.
28 Section s 86(6)(a).
be present in court, participate in the hearing and assist the court by way of furnishing
evidence, making submissions or answering questions.29 It is no answer to contend that
contextually s 86(10) forms part of s 86 and thus part of the ‗debt review‘ as opposed to
the ‗hearing‘ before the Magistrate‘s Court in terms of s 87. The words in s 86(10) ‗that
is being reviewed in terms of this section‘ rather emphasise that it is not a debt review
pursuant to ss 83(3)(b) or 85(a) and (b). Entirely different considerations apply to the
review under these sections: they are not necessarily initiated by the consumer and the
court has a discretion whether to proceed under those provisions. The credit provider is
not entitled to terminate either of them. Under ss 86 and 87 there is only one unified
process the purpose of which is the restructuring of the consumer‘s debts by amending
the terms of the credit transaction between the parties. If the parties agree, they may
amend the agreement in terms of s 116 or file a consent order as envisaged by s
86(8)(a). If they do not, the hearing envisaged by s 87 takes place. It follows that I am in
agreement with the conclusion reached in the court below:30
‗I am unable to find anything in the structure of section 86 or of the Act in its entirety which is indicative of
an intention on the part of the legislature to limit the right of a credit provider under section 86(10) to the
process prior to the reference to the Magistrate‘s Court. On the contrary I consider that the credit
provider‘s rights to give notice in terms of section 86(10) continues until the Magistrate‘s Court has made
an order as envisaged in section 87.‘
[12] In the Papier decision31 the court held that the right of a credit provider to
terminate the debt review is forfeited once the debt counsellor brings an application to
the Magistrate‘s Court in terms of ss 86(7) and 87. The argument was that because the
debt counsellor has a period of 30 days within which to determine whether the
consumer appears to be over-indebted, and the consumer a further 20 days, in the
event of a finding that he is not over-indebted, to apply directly to the Magistrate‘s Court
in terms of s 86(9) for an order contemplated in s 86(7)(c), the 60 day period was
introduced to allow either the debt counsellor or the consumer sufficient time to
approach the Magistrate‘s Court as aforesaid. I do not think that s 86 requires the
29 National Credit Regulator v Nedbank Ltd & others 2009 (6) SA 295 (GNP) at 313C-D.
30 Para 18.
31 Para 7.
consumer or his debt counsellor to ‗approach the court‘ within the period of 60 days.
Indeed no time period is specified within which the debt counsellor must make
application to the Magistrate‘s Court. Nor does the NCA require the process of debt re-
structuring to be complete within the period of 60 days after the application was made.
To do so would obviously be unrealistic. If it is correct, the credit provider will have little,
if any, opportunity to terminate the debt review, that is only the period after the 60 day
period and before the Magistrate‘s Court is approached. A sounder approach is to
recognise the express words of s 86(10) which gives the credit provider a right to
terminate the debt review in respect of the particular credit transaction under which the
consumer is in default, and only when he is default, at least 60 business days after the
application for debt review was made. It must be emphasised that it is only when the
consumer is in default that the credit provider has this right. If he is not, the debt review
continues without the credit provider being entitled to terminate it. It is not that the credit
provider is ‗derailing‘ the process when he terminates the debt review: it the consumer
that is in breach of contract, not the credit provider. If the consumer applies for debt
review before he is in default the credit provider may not terminate the process. But if
the consumer is in default the consumer is entitled to a 60 business days‘ moratorium
during which time the parties may attempt to resolve their dispute.
[13] This conclusion is supported by s 86(5). Where, as in this case, the consumer
has applied for debt review before the credit provider has proceeded to enforce the
credit agreement,32 the consumer and credit provider are obliged, as s 86(5) requires,
not only to comply with any reasonable request by the debt counsellor to facilitate an
evaluation of the consumer‘s indebtedness and the prospects for responsible debt
restructuring but also to participate in good faith in the review and negotiations.33 This
duty to negotiate does not terminate when the debt counsellor refers his proposal to the
Magistrate‘s Court but continues pending the hearing. This much was conceded by
32 Section 86(2).
33 Section 86(5) provides: ‗A consumer who applies to a debt counsellor, and each credit provider
contemplated in subsection (4)(b), must –
(a) comply with any reasonable requests by the debt counsellor to facilitate the evaluation of the
consumer‘s state of indebtedness and the prospects for responsible debt re-arrangement; and
(b) participate in good faith in the debt review and in any negotiations designed to result in responsible
debt-rearrangement.‘
counsel appearing for the National Credit Regulator, the amicus curiae. Moreover, the
purpose of these negotiations is specifically to ‗result in responsible debt re-
arrangement‘34 which is precisely what the debt review is all about.
[14] The conclusion that the right of the credit provider to terminate the debt review
under s 86(10) can be exercised even after a referral to the Magistrate‘s Court, does not
lead to the anomalous result contended for on behalf of the amicus curiae.35 While it is
correct to say that s 87(1) requires that the Magistrate‘s Court ‗must conduct a hearing‘,
it is not correct to argue that termination of a debt review terminates the hearing.
Section 86(10) entitles a credit provider to terminate the debt review relating to a
specific credit agreement (‗[i]f a consumer is in default under a credit agreement that is
being reviewed‘), not the ‗hearing‘. The hearing continues and, if several credit
agreements are being reviewed, continues in respect of the others. Although notice of
termination of the debt review is not required to be given to the Magistrate‘s Court but
only to the consumer, debt counsellor and National Credit Regulator,36 the proceedings
are governed by the Rules of the Magistrates‘ Courts which makes adequate provision
for the service of process and notices.37
[15] However, the right of the credit provider to terminate the review is balanced by s
86(11) which provides that if the credit provider has given notice to terminate and
proceeds to enforce the agreement ‗the Magistrate‘s Court may order that the debt
review resume on any conditions that the court considers to be just in the
circumstances‘. It is at this moment that the participation of the credit provider in the
debt review becomes relevant. He is obliged to comply with the reasonable requests of
the debt counsellor (s 86(5)(a)) and to participate in good faith in the review and any
negotiations designed to result in responsible debt re-arrangement (s 86(5)(b)). Should
the credit provider fail or refuse to participate in the review, a resumption of the process
may well be ordered. But where the credit provider on good grounds conclude that the
proposed restructuring will not lead to the ‗satisfaction by the consumer of all
34 Section 86(5)(b).
35 See also Papier’s case above para 32.
36 Section 86(10)(a) (b) and (c).
37 Rule 9. See GG 33487 of 23 August 2010 and Nedbank Ltd & others v National Credit Regulator &
another above, para 28.
responsible financial obligations‘ (s 3(g) and (i)) or a re-arrangement as contemplated
by s 86(7)(c) the court considering the resumption of the debt review may well refuse to
sanction its resumption. As was stated by D Pillay J in FirstRand Bank Ltd v Mvelase,38
the NCA strikes a balance between the interests of consumers and those of credit
providers –
‗through a push-pull tension which ensures that whenever sections of the NCA tip the scales in favour of
the consumer, countervailing rights of the credit provider in other sections sway the balance in favour of
the latter, and vice versa.‘
[16] Section 86(11) refers to the ‗Magistrate‘s Court‘ that may give the order that the
debt review be resumed. In his judgment in the court below Eksteen J considered that
where s 86(11) refers to the Magistrate‘s Court ‗hearing the matter‘ it is a reference to
the Magistrate‘s Court to which the debt review has been referred. He reasoned that the
jurisdiction conferred by s 86(11) is specifically restricted to the Magistrate‘s Court in
contrast to the powers enjoyed under ss 83, 85, 129(2) and 130 where reference is
made to ‗the court‘ or ‗a court‘. The debt review process provided for by s 86 in its
entirety falls under the judicial oversight of the Magistrate‘s Court and, for that reason,
he held that only the Magistrate‘s Court had jurisdiction to order a resumption of the
debt review.39
[17] Proceedings to enforce a credit agreement may be commenced in either the
High or the Magistrate‘s Court. Section 86(11) mentions only the Magistrate‘s Court. It
seems to me that the words ‗hearing the matter‘ in this subsection relate to the
proceedings to enforce the agreement and must, consequently, refer to the enforcing
court which may be either the High or the Magistrate‘s Court. The problem, however, is
that s 86(11) does not refer to the High Court at all. This, it was submitted, is an
omission in the legislation that can and should be cured by reading the words ‗or High
38 2011 (1) SA 470 (KZP) para 20.
39 See paras 23 ff.
Court‘ into the subsection.40 I agree with this approach: it will avoid the issues that may
arise from two different courts considering related matters.
[18] Often debt enforcement proceedings take place by way of a simple summons
followed by an application for summary judgment. As was said in Joob Joob
Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture,41 ‗summary judgment
procedure was not intended to ―shut (a defendant) out from defending‖, unless it was
very clear indeed that he had no case in the action. It was intended to prevent sham
defences from defeating the rights of parties by delay, and at the same time causing
great loss to plaintiffs who were endeavouring to enforce their rights.‘ Over-
indebtedness is not a defence on the merits.42 However, because of its extraordinary
and stringent nature a court has an over-riding discretion to refuse an application for
summary judgment.43 It would be proper for a defendant to raise termination of the debt
review by reason of the credit provider‘s failure to participate or its bad faith in
participating when application for summary judgment is made. These issues may be
raised, not as a defence to the claim, but as a request to the court not to grant summary
judgment in the exercise of its over-riding discretion. Of course, sufficient information on
which the request for a resumption of the debt review is based must be placed before
the court.
[19] No such request was made by the appellant in the court below. Moreover, the
proposal by the debt counsellor in respect of the mortgage bond the debt review of
which was terminated envisaged a debt re-structuring in terms of which the monthly
instalments payable on the mortgage bond be reduced from R6 644,93 to R3 500,00,
but payable over the same period of time, that is 240 months. This would deprive the
respondent of nearly one half of what it was entitled to under the credit agreement.
Such a proposal is not in accordance with the NCA, particularly s 86(7)(c)(ii), which
places limits on the proposal for the re-arrangement as well as on the order to be made
40 See, in particular, Mercedes Benz Financial Services South Africa (Pty) Ltd v Dunga 2011 (1) SA 374
(WCC) paras 16-23 and 33-44.
41 [2009] ZASCA 23; 2009 (5) SA 1 (SCA) para 31.
42 C van Heerden in J W Scholtz, J M Otto, E van Zyl, CM van Heerden and N Campbell Guide to the
National Credit Act (2008) para 12.16.
43 Joob Joob Investments paras 10-11.
in terms of s 87(1).44 In these circumstances the termination of the debt review by the
respondent is understandable. It follows that the appeal should be dismissed. No order
for costs was sought.
[20] The appeal is dismissed.
________________
F R MALAN
JUDGE OF APPEAL
44 Cf SA Taxi Securitization (Pty) Ltd v Mongezi Moni & others [2011] 2 AEC GHC 11 paras 34 ff.
APPEARANCES:
For Appellant:
SA Collett
Instructed by:
Gerhard Stoltz Inc
East London
Webbers
Bloemfontein
For Respondent:
P F Louw SC, S Eiselen and N Konstantinides
Instructed by:
Glover Inc
Parktown
Rossouws
Bloemfontein
For Amicus Curiae:
A E Franklin SC and A Govender
Instructed by:
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:
27 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.
COLLETT v FIRSTRAND BANK
The Supreme Court of Appeal today gave a judgment on the
meaning of sections 86(10) and (11) and s 87 of the National
Credit Act 34 of 2005. The court held that a credit provider is
entitled to terminate a debt review applied for by a consumer even
after the matter has been referred to the Magistrate’s Court for a
re-arrangement order. This right, however, is balanced by the
obligation of both the credit provider and consumer to participate in
the debt review and negotiations in good faith in order to achieve
responsible debt re-arrangement. A failure to do so by the credit
provider may lead to a resumption of the debt review under section
86(11). The Supreme Court of Appeal also held that there was a
lacuna in section 86(11) and read into its provisions after the
words ‘Magistrate’s Court’ the words ‘or High Court’. This will
ensure that the Magistrate’s Court and the High Court hearing
proceedings to enforce a credit agreement may grant an order for
the resumption of the debt review.
|
3925
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 648/2021
In the matter between:
GOLDRUSH GROUP (PTY) LTD
APPELLANT
and
NORTH WEST GAMBLING BOARD
FIRST RESPONDENT
MEMBER OF THE EXECUTIVE COUNCIL
FOR ECONOMY AND ENTERPRISE
DEVELOPMENT, NORTH WEST
PROVINCE
SECOND RESPONDENT
SANTOSAT (PTY) LTD
THIRD RESPONDENT
SANTOSCAN (PTY) LTD
FOURTH RESPONDENT
GOLDRUSH SLOTS GAMING
NORTH WEST (PTY) LTD
FIFTH RESPONDENT
SANGRO HOLDINGS 1 (PTY) LTD
SIXTH RESPONDENT
PHOKONG INVESTMENTS AND
PROJECTS (PTY) LTD
SEVENTH RESPONDENT
K201985410 (SOUTH AFRICA) (PTY) LTD
EIGHTH RESPONDENT
EDITH MAMOTSE MPHATSE
NINTH RESPONDENT
MPHO RADIKOJANA
TENTH RESPONDENT
Neutral citation: Goldrush Group (Pty) Ltd v North West Gambling Board and
Others (648/2021) [2022] ZASCA 164 (28 November 2022)
Coram:
PONNAN, GORVEN and HUGHES JJA and MJALI and
GOOSEN AJJA
Heard:
2 November 2022
Delivered: 28 November 2022
Summary: Locus standi – shareholder – declaration of rights affecting company –
own interest litigant – principles governing standing – financial interest only –
interests of justice not served – no basis for locus standi.
__________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: North West Division of the High Court, Mahikeng (Snyman AJ
sitting as court of first instance):
The appeal is dismissed with costs.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Gorven JA (Ponnan and Hughes JJA and Mjali and Goosen AJJA concurring):
[1] This appeal arose from requirements forming part of bingo operator and route
operator licences in the North West Province. Gambling in that province is regulated
by the North West Gambling Act 2 of 2001 (the Act) and overseen by the North
West Gambling Board (the Board). The appellant is Goldrush Group (Pty) Ltd
(Goldrush) which, at the time of the application giving rise to this appeal, held
40 percent of the shares in the third to fifth respondents (the licensee companies).
The balance of the shares in the licensee companies were held by the sixth to tenth
respondents (the local PDI shareholders). The licensee companies were formed for
the purpose of responding to a request for applications (the 2009 RFA) for gambling
licences. Pursuant to their applications, the third and fourth respondents were
granted bingo operator licences and the fifth respondent a route operator licence. At
the instance of Goldrush, the licensee companies appointed a management company,
Goldrush Group Management (Pty) Ltd, a wholly owned subsidiary of Goldrush.
[2] The 2009 RFA for bingo licences contained the following provisions:
a)
‘Local PDI’ was defined as meaning, ‘a natural black person who is a resident
within the North West Province or a juristic person in whom the majority ownership,
employment and beneficiation is held or accrues to natural persons who are resident
in the North West Province’.
b)
‘Resident’ was defined as meaning ‘a natural person who is ordinarily a
resident of the country in terms of the Income Tax Act, 1962 (Act No. 58 of 1962)
as amended, and who is ordinarily a resident of the North West Province and has a
fixed or permanent residential address in the province; provided that such person
was physically residing in the province for a period or periods exceeding twenty four
(24) months prior to the lodgement of the application in terms of this RFA and
remains such for the life of any licence issued in respect of this RFA’.
c)
Under the heading ‘Corporate Structure’, was the following provision:
‘A Bingo Operation must be owned by at least 60% local PDIs. All local PDIs shall
be citizens of the Republic of South Africa and shall reside in the North West
Province.’
For purposes of this matter, the RFA for a Limited Payout Machine contained
identical provisions.
[3] The licences issued pursuant to the 2009 RFA all contained a requirement that
at least 60 percent of the shareholding in a company with a licence must be held by
local PDIs (the local PDI requirement). In addition, 50 percent of the boards of
directors of the licenced entities were required to be made up of local PDIs who had
to be involved in management.
[4] The licences were renewed annually, as is required under s 41 of the Act. The
local PDI requirement has formed part of each renewed licence. In 2015 the Board
issued a further Request for Applications (the 2015 RFA) in which the local PDI
requirement was retained.
[5] Goldrush said that when the licensee companies began to operate, it
experienced difficulty in persuading the local PDI shareholders to make their agreed
financial contributions to running the licensee companies. As a consequence, it said,
the licensee companies operated at a loss for at least the first three years during which
Goldrush incurred the running expenses. This led to tensions between Goldrush and
the local PDI shareholders. Attempts to mediate the disputes failed. In 2013, after
restructuring, Goldrush became a 40 percent shareholder in all of the licensee
companies.
[6] In 2018, the Greater Rustenburg Community Foundation, a Non-
Governmental Organisation which was one of the local PDI shareholders in the
licensee companies, wished to dispose of its approximately 4 percent shareholdings
to a competitor. Goldrush exercised its pre-emptive right under the shareholders’
agreements governing the licensee companies and purchased those shares. This
resulted in Goldrush holding between 43.45 and 44 percent of the shares. The local
PDI requirement was accordingly no longer met since the shareholding of local PDIs
fell below the specified 60 percent.
[7] Goldrush informed the Board of these acquisitions on 10 September 2018.
This prompted a response from the Board pointing out that the sale had resulted in a
contravention of the local PDI requirement. It accordingly invited Goldrush to
‘revisit your stance’. The attorneys for Goldrush responded, asserting that the local
PDI requirement was ‘invalid and unenforceable’. They elaborated:
‘The requirements and conditions imposed in these provisions go well beyond what is provided
for in the legislation governing Broad-Based Black Economic Empowerment and the Codes of
Good Practice on Broad-Based Black Economic Empowerment published on 11 October 2013.
The Board does not have the authority to apply higher black ownership targets than those set out
in the B-BBEE Codes or impose criteria requiring shareholders to reside in a particular province
or locality.
Goldrush accordingly respectfully declines your invitation to revisit its transaction. We request
you reconsider your position to the acquisition taking into consideration what we have said above.’
The Board reminded Goldrush that, in the RFA, the licensee companies had
committed to ensure that 60 percent of their shareholdings would be made up of
local PDIs and that since then their licence conditions had echoed that requirement.
It demanded that Goldrush ensure that the licensee companies comply. Thus were
the battle lines drawn.
[8] An internal review of that decision was launched under s 90 of the Act. After
the Board failed to comply with the requisite time limits, it emerged that the
management of the Board, and not the Board itself, had taken the decision. That
decision therefore did not meet the criteria for an internal review. When this became
clear, the internal review was not persisted in.
[9] The licences were due to expire on 31 March 2019. The licensee companies
applied to renew their licences. In the annual renewal process, the Board proposed
the reimposition of the local PDI requirement. Goldrush objected. At its meeting of
28 March 2019, the Board decided not to renew their licences. The reason given was
that they had ‘contravened [the local PDI requirement] and the RFA’ when the local
PDI shareholding fell below 60 percent. The decision was conveyed to Goldrush on
29 March 2019, two days before the new licensing period commenced. The effect of
this was that the licensee companies had to cease operations two days later.
[10] Goldrush caused the licensee companies to approach the High Court for
urgent relief. The first part sought to permit them to continue operating pending the
finalisation of the second part. The latter involved a review of the decision of the
Board refusing to renew the licences. This second part would have had to be
preceded by an internal review by the Tribunal before being determined by the court.
Instead of finalising that application, agreement was reached that:
a)
the Board would renew the licences.
b)
the licensee companies would comply with the local PDI requirement by
complying with the 60 percent local PDI requirement within 60 days, failing which
the licences would be cancelled. This was embodied in a consent order of
18 April 2019;
c)
the High Court could be approached directly.
[11] There was no consensus in the papers as to what was envisaged by this last
provision. Goldrush contended that the High Court could be approached for a
declarator as to whether the local PDI requirement could lawfully be imposed by the
Board. On the other hand, the Board understood that it meant only that the licensee
companies could approach the High Court to review the decision of the Board
without first complying with the internal review procedure. What was common
cause is that neither the licensee companies nor the Board would have accepted any
adverse decision of the Tribunal. As such, following the procedure for internal
review would simply have delayed the inevitable determination by the High Court.
[12] Goldrush then approached the North West Division of the High Court,
Mahikeng (the high court), for the following order:
‘1.
It is declared that the imposition by the First Respondent of conditions on licences issued
in terms of the North West Gambling Act 2 of 2000 requiring the licensee to ensure that all times
during the subsistence of the licence, at least 60 percent equity ownership in the licensed entity is
held by Previously Disadvantaged Individuals who reside in the North West Province is unlawful
and invalid.
2.
The First Respondent and Second Respondent are directed to pay the costs of the
application.’
The application was opposed by the first and seventh respondents and was dismissed
with costs by Snyman AJ. This appeal is with her leave.
[13] The Board opposed the application on a number of grounds. These included
that:
a)
Goldrush had no locus standi to seek the relief in question. Any application
should have been brought by the licensee companies.
b)
There was a fatal non-joinder of other companies holding licences.
c)
The application for a declarator was inappropriate in the circumstances. A
review application should have been brought.
d)
There was an unreasonable delay in bringing the application since the local
PDI requirement had formed part of the 2009 RFA and had been embodied in the
licences in 2009 and in all the following years.
e)
There was no basis for the contention of Goldrush that the local PDI
requirement could not lawfully be imposed by the Board in the light of the B-BBEE
legislation.
[14] The issue of locus standi is generally decided without reference to the merits.
As Hoexter and Penfold put it:
‘In common with the doctrines of ripeness and mootness, the question of standing is traditionally
a liminal enquiry divorced from the substance of the case.’1
This is because, as explained in Oudekraal Estates (Pty) Ltd v City of Cape Town
and Others,2 quoting with approval what was said in Wade Administrative Law:3
‘The truth of the matter is that the Court will invalidate an order only if the right remedy is sought
by the right person in the right proceedings and circumstances.’4
The Constitutional Court has fashioned an exception to the separation of standing
from the merits of a matter in Giant Concerts CC v Rinaldo Investments (Pty) Ltd
and Others:5
‘[T]he interests of justice under the Constitution may require courts to be hesitant to dispose of
cases on standing alone where broader concerns of accountability and responsiveness may require
investigation and determination of the merits. By corollary, there may be cases where the interests
of justice or the public interest might compel a court to scrutinise action even if the applicant's
standing is questionable. When the public interest cries out for relief, an applicant should not fail
merely for acting in his or her own interest.’6
[15] How this enquiry is to be approached lacks clarity as explained by Hoexter
and Penfold, in their treating of Giant Concerts:
‘Later in the judgment the court added as an apparent afterthought that when a party has no
standing, “it is not necessary to consider the merits, unless there is at least a strong indication of
fraud or other gross irregularity in the conduct of a public body”.’7
1 Hoexter and Penfold Administrative Law in South Africa 3 ed (2021) at 676.
2 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; 2004 (6) SA 222 (SCA); [2004] 3
All SA 1 (SCA).
3 Wade Administrative Law 7th ed (by H W R Wade and Christopher Forsyth) at 342-4.
4 Oudekraal Estates para 28.
5 Giant Concerts CC v Rinaldo Investments (Pty) Ltd and Others [2012] ZACC 28; 2013 (3) BCLR 251 (CC).
6 Ibid para 34.
7 Hoexter and Penfold at 677. Their emphasis, quoting from Giant Concerts para 58.
As they point out, the Constitutional Court itself seems to have adopted divergent
approaches to these dicta.8 In Tulip Diamonds FZE v Minister for Justice and
Constitutional Development,9 Van der Westhuizen J understood the exception as
limiting the locus standi enquiry to whether fraud or gross irregularity had been
shown once he concluded that own-interest standing was lacking. And in Areva NP
Incorporated in France v Eskom Holdings SOC Ltd,10 Zondo J, for the majority, said
that a court ‘should only enter the merits in exceptional cases or where the public
interest really cries out for that’.11 On the other hand, the minority in Areva saw it as
in the public interest to look into the lawfulness of conduct of a state-owned entity
where vast sums of money would result from the award of a tender. It seems to me
that Tulip Diamonds and the majority view in Areva binds this Court. As such, if
own-interest standing is lacking, that will determine the present matter without
entering the merits. This is because there is no averment, let alone any indication,
that fraud or gross irregularity attends on the conduct of the Board.
[16] Before us, counsel for Goldrush simply submitted that, because it was a
shareholder whose ability to deal with its shareholding was circumscribed by the
local PDI requirement, it had standing. The submission in its heads of argument was
likewise terse in the extreme:
‘Goldrush is a shareholder in each of the licensee companies. It plainly has a direct and substantial
interest in determining the legality of the continued imposition of a requirement that limits that
shareholding to 40 percent and that imposes criteria prescribing the identity of its fellow
8 Ibid at 677-9.
9 Tulip Diamonds FZE v Minister for Justice and Constitutional Development [2013] ZACC 19; 2013 (10) BCLR
1180 (CC); 2013 (2) SACR 443 (CC).
10 Areva NP Incorporated in France v Eskom Holdings SOC Ltd and Others [2016] ZACC 51; 2017 (6) SA 621 (CC);
2017 (6) BCLR 675 (CC).
11 Ibid para 41.
shareholders. Its interests or potential interests are accordingly directly affected by the
unlawfulness sought to be impugned.’
Counsel for Goldrush was invited to provide authority for the contention that, in
circumstances such as this, being a shareholder in the licensee companies clothed it
with the requisite locus standi. He was unable to provide any. In the heads of
argument, reliance was placed on the matter of Giant Concerts.
[17] In that matter, Giant Concerts CC (Giant) had got wind of the intention of a
municipality to sell immovable property by private treaty to Rinaldo Investments
(Pty) Ltd (Rinaldo). Giant approached the municipality, saying that it wished to
purchase the property. The municipality met with Giant who claimed that it would
use the property for the same purpose and pay a higher price but refused to name its
price or reveal to the municipality its plans for utilising the property. Not satisfied
with this, the municipality concluded the envisaged agreement with Rinaldo.
Aggrieved by this decision, Giant approached the High Court to set aside the sale. It
succeeded but that decision was reversed on appeal by this Court on the basis that
Giant lacked locus standi.
[18] The Constitutional Court held that this was an own-interest application as
envisaged under s 38(a) of the Constitution which provides:
‘Anyone listed in this section has the right to approach a competent court, alleging that a right in
the Bill of Rights has been infringed or threatened, and the court may grant appropriate relief,
including a declaration of rights. The persons who may approach a court are -
(a)
anyone acting in their own interest.’
The question, accordingly, was whether Giant had standing on that basis.
[19] The Constitutional Court accepted the correctness of the approach of this
Court in Greys Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works
and Others,12 saying:
‘“[A]dversely affects” in the definition of administrative action was probably intended to convey
that administrative action is action that has the capacity to affect legal rights, and that impacts
directly and immediately on individuals. The effect of this is that Giant, as an own-interest litigant,
had to show that the decisions it seeks to attack had the capacity to affect its own legal rights or its
interests.’13
It was clear that Giant’s sole interest was commercial. The Constitutional Court held:
‘[Where] a litigant acts solely in his or her own interest, there is no broad or unqualified capacity
to litigate against illegalities. Something more must be shown.’14
After reviewing the relevant case law, the Constitutional Court summarised the
approach to be taken to own-interest standing in constitutional matters:
‘[C]onstitutional own-interest standing is broader than the traditional common law standing, but .
. . a litigant must nevertheless show that his or her rights or interests are directly affected by the
challenged law or conduct. The authorities show:
(a)
To establish own-interest standing under the Constitution a litigant need not show the same
“sufficient, personal and direct interest” that the common law requires, but must still show that a
contested law or decision directly affects his or her rights or interests, or potential rights or
interests.
(b)
This requirement must be generously and broadly interpreted to accord with constitutional
goals.
(c)
The interest must, however, be real and not hypothetical or academic.
(d)
Even under the requirements for common law standing, the interest need not be capable of
monetary valuation, but in a challenge to legislation purely financial self-interest may not be
enough - the interests of justice must also favour affording standing.
12 Greys Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; 2005 (6)
SA 313 (SCA); [2005] 3 All SA 33 (SCA) para 23.
13 Giant Concerts para 30.
14 Ibid para 35.
(e)
Standing is not a technical or strictly-defined concept. And there is no magical formula for
conferring it. It is a tool a court employs to determine whether a litigant is entitled to claim its
time, and to put the opposing litigant to trouble.
(f)
Each case depends on its own facts. There can be no general rule covering all cases. In
each case, an applicant must show that he or she has the necessary interest in an infringement or a
threatened infringement. And here a measure of pragmatism is needed.’15
The Constitutional Court concluded that Giant lacked standing, even given the broad
approach articulated above.
[20] The approach to a consideration of own-interest standing is that the challenge
made by Goldrush must be accepted as being justified.16 It is clear that, at best for
Goldrush, its interest is purely financial. It seems to me that, as a result, part of item
(d) of the summary of the Constitutional Court in Giant Concerts predominates in
the present matter:
‘[P]urely financial self-interest may not be enough - the interests of justice must also favour
affording standing.’
Even accepting, therefore, that the financial interest asserted by Goldrush might be
‘directly affected by the unlawfulness sought to be impugned’, it is necessary for the
interests of justice to tip the scales in favour of Goldrush for it to have locus standi.
[21] It was necessary for Goldrush to establish that it had the requisite standing.
Despite this, and having relied on Giant Concerts, it neither provided focussed
evidence or made any submissions concerning the interests of justice. Not only that,
but, tellingly, the seventh respondent opposed the application. In its answering
affidavit it claimed that the application was ‘launched mala fide in an attempt to
15 Ibid para 41. References omitted.
16 Giant Concerts para 32; Ritz Hotel Ltd v Charles of the Ritz and Another 1988 (3) SA 290 (a) at 307H-I; Jacobs en
‘n Ander v Waks en Andere 1992 (1) SA 521 (A) at 536A-B.
serve [Goldrush’s] own interest.’ This assertion was met with a deafening silence,
despite the replying affidavit employing four paragraphs to address the averments in
the relevant paragraph of the answering affidavit embodying that claim. This was a
clear invitation to Goldrush to advance any other interests which the application
sought to promote. The invitation to do so was unfortunately declined.
[22] If something other than financial self-interest is required, the result of a
complete lack of averments or argument dealing with the broader interests of justice
has the result that Goldrush failed to make out a case for its standing. But leaving
aside the lack of direct evidence or submissions, on a conspectus of the papers
themselves, I take the view that no such case emerges. There are a number of reasons
for this conclusion.
[23] Firstly, there is no explanation in the papers why, after the urgent application
by the licensee companies resulted in the agreement, it was not they who pursued
the present application. In fact, it seems that Goldrush considered that it represented
the licensee companies in bringing the application. I say this because at least two
passages in the founding papers suggest a conflation of the identities of Goldrush
and the licensee companies:
‘a)
As per the agreement with the Board, Goldrush and the licensee companies do not seek the
internal review of the decision of 29 March 2019, but have rather agreed that the High Court be
approached directly to seek a declarator as to the lawfulness of the local PDI requirement.
b)
There is a live dispute between Goldrush, the licensee companies and the Board as regards
the legality of the local PDI shareholding requirement.’
The irony of these submissions is that the licensee companies nowhere indicated any
support for the present application or the contention that the local PDI requirement
is unlawful and not binding on them. On the contrary, at least the seventh respondent,
a local PDI shareholder, opposed it. Far from citing them as co-applicants, Goldrush
joined the licensee companies and the local PDI shareholders as respondents.
[24] Secondly, it was conceded by counsel for Goldrush that the licensee
companies would have had locus standi to seek the relief. This concession was
correctly made. After all, it is they who are subject to the local PDI requirement and
whose licence renewals were put at risk by Goldrush for non-compliance. The
scheme of the Act makes it clear that the relationship created by the grant of a licence
is one between the Board and the licensee. There is no legal relationship between a
shareholder of a company holding a licence and the Board. Goldrush seems to have
appreciated this at the time in citing the licensee companies as the applicants in the
urgent application and not itself participating as a party.
[25] Thirdly, the relief sought will affect all licence holders in the province. One
has no idea of the attitude of any licence holders other than the licensee companies.
It is so, however, that, as the Board submitted, the effect of Goldrush succeeding
would, as it were, meddle in the legal relationship between the Board and all of the
licensees. I am minded that this primarily bears on the question of joinder, on which
I express no view. However, it is also a factor which has a bearing on whether the
interests of justice would be served in according standing to Goldrush in this matter.
[26] A final consideration is that Goldrush asserted that it had accepted the
provisions in the RFA concerning local PDIs ‘on the assumption that the local
persons/entities it would partner with would work closely with Goldrush to build the
business and would fairly meet their commitments as shareholders to contribute
financially and to the productivity of the operations of the companies. Unfortunately,
this did not materialise, as explained hereunder.’ But, as was pointed out by counsel
for the Board, Goldrush had a right to invoke the provisions of s 163 of the
Companies Act 71 of 2008 if it felt that the majority shareholders were engaging in
oppressive conduct.
[27] This Court has recognised the standing of shareholders in certain matters.
Although not drawn to our attention, in Trinity Asset Management (Pty) Ltd and
Others v Investec Bank Ltd and Others,17 the principle has been established that a
shareholder is entitled to accurate information from the board of a company
concerning a proposal to be put to shareholders at a general meeting of the company.
As a result, shareholders were held by this Court to have locus standi to apply for an
interdict preventing a meeting from proceeding when the information to be placed
before that meeting in support of a resolution to ratify an agreement concluded by
the company was inaccurate and misleading. As will be appreciated, however, this
clearly does not provide authority for the contention of Goldrush in the present
matter.
[28] All of this means that Goldrush is left with an attempt to found standing on
the fact that it has a purely financial interest in the relief sought. There is no basis on
which to find that this is one of those exceptional cases where the public interest
cries out for a court to enter into the merits of the matter. The result is that the
substantive issues aired in the application do not arise for consideration. Despite the
high court having dealt with the matter differently, the order granted by it cannot be
assailed. The appeal must be dismissed and that order must stand. The costs should
follow the result.
17 Trinity Asset Management (Pty) Ltd and Others v Investec Bank Ltd and Others [2008] ZASCA 158; 2009 (4) SA
89 (SCA); [2009] 2 All SA 449 (SCA).
[29] In the result, the appeal is dismissed with costs.
____________________
T R GORVEN
JUDGE OF APPEAL
Appearances
For appellant:
B Roux SC (with him I B Currie)
Instructed by:
Cliffe Dekker Hofmeyr Incorporated, Johannesburg
Noordmans Attorneys, Bloemfontein
For first respondent:
M P Van der Merwe SC
Instructed by:
M E Tlou Attorneys and Associates, Mahikeng
Bezuidenhouts Incorporated, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 November 2022
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
Goldrush Group (Pty) Ltd v North West Gambling Board and Others
(648/2021) [2022] ZASCA 164 (28 November 2022)
Today the Supreme Court of Appeal dismissed an appeal from a judgment of
Snyman AJ in the North West Division of the High Court, Mahikeng (the high court).
The appeal arose from requirements forming part of bingo operator and route
operator licences imposed by the North West Gambling Board (the Board). The
appellant, Goldrush Group (Pty) Ltd (Goldrush), held 40 percent of the shares in
three companies which had been awarded licences by the Board (the licensee
companies). The other 60 percent of the shares in the licensee companies were held
by the sixth to tenth respondents (the local PDI shareholders). Both in the request
for applications and in the resultant licences, there was a requirement that the
licensed entity must be owned by 60 percent local PDIs, being citizens of the
Republic of South Africa residing in the North West Province.
Disputes arose between Goldrush and the local PDI shareholders in the licensee
companies. Things came to a head when a local PDI shareholder offered its
approximately 4 percent shareholding to a competitor of Goldrush, prompting
Goldrush to invoke a pre-emptive right to purchase those shares. This ultimately
resulted in the Board refusing to renew the licences on the basis that the licensee
companies no longer complied with the 60 percent local PDI shareholding
requirement.
Goldrush approached the high court for relief declaring the 60 percent local PDI
requirement to be unlawful and invalid as conflicting with the Broad-Based Black
Economic Empowerment Act and the Codes of Good Practice on Broad-Based Black
Economic Empowerment. The Board took the point that Goldrush lacked the
requisite standing to approach the high court for that relief. The high court dismissed
the application on the merits.
The Supreme Court of Appeal held that it was necessary to decide the question of
the locus standi of Goldrush initially. The only basis proffered by Goldrush was that
it was a shareholder in the licensee companies and that the limitation on dealing with
its shareholding was detrimental to it. This, then, amounted to own-interest litigation
where the only interest was financial. Applying the principles in the matter of Giant
Concerts CC v Rinaldo Investments (Pty) Ltd and Others [2012] ZACC 28; 2013 (3)
BCLR 251 (CC), the Supreme Court of Appeal concluded that Goldrush did not make
out a case that the interests of justice tipped the scales in favour of it being accorded
locus standi. It was accordingly held that Goldrush lacked the requisite standing and
that the high court had correctly dismissed the application, albeit on a different basis.
For those reasons, the appeal was dismissed with costs.
|
3858
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 488/2021
In the matter between:
THE MEMORABLE ORDER OF TIN HATS APPELLANT
and
KENNETH PAUL ELS
RESPONDENT
Neutral citation:
The Memorable Order of Tin Hats v Kenneth Paul Els (488/2021)
[2022] ZASCA 99 (22 June 2022)
Coram:
PLASKET, CARELSE and HUGHES JJA and TSOKA and MAKAULA
AJJA
Heard:
23 May 2022
Delivered: 22 June 2022
Summary: Delict – negligence – omission to install second handrail on flight of stairs
– liability for wrongfulness – appellant under a duty to the public and its members to
ensure their safety – no causal connection between incident and omission.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg (Lamont J, Meyer
J and Harrison AJ sitting as a court of appeal):
(1) The appeal is upheld with costs, such costs to include the costs of two counsel.
(2) The order of the full court is set aside and replaced with an order in the following
terms:
‘(a) The appeal is upheld with costs.
(b) The order of the trial court is set aside and replaced with an order in the
following terms:
“The plaintiff’s claim is dismissed with costs, including the costs of the expert
witness, Mr André Fullard.”’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Hughes JA (Plasket and Carelse JJA and Tsoka and Makaula AJJA concurring)
[1] The appellant is, the Memorable Order of Tin Hats (the M.O.T.H), a voluntary
association and brotherhood of former South African soldiers. One of the premises of
the M.O.T.H, is the M.O.T.H Hall, situated at the corner of 16th Street and 2nd Avenue,
Parkhurst, Johannesburg, which was opened on 12 November 1955. This two storey
building, is occupied by a school in the main hall area on the ground floor. The
basement area is occupied by the M.O.T.H which utilises it as a pub for recreational
gatherings of its members and the public. To access the building, the occupants of the
school use the main entrance of the building on the eastern façade. The M.O.T.H uses
the entrance on the western façade of the building to gain access to the basement.
Importantly, on exiting the basement, there is a two-step stairway directly outside. It is
this route from the pub on the basement level to the parking area on the ground level
that is at the centre of this dispute.
[2] The respondent, Mr Kenneth Paul Els, often frequented the pub, though he was
not a member of the M.O.T.H. On 18 January 2014, he went to the pub to consult with
a client. Whilst busy with his consultation, one of the members, Mr Pat Levengs, sought
assistance to leave the premises of the pub and proceed to the parking lot. It was a
regular occurrence that, as Mr Levengs was wheelchair-bound, he sought assistance
from the patrons to get him to the parking area. It was also common cause that Mr Els
had assisted him on many occasions. On the day in question and during the process
of assisting Mr Levengs, Mr Els was injured. I shall outline the circumstances of the
accident in detail below.
[3] Mr Els instituted action proceedings for delictual damages arising from the injury
he sustained. His claim was premised on the negligence of the appellant in the
following relevant respects:
‘…
5.3 it/they unlawfully and/or wrongfully failed to provide adequate hand rails at staircases;
5.4 it/they unlawfully and/or wrongfully failed to provide any regulation compliant on and off
ramps to allow for safe wheelchair access/ingress/egress or from the M.OT.H. Hall;
5.5 it/they unlawfully and /or wrongfully failed to provide for handrails on both sides of
staircases;
5.6 it/they unlawfully and or wrongfully failed to ensure that each tread step is of the same
height and does not exceed 170mm;
5.7 it/they unlawfully and wrongfully failed to make every effort to provide safe
access/ ingress/ egress facilities to the M.O.T.H Hall;
5.8 it/they unlawfully and /wrongfully failed and/or omitted to take any reasonable measures or
action; to avoid the reasonably foreseeable incident, which could have been avoided
through the taking of reasonable, care, skill, effort and /or precautionary measures, which
it/they could and should have taken, yet unlawfully and/or wrongfully failed to take.’
[4] In essence, Mr Els’ case is that his delictual claim arose from the unlawful and
wrongful failure or omission of the M.O.T.H to take reasonable measures to avoid a
foreseeable incident that resulted in the damages he suffered as a result of his injuries.
[5] The matter came before Twala J who granted a separation of issues in terms of
rule 33(4) of the Uniform Rules of Court. Thus, the matter proceeded on the merits and
quantum was held over. Twala J found 90% in favour of Mr Els and refused an
application for leave to appeal. The M.O.T.H petitioned this Court and was granted
leave to appeal to the full court of the Gauteng Division, Johannesburg. The full court,
per Lamont J, Meyer J and Harrison AJ concurring, dismissed the M.O.T.H’s appeal.
Dissatisfied, it applied for special leave to appeal. These proceedings are with the
leave of this Court, special leave having been granted.
[6] Briefly, the events of 18 January 2014 are as follow. As already alluded to, Mr
Els visited the pub to consult with a client, Mr Scott Cheney, who is a member of the
M.O.T.H. According to Mr Els, during the course of his consultation, Mr Levengs called
from outside of the pub, for his assistance to help him up the flight of two stairs en
route to the car park. He testified that it was common practise for him to assist Mr
Levengs to exit the pub en route to the car park.
[7] He testified that as he exited the pub with Mr Cheney in tow, he found Mr
Levengs with two other patrons, Mr Paul Jansen and Mr Kenneth Swartz who were
trying to assist him. According to his evidence, he had assisted Mr Levengs to exit the
pub on prior occasions, but had used another route. This was his first attempt at this
staircase en route to the car park, as he had never been at this specific area. On arrival
he observed that the wheelchair and Mr Levengs were jammed between the step and
the outer wall. It is common cause that Mr Levengs sitting in that wheelchair weighed
120 kilograms.
[8] Having assessed the situation, Mr Els deduced that ‘[i]t was impossible to turn
the wheelchair because of the lack of space and probably because of his weight too,
it was jammed. The only reasonable way to end the problem was to continue with the
manoeuvre of what they were trying to do, and that is to walk this wheelchair up the
steps to get to the top of the stormwater sloot [storm water drain]’.
[9] Mr Els testified that, having been called to assist by Mr Levengs, he went there
on his own accord to assist as he had done on previous occasions. Through his
testimony it emerged that he had ‘no idea what happened’. He stated that although ‘I
do not know exactly what happened…I believe I lost my balance’. Further, in advancing
an explanation of what he believed transpired he stated that: ‘[t]here was a lot of huffing
and puffing, and I do not know exactly what went wrong, but it would seem that I lost
my balance. I could not get my foot out . . .’. He ended up falling on his back and losing
consciousness, with Mr Levengs and his wheelchair on top of him.
[10] Mr Cheney’s evidence was that he and Mr Els held onto the back of the chair,
while Mr Jansen and Mr Swartz held the front. It transpired according to Mr Cheney
that the incident occurred as a result of the fact that ‘[t]hey were pushing and Mr
Kenneth Els’ foot got stuck between the [first] riser of that staircase and the wheelchair’.
[11] Mr Els identified the M.O.T.H’s negligence as being two-fold. He stated that
‘…their negligence I would perceive as not having steps which were safe in the first
place. But in the second place they should have had ramps there, which there are
now’.
[12] Both Mr Jansen and Mr Swartz testified that Mr Levengs did not specifically call
on Mr Els for help and usually when Mr Levengs sought assistance, volunteers were
sought from the pub. Further, both testified, which evidence was not challenged, that
they had on many occasions assisted Mr Levengs up the stair case in question without
any incident occurring. In addition, both were adamant that Mr Els hooked or caught
his foot on the step and fell backward.
‘Mr Jansen: …Then we pulled Pat onto the first step and then again, one, two, three, go and
then up the second and then the plaintiff hooked his foot on the step and fell over backwards.’
‘Mr Swartz: When the wheels were on the first step and when he went back on the second
step his back foot caught the back step- and he fell backwards with the wheelchair and
obviously he was trying to protect the old man, then he went down and he held the wheelchair
on top of him.’
[13] What emerges from the evidence, on the respondent’s version, is that the
wheelchair was stuck and in an attempt by the group to free it, Mr Els lost his balance,
while his foot was jammed. This resulted in him falling backwards and sustaining his
injuries.
[14] The gist of the M.O.T.H’s case is that the full court erred in holding that it was
liable in delict for the damage suffered by Mr Els. The evidence did not, according to
it, establish negligence, legal causation or wrongful conduct on its part.
[15] The trial court found that the M.O.T.H owed a duty to protect its patrons against
harm (duty of care) from stairs which did not have railings and that such breach had
caused harm to Mr Els. Furthermore, had a wheelchair ramp been built and rails placed
at the staircase, Mr Els’ claim would not have materialised.
[16] The full court on appeal concluded: ‘The appellant had a duty to protect its
members and guests from harm which could be caused by the steps and should have
facilitated the navigation of the steps by providing rails, ramps or signage …The
appellant was negligent in failing to take the appropriate steps to render the hazard
safe’.
[17] It is well established that negligence arises from positive conduct which causes
physical harm which raises a presumption of wrongfulness. However, with an omission
as opposed to positive conduct, wrongfulness is not presumed, and for wrongfulness
to be established reliance falls upon a legal duty. This duty arises from public and legal
policy considerations. This case rests on the liability attracted for an omission on the
part of the M.O.T.H. In these circumstances, a different approach than that of positive
conduct is applicable, in addressing wrongfulness for the omission or failure to do
something.1
[18] An omission per se is not wrongful unless it is considered to go against legal
policy or public considerations, which dictate that a plaintiff be compensated for the
loss suffered as a result of such omission. Thus, the approach alluded to above,
involves a further enquiry, that being whether there was a legal duty that gave rise to
1 The South African Hang and Paragliding Association v Bewick [2015] ZASCA 34; 2015 (3) SA 449
(SCA); [2015] 2 All SA 581(SCA) para 5; Gouda Boerdery BK v Transnet 2005 (5) SA 490 (SCA) para12;
Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1 (CC) paras
22-25.
delictual liability.2 Put differently an omission does not necessarily attract liability, only
if it was culpable would it do so.3
[19] As aptly stated by Brand JA in The South African Hang and Paragliding
Association v Bewick: ‘[s]ince wrongfulness is not presumed in the case of an omission,
a plaintiff who claims on this basis must plead and prove facts relied upon to support
that essential allegation (see eg Fourways Haulage SA (Pty) Ltd v SA National Roads
Agency 2009 (2) SA 150 (SCA) para 14).’4
[20] The duty to prove negligence by conduct or omission lies on Mr Els, as the
plaintiff in the trial, as it is trite that he who alleges must prove. Staircases by their very
nature are dangerous to traverse, more so, if safety features are lacking and in this
instance a second handrail was absent. Thus, even though the staircase, having only
one handrail was practical and useable, as per the expert reports, it was not completely
safe for use by the M.O.T.H’s members and the public, abled or disabled. It can
therefore be accepted that the M.O.T.H’s omission in ensuring that the staircase was
safe for use by its members and the public was a catalyst to cause potential harm and
no reasonable steps were taken to safeguard its members and the public from this
harm.
[21] The M.O.T.H conceded that it had a legal duty to take reasonable steps to
ensure the premises, inclusive of this staircase, were safe for its members and the
public. Thus, a negligent omission on its part can be accepted to have infringed on the
policy and legal convictions of the public, as the appellant owed a duty to the public
and its members to ensure the safe use of the staircase. This conduct was wrongful
as the negligent omission resulted in harm, which with reasonable care could have
been avoided. It is thus reasonable that this conduct gives rise to delictual liability. All
things considered thus far, this is a classic case as stated by Brand JA in Trustees,
2 Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461
(SCA) paras 13-14; The South African Hang and Paragliding Association para 7.
3 Kruger v Coetzee 1966 (2) SA 428 (A).
4 The South African Hang and Paragliding Association para 6.
Two Oceans Aquarium Trust5, where ‘. . . duty of care’ in English Law ‘straddles both
elements of wrongfulness and negligence’.
[22] In this case, even on the assumptions above, the critical issue is that of
causation. The question to be answered is what caused Mr Els to fall backwards on
the staircase. He said that he did not know why he fell but he thought that he lost his
balance and his foot got stuck whilst they were in the process of transferring Mr
Levengs in his wheelchair. The witnesses for the M.O.T.H agreed that he tripped and
fell backwards.
[23] Despite the fact that the precise manner of the accident is not clear, it is
apparent that while helping Mr Levengs, Mr Els overbalanced, tripped and fell
backwards, with Mr Levengs and his wheelchair falling onto him. As stated above the
combined weight of Mr Levengs and his wheelchair was estimated by the witnesses to
be in the region of 120 kilograms. I am prepared to accept for purposes of this judgment
that the M.O.T.H’s omission to install a second handrail on the stairs was negligent
and wrongful.
[24] That, however, is not the end of the enquiry. The element of causation also had
to be proved by Mr Els. In my view, he failed to prove a culpably causative relationship
between the omission and the harm. It is more probable than not that, when Mr Els
overbalanced and fell, a handrail on his side of the stairs would not have averted the
harm. Even if he had been able to grab onto such a handrail, the force of 120 kilograms
falling onto him from above, would have broken his grip – and he would have fallen
and injured himself despite it being present. That he would still have fallen even if the
handrail had been there was conceded on his behalf during argument.
[25] On an examination of the evidence the conclusion that I have reached is that
the M.OT.H’s negligent omission and the wrongful conduct were not the catalysts for
the unfortunate accident. Mr Els failed to prove that they were more than likely the
5 Trustees for the Time Being of Two Oceans Aquarium Trust v Kantey & Templer (Pty)Ltd [2005]
ZASCA 109; [2007] 1 All SA 240 (SCA) para 11.
cause of the harm.6 The result is that the appeal must succeed. Costs ought to follow
the result, including the costs of two counsel in the appeal.
[26] Consequently, the following order is made:
1 The appeal is upheld with costs, such costs to include the costs of two counsel.
2 The order of the full court is set aside and replaced with an order in the following
terms:
‘(a) The appeal is upheld with costs.
(b) The order of the trial court is set aside and replaced with an order in the
following terms:
“The plaintiff’s claim is dismissed with costs, including the costs of the expert
witness, Mr André Fullard.”’
___________________
W Hughes
Judge of Appeal
6 Za v Smith and Another [2015] ZASCA 75; 2015 (4) SA 574 (SCA); [2015] 3 All SA 288 (SCA) para 30
and the cases mentioned therein.
APPEARANCES
For the Appellant:
Adv. C H Van Bergen SC
Adv. T Pillay
Instructed by:
RIC Martin Inc, Sandton
McIntyre Van Der Post, Bloemfontein
For the Respondent:
Adv. C Ascar
Instructed by:
Dyason Attorneys, Johannesburg
Aucamp & Cronje Attorneys, Johannesburg
Symington & De Kok, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
22 June 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
The Memorable Order of Tin Hats v Kenneth Paul Els (488/2021) [2022] ZASCA 99 (22 June 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding, with costs including the
costs of two counsel, an appeal against the decision of the Gauteng Division of the High Court of South
Africa, Johannesburg (the high court).
The appellant was, the Memorable Order of Tin Hats (the M.O.T.H), a voluntary association and
brotherhood of former South African soldiers. One of the premises of the M.O.T.H, was the M.O.T.H
Hall, situated at the corner of 16th Street and 2nd Avenue, Parkhurst, Johannesburg. This was a two
storey building with the basement area occupied by the M.O.T.H, which utilized it as a pub for its
members and the public. In order to exit the basement there was a two-step stairway directly outside.
It is this route from the pub on the basement level to the parking area on the ground level that is at the
centre of this dispute. The respondent, Mr Kenneth Paul Els, often frequented the pub, though he was
not a member of the M.O.T.H. On 18 January 2014, he went to the pub to consult with a client. Whilst
busy with his consultation, one of the members who was wheel-chair bound, sought assistance to leave
the premises of the pub and proceed to the parking lot. It was during that process of assisting the
member that the respondent got injured.
The respondent instituted action proceedings for delictual damages arising from the injury he sustained.
The delictual claim arose from the unlawful and wrongful failure or omission of the M.O.T.H to take
reasonable measures to avoid a foreseeable incident that resulted in the damages he suffered as a
result of his injuries. The high court found 90% in favour of Mr Els and refused an application for leave
to appeal. The M.O.T.H petitioned this Court and was granted leave to appeal to the full court of the
Gauteng Local Division, Johannesburg. The full court, dismissed the M.O.T.H’s appeal. Dissatisfied, it
applied for special leave to appeal. These proceedings were with the leave of this Court, special leave
having been granted.
The critical issue was that of causation. The question to be answered was what caused Mr Els’ injuries.
According to his testimony, he did not know why he fell but he thought that he lost his balance and his
foot got stuck whilst they were in the process of transferring the member in his wheelchair. The
witnesses for the M.O.T.H agreed that he tripped and fell backwards.
The SCA held that despite the fact that the precise manner of the accident was not clear, it was apparent
that while helping the member, Mr Els overbalanced, tripped and fell backwards, with the member and
his wheelchair falling onto him. The combined weight of the member and his wheelchair was estimated
by the witnesses to be in the region of 120 kilograms. The SCA held that for the purposes of this
judgment it would accept that the M.O.T.H’s omission to install a second handrail on the stairs was
negligent and wrongful. That, however, was not the end of the enquiry. The element of causation also
had to be proven by Mr Els. The Court found that he failed to prove a culpably causative relationship
between the omission and the harm. It was more probable than not that, when Mr Els overbalanced
and fell, a handrail on his side of the stairs would not have averted the harm. Even if he had been able
to grab onto such a handrail, the force of 120 kilograms falling onto him from above him, would have
broken his grip – and he would have fallen and injured himself despite it being present. On an
examination of the evidence the conclusion that the SCA reached was that the M.OT.H’s negligent
omission and the wrongful conduct were not the catalysts for the unfortunate accident. Mr Els failed to
prove that they were more than likely the cause of the harm. Consequently, the appeal was upheld.
~~~~ends~~~~
|
4025
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 106/2022
In the matter between:
ICOLLEGE (PTY) LTD
APPELLANT
and
XPERTEASE SKILLS DEVELOPMENT
AND MENTORING CC
FIRST RESPONDENT
ZA CENTRAL REGISTRY NPC
SECOND RESPONDENT
Neutral citation: ICollege (Pty) Ltd v Xpertease Skills Development and
Mentoring CC and Another (Case no 106/2022) [2023]
ZASCA 70 (24 May 2023)
Coram:
SCHIPPERS, MABINDLA-BOQWANA and MATOJANE JJA
and OLSEN and UNTERHALTER AJJA
Heard:
17 March 2023
Delivered: 24 May 2023
Summary: Trade mark – interdict to restrain infringement – use of mark closely
resembling registered trade mark – both marks visually and phonetically identical
– likelihood of deception or confusion within meaning of s 34(1)(a) of the Trade
Marks Act 194 of 1993 – requisites for interdict established.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Basson J, sitting
as court of first instance):
The appeal is upheld with costs.
The order of the high court is set aside and replaced with the following
order:
‘1
The first respondent is interdicted and restrained from infringing the
applicant’s registered iCOLLEGE trade marks by using the iCOLLEGE
mark and/or any mark, trading style, trading name, get up and/or dress that
is confusingly and/or deceptively similar to the applicant’s registered
iCOLLEGE trade marks.
The first respondent is ordered within 14 days of the granting of this
order to instruct the second respondent to transfer ownership of the domain
name icollege.co.za to the applicant, failing which the second respondent
is ordered to transfer ownership of the domain name icollege.co.za to the
applicant within 14 days thereafter.
An enquiry into the damages suffered by the applicant as a result of
the first respondent’s unlawful conduct is ordered to be convened.
The first respondent is ordered to pay the applicant’s costs.’
JUDGMENT
Schippers and Matojane JJA (Mabindla-Boqwana JA and Olsen and
Unterhalter AJJA concurring)
[1] The appellant is a private Further Education and Training College
registered with the Department of Higher Education and Training. It provides
skills-based training in international courses, and courses accredited by the
national Sector Education Training Authority. The appellant offers education and
training at its 17 campuses nationwide, and online at its e-learning centre.
[2] The appellant is the proprietor of two trade mark registrations in class 41,
which it utilises in the course of trade. A striking and dominant feature of both
marks is the word ‘iCOLLEGE’. The first trade mark was registered on 27 August
2015 under application number 2013/32192 in respect of, inter alia, education and
training services. The second mark was registered on 24 June 2019 under
application number 2018/02190. These two trade marks, shown in paragraph 9
below, are identical, save that the latter mark is a colour version of the earlier mark
and covers a wider specification of services in class 41. The appellant is also the
registered proprietor of the domain name ‘icollegeint.co.za’.
[3] The first respondent, Xpertease Skills Development and Mentoring CC
(the respondent), was incorrectly cited in the header to the founding papers as
‘Xcellence Skills Development CC’. Nothing however turns on this, as the
respondent did not take issue with the incorrect citation. The respondent also uses
a trade mark, the dominant element of which is the word ‘iCollege’, as is
evidenced by the depiction of its mark in paragraph 9 below. The respondent’s
mark is also accompanied in use with the words ‘ONLINE LEARNING’. The
respondent uses this mark in the course of trading, which is also the provision of
education and training services. The respondent describes itself as an internet-
based business (hence the letter, ‘i’) providing specialised professional education
(represented by the word, ‘College’). It does not offer classroom-based tuition
nor locally accredited qualifications. It provides e-learning courses to consumers
worldwide, and sells e-learning products and courses to prepare customers for
international and vendor-specific information technology certification.
[4] In 2019, the appellant applied to the Gauteng Division of the High Court,
Pretoria (the high court), inter alia, for an order in terms of ss 34(1)(a) and (c) of
the Trade Marks Act 194 of 1993 (the Act), to interdict the first respondent from
infringing the appellant’s rights acquired through the registration of its trade
marks; and from passing off its services as being those of the appellant. The
second respondent did not participate in those proceedings, nor in this appeal. The
high court dismissed the application with costs. The appeal is with the leave of
this Court.
[5] We were informed by counsel for the appellant that it did not persist with
the relief sought on the grounds of s 34(1)(c) of the Act and passing-off. Thus,
the only issue in this appeal is whether the appellant met the requisites of
s 34(1)(a) of the Act, for the grant of an interdict to prevent infringing use of its
trade marks by the respondent. Section 34(1)(a) provides:
‘(1)
The rights acquired by registration of a trade mark shall be infringed by –
(a)
the unauthorized use in the course of trade in relation to goods or services in respect of
which the trade mark is registered, of an identical mark or of a mark so nearly
resembling it as to be likely to deceive or cause confusion; . . .’
[6] The respondent did not dispute that the appellant had not authorised it to
use the appellant’s trade mark. It is common ground that the respondent uses its
iCollege trade mark in the course of trade, and in relation to the identical services
in respect of which the appellant’s iCOLLEGE trade mark is registered, namely
‘education and training services’. So, the only issue for decision by the high court
was whether the respondent’s iCollege trade mark was ‘a mark so nearly
resembling’ the appellant’s iCOLLEGE trade mark ‘as to be likely to deceive or
cause confusion’.
[7] The appellant claimed that the respondent’s use of its iCollege mark is
identical to the appellant’s registered trade mark, with the result that a substantial
number of persons will be deceived or confused into believing that there is a
material link in trade between the respondent’s education and training services
and those offered under the appellant’s iCOLLEGE trade mark. The respondent
contended that the marks in question are inherently different. The answering
affidavit reproduces a passage from PPI Makelaars,1 and states that the services
which the respondent offers ‘are ephemeral; they are often concerned with the
provision of trade-marked products of third parties and they are not offered side
by side enabling customers to make instant comparisons, making quality control
difficult’. The answering affidavit further states that trade marks relating to
resources such as education services are indefinite as opposed to trade marks
covering goods.
[8] In Plascon-Evans,2 Corbett JA said that the determination of the question
whether a mark is identical, or so nearly resembles a registered mark as to be
likely to deceive or cause confusion, involves:
1 PPI Makelaars and Another v Professional Provident Society of South Africa [1997] 4 All SA 444 (SCA); 1998
(1) SA 595 (SCA) at 603E.
2 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] 2 All SA 366 (A); 1984 (3) SA 623 (A) at
640I-641D.
‘. . . essentially a comparison between the marks used by the defendant and the registered mark
and, having regard to the similarities and differences in the two marks, an assessment of the
impact which the defendant’s mark would make upon the average type of customer who would
be likely to purchase the kind of goods to which the marks are applied. This notional customer
must be conceived of as a person of average intelligence, having proper eyesight and buying
with ordinary caution. The comparison must be made with reference to the sense, sound and
appearance of the marks. The marks must be viewed as they would be encountered in the
marketplace and against the background of relevant surrounding circumstances. The marks
must not only be considered side by side, but also separately. It must be borne in mind that the
ordinary purchaser may encounter goods, bearing the defendant’s mark, with an imperfect
recollection of the registered mark and due allowance must be made for this. If each of the
marks contains a main or dominant feature or idea the likely impact made by this on the mind
of the customer must be taken into account. As it has been put, marks are remembered rather
by general impressions or by some significant or striking feature than by a photographic
recollection of the whole. And finally consideration must be given to the manner in which the
marks are likely to be employed as, for example, the use of name marks in conjunction with a
generic description of the goods.’
[9] A side-by-side comparison of the respondent’s iCollege mark with that of
the appellant’s iCOLLEGE trade mark reveals that the marks of both parties
contain an identical dominant feature in relation to sound and appearance – the
word ‘iCOLLEGE’:
(the appellant’s registered marks)
(the respondent’s mark)
Whether this word element is clearly pronounced or carelessly spoken, the marks
sound no different from one another. In the marketplace, the notional user of
education and training services will encounter the appearance of a preeminent
identical word element in both marks, namely iCOLLEGE, regardless of whether
or not there is an imperfect recollection of the registered mark.
[10] In Century City Apartments,3 this Court approved the test stated in
Compass Publishing BV,4 for confusing similarity:
‘The likelihood of confusion must be appreciated globally, taking account of all relevant
factors. It must be judged through the eyes of the average consumer of the goods or services in
question. That customer is to be taken to be reasonably well informed and reasonably
circumspect and observant, but he may have to rely upon an imperfect picture or recollection
of the marks. The court should factor in the recognition that the average consumer normally
perceives a mark as a whole and does not analyse its various details. The visual, aural and
conceptual similarities of the marks must be assessed by reference to the overall impressions
created by the marks bearing in mind their distinctive and dominant components. Furthermore,
if the association between the marks causes the public to wrongly believe that the respective
goods come from the same or economically linked undertakings, there is a likelihood of
confusion.’
[11] Applied to the present case, the marks are visually and aurally, confusingly
similar. The fact that save for the letter ‘C’, the remaining letters in the
respondent’s mark are in lowercase, in a different font, or accompanied by the
words ‘ONLINE LEARNING’, does not detract from this. On an overall viewing
of the basic features of the marks, the main idea or general impression conveyed
is the education services offered by iCOLLEGE – the clearly noticeable and
dominant feature of both marks. This impression is buttressed by the logos
accompanying the dominant word element in both marks – a graduation cap. The
3 Century City Apartments Property Services CC and Another v Century City Property Owners’ Association
[2009] ZASCA 157; 2010 (3) SA 1 (SCA); [2010] 2 All SA 409 (SCA) para 13.
4 Compass Publishing BV v Compass Logistics Ltd [2004] EWHC 520 (Ch) paras 24-25.
phrase ‘ONLINE LEARNING’ envisages education, and on the overall
impression conveyed by the mark, is a strong indicator of an association between
the respondent’s education services and those of the appellant. In this regard, the
high court failed to consider the marks as wholes, rather than the exact details of
each.5 It compared only the pictures in the marks.
[12] It follows that the submission on behalf of the respondent that the
difference between the logos used by the parties is what catches the eye first, not
the word component, is unsound. Rather, it is the dominant or central element of
the marks in issue, namely the word iCOLLEGE, that is likely to make an impact
on the mind of the consumer.6 This feature alone, renders the marks phonetically
and conceptually, confusingly similar on at least two levels of comparison: sound
and appearance. And similarity on any one of these levels is sufficient.7 The high
court disregarded this principle: it recognised ‘the obvious similarity between the
two marks with reference to the words, iCollege and iCOLLEGE’, but then
concluded that ‘there is no visual or conceptual similarity between the pictures
accompanying the written words’.
[13] The high court also overlooked the fact that the greater the similarity
between the respective services of the parties, the lesser the degree of
resemblance required before it can be said that there is a likelihood of deception
or confusion in the use of the offending mark.8 The respondent sought to make
something of the proposition that its services are exclusively online and that it
does not offer locally accredited qualifications. However, s 34(1)(a) of the Act
does not require the appellant to show that the nature and scope of the
5 Adidas Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) 530 (T) at 536A.
6 Cowbell AG v ICS Holdings Ltd [2001] 4 All SA 242 (A); 2001 (3) SA 941 (SCA) para 14; Mettenheimer and
Another v Zonquasdrif Vineyards CC and Others [2013] ZASCA 152; [2014] 1 All SA 645 (SCA); 2014 (2) SA
204 (SCA) para 12.
7 Plascon-Evans fn 2 above at 640G-I.
8 Mettenheimer fn 6 above para 11, approving New Media Publishing (Pty) Ltd v Eating Out Web Services CC
2005 (5) SA 388 (C) at 394C-F.
respondent’s services, or its training methods, are identical to the services covered
by the trade mark registration. And the test approved in Century City Apartments,9
which applies equally in relation to both goods and services, provides a complete
answer to the argument that there is no likelihood of deception or confusion
because the services are not offered side by side. As observed by Webster and
Page, there is no reason to suggest a more lenient test for service marks.10
[14] Whilst the marks in issue are not identical, ie ‘the same in all respects’,11
even though they are very similar, as stated in Webster and Page,12 ‘the likelihood
that the court will then find that the marks are indeed likely to cause confusion or
deception is great’. Thus, in Century City Apartments,13 this Court found that the
marks CENTURY CITY and CENTURY CITY APARTMENTS are not identical,
but held that despite the addition of the word ‘apartments’, the name CENTURY
CITY APARTMENTS was confusingly similar to CENTURY CITY. This, a
fortiori, is such a case, when regard is had to the dominant feature of the marks
in issue – the word, ‘iCOLLEGE’, which is not commonly used.
[15] In its judgment the high court did not deal with the fact that the trade marks
in question were phonetically identical. However, in the judgment refusing leave
to appeal, the court said: ‘although the word “iCollege” both in respect of spelling
and phonetics are the same, they are not distinctive in respect of the products to
which they pertain’.14 In the main judgment, the court analysed the education and
training services rendered by both parties. It referred to their target markets;
methods of teaching; the specific courses and academic services offered; and the
fact that the appellant’s courses are accredited in terms of the National
9 Century City Apartments Property Services fn 3 above para 13.
10 Webster and Page South African Law of Trade Marks para 12.8.3.
11 LTJ Diffusion SA v Sadas Vertbaudet SA [2003] ETMR 83 (European Trade Marks Reports) par 50, approved
in Century City Apartments Property Services fn 3 above para 12.
12 Webster and Page South African Law of Trade Marks para 12.8.1B.
13 Century City Apartments Property Services fn 3 above para 13.
14 Emphasis added.
Qualification Framework, while the respondent’s qualifications are accredited by
third party vendors such as Microsoft. The court concluded:
‘. . . [W]hilst both the applicant and the respondent use their trade marks in respect of
“education and training services” (in respect of which the applicant registered its trade mark),
the educational/academic products and services presented by the applicant and the respondent
are not identical, nor is the training vehicle by which the different educational services are
offered the same.’
[16] The high court’s further inquiry into the specific nature, ambit and teaching
methods in relation to the services rendered by the appellant and the respondent,
was both impermissible and irrelevant. The court disregarded the notional use
test, which required it to postulate the notional use to which the appellant is
entitled to put its iCOLLEGE trade mark – online education and training services
– included in the full range of permissible fair use in respect of which it is
registered.15
[17] The purpose of a trade mark registration is to protect the mark as a badge
of origin. Section 34(1)(a) of the Act governs primary trade mark infringement
and confers on the proprietor an exclusionary right to prevent others from using
the mark without its consent.16 As stated, the respondent has no such consent and
is using its mark in respect of identical services in the class in which the
appellant’s trade mark has been registered – education and training. The appellant
established that the use of the respondent’s mark was such that it will cause
consumers to wrongly believe that there is a material link in trade between the
respondent’s education services and the appellant.17 This constitutes primary
15 Plascon-Evans fn 2 above at 641G-642A; Lucky Star Ltd v Lucky Brands (Pty) Ltd and Others [2016] ZASCA
77; 2017 (2) SA 588 (SCA) paras 8-9.
16 Verimark (Pty) Ltd v Bayerische Motoren Werke AktienGesellschaft; Bayerische Motoren Werke
AktienGesellschaft v Verimark (Pty) Ltd [2007] ZASCA 53; 2007 (6) SA 263 (SCA) para 5; Federation
Cynologique and R (British American Tobacco UK Ltd) v Secretary of State for Health [2016] EWCA Civ 1182;
[2018] QB 149 paras 46-49.
17 Verimark fn 16 above para 5.
trade mark infringement within the meaning of s 34(1)(a) of the Act, which
entitled the appellant to an interdict.
[18] Finally, the respondent’s argument that the appellant is not entitled to an
interdict for trade mark infringement because the word ‘COLLEGE’ has been
disclaimed, can be dealt with briefly. It was argued that because of the disclaimer,
what remains in the appellant’s mark is the logo and the letter ‘i’, which cannot
form the subject of protection. The argument is unsustainable.
[19] The appellant’s trade mark as a whole had the necessary attributes that
qualified it for registration. If a trade mark as a whole is capable of distinguishing,
it matters not that the prominent part of that mark is an element which is being
disclaimed.18 As is evident from the trade mark information sheet annexed to the
founding affidavit, the appellant was granted rights in the specific representation
of the mark depicted in its application for registration, namely iCOLLEGE. Upon
registration, the appellant was granted a limited monopoly to that mark to ensure
that it fulfils its function as a badge of origin.19 Whilst a trade mark proprietor
cannot bring a claim for infringement in respect of the use of a disclaimed feature,
where that feature forms part of a composite mark, the court is entitled to take the
disclaimed feature into account in deciding whether the infringing mark, as a
whole, so nearly resembles the registered mark, as to be likely to deceive or cause
confusion.20
[20] In the result, the following order is made:
The appeal is upheld with costs.
18 Webster and Page South African Law of Trade Marks para 9.16.
19 Verimark fn 16 above para 6.
20 Webster and Page South African Law of Trade Marks para 9.19.
The order of the high court is set aside and replaced with the following
order:
‘1
The first respondent is interdicted and restrained from infringing the
applicant’s registered iCOLLEGE trade marks by using the iCOLLEGE
mark and/or any mark, trading style, trading name, get up and/or dress that
is confusingly and/or deceptively similar to the applicant’s registered
iCOLLEGE trade marks.
The first respondent is ordered within 14 days of the granting of this
order to instruct the second respondent to transfer ownership of the domain
name icollege.co.za to the applicant, failing which the second respondent
is ordered to transfer ownership of the domain name icollege.co.za to the
applicant within 14 days thereafter.
An enquiry into the damages suffered by the applicant as a result of
the first respondent’s unlawful conduct is ordered to be convened.
The first respondent is ordered to pay the applicant’s costs.’
__________________
A SCHIPPERS
JUDGE OF APPEAL
___________________
K E MATOJANE
JUDGE OF APPEAL
Appearances
For the appellant:
P Cirone
Instructed by:
Kisch Africa Inc, Johannesburg
Phatshoane Henney Attorneys, Bloemfontein
For the first respondent:
D Harms SC
Instructed by:
Nixon & Collins Attorneys, Pretoria
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:
24 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
ICollege (Pty) Ltd v Xpertease Skills Development and Mentoring CC and Another (106/2022) [2023]
ZASCA 70 (24 May 2023)
Today, the Supreme Court of Appeal (SCA) upheld an appeal with costs against the decision of the
Gauteng Division of the High Court, Pretoria, per Basson J (the high court).
The issue before the SCA was whether the appellant met the requisites of s 34(1)(a) of the Trade Marks
Act 194 of 1993 (the Act) for the grant of an interdict to prevent infringing use of its trade marks by the
first respondent.
The appellant, ICollege (Pty) Ltd, is a private Further Education and Training College registered with
the Department of Higher Education and Training. It offers education and training at its 17 campuses
nationwide, and online at its e-learning centre. The appellant is the proprietor of two trade mark
registrations in class 41, which it utilises in the course of trade. A striking and dominant feature of both
marks is the word ‘iCOLLEGE’.
The first respondent, Xpertease Skills Development and Mentoring CC (the respondent) also used a
trade mark, the dominant element of which was the word ‘iCollege’, together with the words ‘ONLINE
LEARNING’. The respondent used this mark in the course of trading, which was also the provision of
education and training services. The respondent described itself as an internet-based business providing
specialised professional education and providing e-learning courses.
The SCA found that a comparison of the respondent’s iCollege mark with that of the appellant’s
iCOLLEGE trade mark reveals that the marks of both parties contain an identical dominant feature in
relation to sound and appearance – the word ‘iCOLLEGE’. Whether this word element is clearly
pronounced or carelessly spoken, the marks sound no different from one another. In the marketplace,
the notional user of education and training services would encounter the appearance of a dominant,
identical word element in both marks, namely iCOLLEGE, regardless of whether or not there is an
imperfect recollection of the registered mark. This dominant element of the marks was likely to make
an impact on the mind of the consumer. This feature alone, rendered the marks phonetically and
conceptually, confusingly similar on at least two levels of comparison: sound and appearance. And
similarity on any one of these levels is sufficient.
It was common ground that the respondent had no consent to use the appellant’s trade mark and that
the respondent was using its mark in respect of identical services in the class in which the appellant’s
trade mark had been registered – education and training. The SCA thus found that the appellant had
established that the use of the respondent’s mark was such that it could cause consumers to wrongly
believe that there was a material link in trade between the respondent’s education services and the
appellant. This, the SCA held, constituted primary trade mark infringement within the meaning of
s 34(1)(a) of the Act, which entitled the appellant to an interdict.
~~~~ends~~~~
|
4060
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 610/2021
In the matter between:
MINISTER OF INTERNATIONAL
RELATIONS AND CO-OPERATION
FIRST APPELLANT
DIRECTOR-GENERAL:
DEPARTMENT OF INTERNATIONAL
RELATIONS AND CO-OPERATION
SECOND APPELLANT
DEPARTMENT OF INTERNATIONAL
RELATIONS AND CO-OPERATION
THIRD APPELLANT
and
SIMEKA GROUP (PTY) LTD
FIRST RESPONDENT
REGIMENTS CAPITAL (PTY) LTD
SECOND RESPONDENT
LEMASCENE (PTY) LTD
THIRD RESPONDENT
SERENDIPITY INVESTMENTS SA LLC
FOURTH RESPONDENT
SIMEKA INVESTMENT GROUP (PTY) LTD
FIFTH RESPONDENT
Neutral citation: Minister of International Relations and Co-operation and Others
v Simeka Group (Pty) Ltd and Others (610/2021) [2023] ZASCA
98 (14 June 2023)
Coram:
PETSE DP and MAKGOKA and MOTHLE JJA and KGOELE and
WINDELL AJJA
Heard:
16 August 2022
Delivered: 14 June 2023
Summary: Constitutional and administrative law – procurement process – legality
review – self-review by an organ of state – proper approach to establish whether
irregularities occurred as a matter of fact – evaluation whether irregularities
constitute tenable grounds of review – determination of whether there had been
deviation from procurement prescripts and, if established, the materiality of such
deviation from legal requirements of procurement process – determination of
whether the manifest purpose sought to be served by the procurement process had
been substantially accomplished.
Delay in instituting a legality review – whether delay unreasonable and if so, whether
delay should nevertheless be condoned – legality self-review not subject to strictures
of s 7(1) of Promotion of Administrative Justice Act 3 of 2000 – nevertheless legality
self-review required to be instituted without unreasonable delay – whether delay is
unreasonable is a question of fact – whether unreasonable delay should be condoned
entails a value judgment dictated by constitutional values.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Hughes 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 in its place is substituted the
following order:
'1
The late institution of the application for a legality review is condoned.
The award of the tender for the appointment of a development partner
for the design, construction, operation, maintenance and financing of a
suitable and sustainable office and residential accommodation for South
African diplomatic missions in Manhattan, New York City, New York
pursuant to a request for proposal (DIRCO 10/2015/16) to the joint venture
comprising Simeka Group (Pty) Ltd and Regiments Capital (Pty) Ltd is
declared constitutionally invalid and therefore unlawful.
The award of the tender referred to in paragraph 2 of this order is
reviewed and set aside.
The Project Management Agreement concluded between the
Department of International Relations and Cooperation and Lemascene (Pty)
Ltd pursuant to the award of the tender is declared to be of no legal force and
effect, reviewed and set aside.
The respondents, jointly and severally, are ordered to pay the costs of
this application, including the costs of two counsel where so employed.'
JUDGMENT
Petse DP (Makgoka and Mothle JJA and Kgoele and Windell AJJA
concurring):
Introduction
[1] Since the advent of our constitutional democracy, the procurement of goods
and services by all organs of state must now comply with certain stringent
constitutional and statutory procurement prescripts. The fons et origine of those
prescripts is s 217 of the Constitution.1 Section 217(3), in particular, decrees that the
State must provide legislative measures to give effect to the requirements of s 217(1)
of the Constitution. As a result, this constitutional decree gave birth to two important
pieces of legislation, the first being the Public Finance Management Act2 and, the
second, the Preferential Procurement Policy Framework Act.3
[2] This appeal is one of the multiple cases, too many to enumerate, that have
served before this Court since the advent of the constitutional order ushered in by
the Constitution.4 The dispute in this appeal has its genesis in the award of a tender
by the third appellant, the Department of International Relations and Cooperation
(the Department), to a joint venture comprising the first respondent, Simeka Group
(Pty) Ltd (Simeka Group), and the second respondent, Regiments Capital (Pty) Ltd
(Regiments Capital), on 17 May 2016.
1 Constitution of the Republic of South Africa, 1996.
2 Public Finance Management Act 1 of 1999.
3 The Preferential Procurement Policy Framework Act 5 of 2000.
4 At first the Interim Constitution of the Republic of South Africa Act 200 of 1993 and later the Constitution of the
Republic of South Africa Act 108 of 1996.
[3] Briefly, the tender was for the appointment of a development partner for the
design, construction, operation, maintenance and financing of a suitable and
sustainable office and residential accommodation for South African diplomatic
missions in Manhattan, New York City, New York in the United States of America
(the USA). The substantive question in this appeal ultimately turns on whether the
award of the tender to Simeka Group and Regiments Capital as a joint venture by
the Department was constitutionally valid. For convenience, Simeka Group and
Regiments Capital shall be referred to collectively as the Joint Venture. As alluded
to above, there is an ancillary question that requires determination, namely whether
there was an inordinate delay by the Department in instituting its legality review and,
if so, whether such a delay is inexcusable.
[4] The Department, together with the first appellant, the Minister of International
Relations (the Minister) and the second appellant, the Director-General of the
Department (the Director-General), as co-applicants in the Gauteng Division of the
High Court, Pretoria (the high court) contended that the award of the tender to the
Joint Venture was fraught with multiple material irregularities that rendered the
award unconstitutional and unlawful. Consequently, they sought an order declaring
the award constitutionally invalid and unlawful and, as a consequence, reviewing
and setting it aside. Because of the identity of interest amongst the three parties, the
Minister, the Director-General and the Department shall, for convenience, be
referred to collectively as the government parties. However, whenever the context
dictates otherwise they will be identified by their individual appellations.
[5] The third respondent, Lemascene (Pty) Ltd (Lemascene), fourth respondent,
Serendipity Investments SA LCC (Serendipity) and fifth respondent, Simeka
Investment Group (Pty) Ltd (Simeka Investment), resisted the grant of the relief
sought by the government parties.
[6] I pause here to mention that Lemascene, which was specifically incorporated
for this purpose was, on the one hand, designed to implement the South African part
of the project. On the other hand, Serendipity which is a company incorporated in
the USA was established to carry out the USA's portion of the project.
[7] In the event, the high court (per Hughes J) held that the government parties'
delay in instituting the review proceedings was: (a) inordinate; (b) the explanation
proffered for the delay was woefully inadequate; and (c) the delay itself was
unreasonable. Accordingly, the high court declined to condone the delay and thus
dismissed the application with costs, including the costs of two counsel. Thus, the
government parties were non-suited solely on the basis of delay. Indeed, the high
court called into question the bona fides of the government parties in instituting their
legality self-review, and opined that the institution of the review application was
actuated by ulterior motives. It further held that the 'Department [sought] to evade
its constitutional obligation by way of a self-review' in order 'to avoid a declaration
that [the Department] is responsible for fruitless and wasteful expenditure'. On 14
May 2021 the high court granted the government parties leave to appeal to this Court,
hence the present appeal.
Factual background
[8] As alluded to above, on 4 March 2016 the Department issued a Request for
Proposals (the RFPs) for the appointment of a development partner for the design,
construction and financing of suitable and sustainable office and residential
accommodation for the South African diplomatic missions in the USA. This was
pursuant to an advertisement placed by the Department in the Government Tender
Bulletin requesting proposals. More specifically, the Department made it perfectly
clear that it sought to enter into what it termed a 'long term lease' or, in the alternative,
a 'lease to buy property' option, with a South African incorporated entity that had
'presence or collaboration' in New York and 'able to finance, procure and maintain
accommodation and act as landlord to the Government' of the Republic of South
Africa.
[9] To achieve the Department's objective, prospective bidders were explicitly
requested to 'identify and secure land' – self-evidently in Manhattan, New York City
– and to 'design and develop or redevelop' such land in accordance with the
Department's tender specifications. And, beyond this point, the successful tenderer
would be required to operate, manage and maintain the facilities. This entailed, as
expressly required by the RFPs, that the successful tenderer was expected to 'raise
the required funding to finance both the capital and operational costs of acquiring
and managing the facilities' for the beneficial use of the Department.
[10] The process for accepting any responsive bid entailed the following:
(a) bids would be screened to determine whether they complied with the
requirements of the RFPs, which, inter alia, were:
(i) that each bidder should provide audited financial statements for the immediate
past three years;
(ii) in the case of a Joint Venture or Consortium, each one of the parties forming part
of the Joint Venture or Consortium would be required to provide audited financial
statements;
(b) bidders were required to provide proof that they would be able to raise the
required capital to fund the project;
(c) as required by Treasury Regulations with respect to procurement of goods and
services for organs of state, the bids would be evaluated by the Bid Evaluation
Committee (BEC) and if they met the required threshold, they would then proceed
to the Bid Adjudication Committee (BAC) which was tasked with the responsibility
of adjudicating the bids to determine if they met the requirements of the bid as
required by the RFPs.
[11] Presumably, because of the magnitude of the scope of the work required in
terms of the RFPs and the substantial financial injection that the project entailed,
only two bids were received by the Department. The one bid was that of the Joint
Venture whilst the other was received from a consortium comprising Lephuthing
Investment
CC
and Menzibali
Construction CC
(Lephuthing/Menzibali
Construction). On 16 May 2016, and after due consideration of the two competing
bids received, the BEC concluded that the bid submitted by Lephuthing/Menzibali
Construction was non-responsive. It was, as a result, disqualified. Instead, the BEC
recommended the bid submitted by the Joint Venture. It bears mentioning that the
Lephuthing/Menzibali Construction consortium was disqualified solely on the basis
that it had not submitted audited financial statements of the parties comprising the
consortium. Curiously, the Joint Venture, too, failed to meet this express
requirement of the RFPs and yet it was allowed to proceed to the next stage of the
process ostensibly because the BEC was satisfied with the Joint Venture's proposal
with reference to both its financial and capability attributes. I shall revert to this
aspect later.
[12] As already indicated above, the BEC recommended to the BAC that the Joint
Venture be awarded the contract for the project envisaged in the RFPs. For its part,
the BAC accepted the recommendation and, on 16 May 2016, forwarded its own
recommendation to the Director-General, further indicating that it 'concurs with the
recommendation' of the BEC.
[13] In addition, the BAC recommended that 'the Project Team travels to New
York to conclude the selection process of the three (3) shortlisted site[s]; supported
by the officials from the missions through site inspection'. The Director-General
accepted the recommendation and awarded the tender to the Joint Venture.
Consequently, on 17 May 2016, the Director-General wrote to the Joint Venture in
accordance with a draft letter prepared for him by the BAC – awarding the tender to
the Joint Venture, advising the latter that it was appointed as 'the preferred bidder
for the ... project'.
[14] It is apposite at this juncture to emphasise that the RFPs made plain that the
successful bidder was itself required to provide finance for the construction of the
office and residential accommodation as stipulated in the RFPs. There was no doubt
that the RFPs contemplated that the Department would become purely a lessee either
to hire the accommodation for the duration of the lease, alternatively, the Department
would lease the accommodation with a view of purchasing it when the lease
ultimately terminated by effluxion of time. Accordingly, no capital outlay of
whatever nature would be required from the Department. This is evident from the
scope of the work spelt out in the RFPs that the successful tenderer would be required
to provide.
[15] Following the award of the tender, a Steering Committee was established
comprising representatives of the Department, the Joint Venture and the National
Treasury and its primary objective was to monitor the implementation of the project.
Its chairperson was Ms Bernice Africa, the Department's Chief Director: Property
and Facilities Management. The committee proposed, amongst other things, that the
envisaged lease agreement should constitute a finance lease. In terms of s 76(3) of
the Public Finance Management Act 1 of 1999 (the PFMA) read with Regulations
13.2.4 and 16 of the Treasury Regulations,5 a finance lease requires the approval of
the National Treasury. The Treasury Regulations make provision for four categories
of approval, namely Treasury Approval I (TA I); Treasury Approval IIA (TA IIA);
Treasury Approval IIB (TA IIB) and Treasury Approval III (TA III). Upon being
approached to grant the requisite approvals, the National Treasury instead granted
exemptions in relation to TA I, TA IIA and TA IIB, stating that the exemptions were
granted by virtue of 'the developments that have already taken place'. However, the
National Treasury insisted on due compliance with respect to TA III. To this end,
the National Treasury required that the Department submit certain documentation,
namely:
(a) the final draft Public Private Partnership (PPP) agreement;
(b) the final draft nominee agreement;
(c) the final financial model, including detailed information on contingent liabilities
and the impact of exchange rate movements on project cash-flows;
(d) the PPP contract management plan; and
(e) documents indicating the preferred bidder's capacity and track record in the
financing, design and construction of buildings (American company) and facilities
management (South African company).
5 The Regulations were published in Government Notice R225, Government Gazette no 27388 dated 15 March 2005.
[16] At the first meeting of the Steering Committee held on 21 June 2016 attended
by representatives from both Simeka Group and Regiments Capital on the one hand,
and the Department on the other, it was, inter alia, agreed that:
(a) an offer to purchase the land had been 'verbally accepted by the current owners'
and that it was envisaged that a written agreement should be concluded by 30 June
2016 with a deposit of US $1 million payable within 60 days thereafter;
(b) that the transaction had by then metamorphosised into a finance lease and that
the Department would consider contributing towards the purchase of the land;
(c) that Simeka Group would represent the Department as the latter's agent in the
acquisition of the land with the South African Government in effect becoming the
purchaser of the land.
[17] At its subsequent meeting held on 19 January 2017, the Steering Committee
agreed that the Department would pay a non-refundable deposit of US $60 million
towards the acquisition of land for the project in terms of a Project Preparation
Agreement (the PPA) that was at that stage envisaged.
[18] At this juncture two points of fundamental importance should be made. First,
it was by now envisaged that the Department would finance both the acquisition of
the land and the construction of the offices and residential accommodation. Second,
this development represented a radical departure from what the RFPs had envisaged
and required when the project went out on tender. As a rationale for this radical
departure from what the RFPs contemplated, it was explained that it would be best
for the Government 'to take title of the property for purposes of [diplomatic]
immunities and privileges'. The Steering Committee further agreed that:
(a) the PPA should be submitted by 27 January 2017;
(b) TA III application should be submitted to the National Treasury by 31 March
2017; and
(c) the 'targeted' date for the TA III approval was 30 April 2017.
[19] What happened next was that on 25 March 2017 the Government, represented
by the Department, on the one hand and Lemascene and Regiments Capital on the
other, concluded the PPA. In terms of clause 4.1 of the PPA, Lemascene would
represent the Government and, as the latter's agent, identify potential project sites
and 'enter into negotiations with owners [of land]' and thereafter 'present such
[p]roject [s]ites in their order of priority to the Department' for it to identify a
preferred site of its choice. Following this, Lemascene would then 'procure ... the
Land Purchase Agreement' to be concluded between Lemascene and Serendipity as
agents for the Department. The PPA explicitly provided in clause 4.5 thereof that
Lemascene and Serendipity 'shall have no beneficial interest or rights nor assume
any obligations in terms of or in the Land Purchase Agreement or the chosen site ... '
This meant that the Department would be the sole party to purchase the land and
generally fund the project. This was, of course, at variance with the explicit
requirements of the RFPs that provided that the successful tenderer would solely
bear such an obligation.
[20] Clause 7 of the PPA, inter alia, provided that '[t]he Department shall make an
advance payment of US$ 9 000 000.00 (nine million US Dollars), representing ...
twenty per cent (20%) of the purchase price of the Project Sites ... to Lemascene for
the execution of the Preparatory Work' which is inclusive of the payment of a deposit
of US $5 million. It bears mentioning that the total purchase price of the property in
terms of the agreement concluded on 29 June 2017 between Serendipity – in its
representative capacity – and the land owners was US $47 850 000.
[21] On 29 August 2017, and as explicitly provided for in the PPA, the Department
acting in collaboration with Lemascene, prepared a letter under the hand of its then
Director-General addressed to the National Treasury in terms of which an
application was made for the TA III approval. In support of its application, the
Department provided the National Treasury with a report in terms of Treasury
Regulation 16.5.6. The Department also expressed its confidence as to the feasibility
of the project as well as its 'strategic operational and financial benefits ownership'
that it had 'interrogated thoroughly', emphasising that the project 'would provide
value for money for [the] Government'. The Department, being overly confident of
the viability of the project, proposed to the National Treasury that it 'be afforded the
opportunity to present the project to the National Treasury colleagues on 11
September 2017'.
[22] But there was a new twist of events that ultimately scuppered the entire
project. In the wake of allegations that had enjoyed wide-spread publicity to the
effect that a member of the Joint Venture, ie Regiments Capital, was associated with
a notorious family perceived to have corruptly siphoned vast sums of money from
the government and more especially from State-owned entities, the National
Treasury expressed grave misgivings about granting the required TA III approval.
[23] In order to circumvent and allay what by all accounts had become justifiable
concerns raised by the National Treasury, Simeka Group wrote to the Department
confirming that it had taken note of the 'concerns raised by the National Treasury
committee' that had convened to consider 'the TA III approval application of the
project'. It then proposed that Regiments Capital should withdraw from the Joint
Venture so that Simeka Group could then proceed with the project on its own. This
proposal found favour with the Department. Pursuant thereto Simeka Group,
Regiments Capital, Lemascene and Serendipity concluded a termination agreement
during December 2017 in terms of which Regiments Capital terminated the Joint
Venture. Regiments Capital further undertook to, inter alia: (a) relinquish any and
all of its rights, title and interest in the project; and (b) irrevocably procure the
resignation of directors nominated by it to the board of directors of Lemascene.
[24] Although the sole objective of the termination agreement was to enable
Simeka Group, as an untainted entity, to proceed with the implementation of the
project to its intended conclusion, the National Treasury was still not convinced and,
as a result, refused to grant TA III approval. The entrenched position taken by the
National Treasury in refusing to grant the TA III approval precipitated a crisis for
both the Department and Simeka Group. In an endeavour to extricate itself from the
resultant quagmire, the Department consulted the State Attorney who, on 29 June
2018, wrote to the attorneys representing the respondents indicating, inter alia, that
the award of the tender to the Joint Venture was fraught with irredeemable
irregularities. Consequently, the Department went on to intimate that it would bring
a review application to the high court to have the award of the tender to the Joint
Venture declared constitutionally invalid and unlawful. Some three months
thereafter this litigation commenced.
[25] On 10 October 2018, the government parties instituted review proceedings in
the high court seeking the following relief:
'1
Declaring the award of the tender for the appointment of a development partner for the
design, construction, operation, maintenance and financing of a suitable and sustainable
office and residentia1 accommodation for South African diplomatic missions in
Manhattan, New York City, New York (DIRCO 10/2015/16) to the joint venture
comprising the first and second respondents to be unlawful and / or unconstitutional and
/or invalid;
Setting aside the award of the aforesaid tender to the joint venture comprising the first and
second respondents;
Setting aside the Project Preparation Agreement concluded between the third applicant and
the third respondent pursuant to the awarding of the tender to the first and second
respondents;
Directing the first, second, third and / or fourth respondents to repay to the third applicant
the Rand equivalent of US $9 million, together with interest thereon at the prescribed rate
of interest calculated from the date of this order to date of payment.'
In this Court, as was the case in the high court, the relief sought in terms of paragraph
4 of the notice of motion was not pursued. Thus, nothing more need be said of this
prayer.
[26] As already mentioned, the review application failed before Hughes J who
dismissed it solely on the basis of delay. Consequently, the high court did not enter
into the substantive merits of the review.
[27] It is timely at this juncture to observe that in its review, the government parties
relied on a number of alleged irregularities in the tender process. In particular, they
asserted that:
(a) the two parties that had responded to the RFPs were not treated equally in that
Lephuthing/Menzibali Construction's bid was disqualified because it had not
provided the required audited financial statements whereas the Joint Venture was
not, despite the fact that it too had failed to provide the required audited financial
statements;
(b) as for Regiments Capital as a party to the Joint Venture, no financial statements
at all were provided;
(c) both the BEC and BAC ignored the requirements of the RFPs in order to favour
the Joint Venture;
(d) the Joint Venture failed to meet the RFPs' requirement to provide proof that it
had the ability to raise the requisite funding for the project;
(e) once the tender was awarded to the Joint Venture, and pursuant to decisions taken
by the Project Steering Committee, the Department was burdened with the obligation
to fund the project whereas this should have been the sole responsibility of the Joint
Venture in compliance with both the RFPs and the contract concluded between the
parties.
Nature of the review
[28] It is helpful at this juncture to get one uncontentious preliminary issue out of
the way. The logical point of departure in a matter such as this is to determine
whether the review is one to be dealt with under the Promotion of Administrative
Justice Act 3 of 2000 (PAJA) or the principle of legality. I have above said that the
issue is, in the context of the facts of this case, uncontentious. The parties are in
agreement that this review falls to be dealt with under the principle of legality,6 since
it is the Department that seeks to invalidate its own decision. Whilst cognisant that
Gijima generated widespread interest amongst academic commentators and even
6 See, for example in this regard: State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited
[2017] ZACC 40; 2018 (2) SA 23 (CC) (Gijima) para 41; MEC for Health, Eastern Cape and Another v Kirland
Investments (Pty) Ltd [2014] ZACC 6; 2014 (5) BCLR 547 (CC); 2014 (3) SA 481 (CC) (Kirkland).
attracted trenchant academic criticism, it is, however, not necessary for present
purposes to say more on that score.7
[29] In Fedsure Life Assurance Ltd and Others v Greater Johannesburg
Transitional Metropolitan Council and Others,8 the Constitutional Court said that:
'It seems central to the conception of our constitutional order that the legislature and the 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 the law'.9
The Constitutional Court went on to elaborate that:
'… a local government may only act within the powers lawfully conferred upon it. There is nothing
startling in this proposition - it is a fundamental principle of the rule of law, recognised widely,
that the exercise of public power is only legitimate where lawful. The rule of law – to the extent at
least that it expresses this principle of legality – is generally understood to be a fundamental
principle of constitutional law. This has been recognised in other jurisdictions. In The Matter of a
Reference by the Government in Council Concerning Certain Questions Relating to the Secession
of Quebec from Canada the Supreme Court of Canada held that:
"Simply put, the constitutionalism principle requires that all government action comply with the
Constitution. The rule of law principle requires that all government action must comply with the
law, including the Constitution. This Court has noted on several occasions that with the adoption
of the Charter, the Canadian system of government was transformed to a significant extent from a
system of Parliamentary supremacy to one of constitutional supremacy. The Constitution binds all
governments, both federal and provincial, including the executive branch (Operation Dismantle
Inc. v. The Queen, [1985] 1 S.C.R. 441, at p.455). They may not transgress its provisions: indeed,
7 See, for example, in this regard: C Hoexter 'South African Administratice Law at Crossroads: The PAJA and the
Principle
of
Legality'
(2018)
Administrative
Law
in
the
Common
Law
World,
available
at
https://adminlawblog.org/2017/04/28/cora-hoexter-south-african-administrative-law-at-a-crossroads-the-paj-and-
the-principle-of-legality/; S Woolman 'The Amazing, Vanishing Bill of Rights' (2007) 124 South African Law Journal
762, 784; R H Freeman (2019) Constitutional Court Review Vol 9, 521-535.
8 Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1999
(1) SA 374; 1998 (12) BCLR 1458 (Fedsure).
9 Fedsure para 58.
their sole claim to exercise lawful authority rests in the powers allocated to them under the
Constitution, and can come from no other source".'10 (Footnotes omitted.)
[30] Almost two years later, in Pharmaceutical Manufacturers Association of
South Africa and Another: In re Ex Parte President of the Republic of South Africa
and Others,11 the Constitutional Court explained that the principle of legality is 'an
incident of the rule of law'12 which is a founding value of the Constitution itself.13
Ngcobo J further clarified the principle of legality in Affordable Medicines Trust and
Others v Minister of Health and Another,14 as follows:
'The exercise of public power must therefore comply with the Constitution, which is the supreme
law, and the doctrine of legality, which is part of that law. The doctrine of legality, which is an
incident of the rule of law, is one of the constitutional controls through which the exercise of public
power is regulated by the Constitution.'15
[31] On this score, it is as well to remember that s 2 of the Constitution decrees
that the Constitution is 'the supreme law of the Republic' and that 'conduct
inconsistent with it is invalid. In that event, s 172(1)(a) of the Constitution enjoins
the courts to declare any conduct inconsistent with it to be invalid. What is clear
from this Constitutional imperative is that once a court has found that any conduct
is, as a fact, inconsistent with the Constitution, such a court is obliged to declare it
10 Ibid para 56.
11 Pharmaceutical Manufacturers Association of South Africa and Another: In re Ex Parte President of the Republic
of South Africa and Others 2000 (2) SA 674; 2000 (3) BCLR 241.
12 Ibid para 17.
13 The source of this is s 1 of the Constitution which provides that:
'The Republic of South Africa is one, sovereign, democratic state founded on the following
values:
(a) Human dignity, the achievement of equality and the advancement of human rights and freedoms.
(b) Non-racialism and non-sexism.
(c) Supremacy of the constitution and the rule of law.' (My emphasis.)
14 Affordable Medicines Trust and Others v Minister of Health and Another [2005] ZACC 3; 2006 (3) SA 247 (CC);
2005 (6) BCLR 529 (CC).
15 Ibid para 49.
invalid. It has no choice in the matter. It is therefore against this backdrop that the
application by the government parties in the high court seeking the review of the
Department's own decision in awarding the contract to the Joint Venture in the first
place and the subsequent wholesale variation of the requirements of the RFPs by the
Steering Committee, thereby relieving the Joint Venture of its contractual
obligations, falls to be considered.
Brief contentions of the parties
[32] In this Court, as in the high court, the overarching contentions of the
government parties is that the Joint Venture woefully failed to satisfy even the barest
minimum of the criteria prescribed by the RFPs in that:
(a) the Joint Venture failed to submit audited financial statements for the three years
preceding the tender as required;
(b) that the bid documents were submitted solely in the name of Simeka Group
whereas the RFPs dictated that in the case of a joint venture, the parties to the joint
venture ought to do so;
(c) the Joint Venture failed to provide proof of its ability to raise the requisite funding
for the project and, instead, only submitted a letter that purported to prove the ability
of Simeka Group and the latter's associate shareholders; and
(d) for what they were worth, the financial statements submitted by the Joint
Venture, such as they were, revealed that the Joint Venture lacked the financial
ability to perform the project.
[33] Moreover, the government parties contended that the agreement concluded
pursuant to the tender was a radical departure from what the RFPs had required and
envisaged. Insofar as the delay in instituting the review proceedings is concerned,
upon which the review application faltered in the high court, the edifice of the
government parties' case rested on three pillars. First, it was argued that there was
no delay, but if there was, such delay was adequately explained, and in any event,
not unreasonable. In addition to this, it was contended that the high court's decision
to the contrary was due to a misconception of the true facts on its part. Lastly, the
government parties submitted that the pervasive unlawfulness in the award of the
tender in the first place and the subsequent conclusion of the PPA, militated in favour
of the delay being overlooked and for the review and setting aside of the award of
the tender to follow as an inevitable consequence.
[34] For its part, the Joint Venture contended that the non-suiting of the
government parties solely on the basis of delay is unassailable. With regard to the
substantive merits of the review, the Joint Venture submitted that the contention that
the 'responsiveness criteria' were not satisfied, thus justifying the setting aside of the
award on this basis, has not been established on the papers. Counsel argued that even
if they were established, these were neither material nor did they occasion any
prejudice to the Department and therefore cannot provide a basis for the award of
the tender to be set aside.
[35] It was further submitted on behalf of the Joint Venture that the conclusion of
the PPA bore no relevance to the award of the tender and that, in any event, the
financial contribution by the Government to the acquisition of the land as envisaged
in the PPA was not proscribed by the RFPs. Accordingly, this case requires this
Court to determine first and foremost whether there was any non-compliance with
the requirements of the RFPs. If so, whether, once established, such non-compliance
with the tender requirements as required by the law was material. Of course, the
constitutional and legislative procurement framework and prescripts will be central
to the determination of the dispute between the protagonists in this litigation.
Constitutional framework
[36] The logical point of departure in a case such as this is of course s 217 of the
Constitution itself. The section provides:
'(1)
When an organ of state in the national, provincial or local sphere of government, or any
other institution identified in national legislation, contracts for goods or services, it must
do so in accordance with a system which is fair, equitable, transparent, competitive and
cost-effective.
(2)
Subsection (1) does not prevent the organs of state or institutions referred to in that
subsection from implementing a procurement policy providing for—
(a) categories of preference in the allocation of contracts; and
(b) the protection or advancement of persons, or categories of persons, disadvantaged by
unfair discrimination.
(3)
National legislation must prescribe a framework within which the policy referred to in
subsection (2) must be implemented.
Statutory framework
[37] The most relevant legislation in the context of the facts of this case is the
PFMA. According to its Preamble, the PFMA seeks, inter alia, to 'regulate financial
management in the national and provincial governments; to ensure that all revenue,
expenditure, assets and liabilities of those governments are managed efficiently and
effectively'. The object of the PFMA is set out in s 2 thereof. It is 'to secure
transparency, accountability, and sound management of revenue, expenditure, assets
and liabilities of the institutions 16 to which [the PFMA] applies'. In addition,
16 Section 3 provides, inter alia, that the Act applies, to the extent indicated, to departments which are defined s 1 of
the PFMA to mean ‘a national or provincial department or a national or provincial government component.’
s 51(1)(a)(iii) of the PFMA requires that an accounting authority for a department
must ensure and maintain 'an appropriate procurement and provisioning system
which is fair, equitable, transparent, competitive and cost effective'.
Legal approach
[38] It is apposite at this juncture to say something about the proper approach to
the role that procedural requirements play in procurement matters. In Allpay
Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of
the South African Social Security Agency and Others,17 the Constitutional Court
disapproved of this Court's approach to procedural requirements when this Court
opined that these should 'not be considered on their own merits, but instead through
the lens of the final outcome'.18 The Constitutional Court cautioned that such an
approach 'conflates the different and separate questions of unlawfulness and
remedy'. It emphasised that '[i]f the process leading to the bid's success was
compromised, it cannot be known with certainty what course the process might have
taken had the procedural requirements been properly observed'. 19 This dictum
assumes, in my view, significance in this case for reasons that will become apparent
later. The Constitutional Court went on to observe, with reference to international
authority, 20 that 'deviations from fair process may themselves all too often be
symptoms of corruption or malfeasance in the process'.21 The Constitutional Court
then proceeded to explain that insistence on compliance with process formalities
served a three-fold purpose, viz:
17 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social
Security Agency and Others [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC) (Allpay Consolidated).
18 Ibid para 24.
19 Ibid para 24.
20 Transparency International Handbook For Curbing Corruption In Public Procurement (2006) at 35 & 42.
21 Allpay Consolidated para 27.
(a) it ensures fairness to participants in the bid process;
(b) it enhances the likelihood of efficiency and optimality in the outcome; and
(c) it serves as a guardian against a process skewed by corrupt influences.22
[39] Insofar as the requirement of materiality is concerned, O'Regan J aptly
captured the core of this requirement in African Christian Democratic Party v
Electoral Commission and Others23 when she said that in essence the question is
'whether what the applicant did constituted compliance with the statutory provisions
viewed in the light of their purpose'.24 And, as already indicated above, the logical
starting point in this enquiry is s 217 of the Constitution. On this score, what
Moseneke DCJ said in Steenkamp NO v Provincial Tender Board of the Eastern
Cape (Steenkamp)25 is instructive. The learned Deputy Chief Justice said:
'Section 217 of the Constitution is the source of the powers and function of a government tender
board. It lays down that an organ of state in any of the three spheres of government, if authorised
by law may contract for goods and services on behalf of government. However the tendering
system it devises must be fair, equitable, transparent, competitive and cost-effective. This
requirement must be understood together with the constitutional precepts on administrative justice
in section 33 and the basic values governing public administration in section 195(1).'26
Hot on the heels of Steenkamp, this Court explained this theme in Millennium Waste
Management as follows:
'The final Constitution lays down minimum requirements for a valid tender process and contracts
entered into following an award of tender to a successful tenderer (s217). The section requires that
22 Ibid.
23 African Christian Democratic Party v Electoral Commission and Others [2006] ZACC 1; 2006(3) SA 305 (CC);
2006(5) BCLR 579 (CC).
24 Ibid para 25.
25 Steenkamp NO v Provincial Tender Board of the Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC); 2007 (3)
BCLR 300 (CC).
26 Ibid para 33.
the tender process, preceding the conclusion of contracts for the supply of goods and services,
must be "fair, equitable, transparent, competitive and cost-effective".'27 (Footnotes omitted.)
[40] In similar vein, Schutz JA, in emphasising the importance of adhering to
relevant legal prescripts, had occasion to observe in Premier of the Free State
Provincial Government and Others v Firechem Free State (Pty) Ltd (Firechem),
that:28
'One of the requirements of such a procedure is that the body adjudging tenders be presented with
comparable offers in order that its members should be able to compare. Another is that a tender
should speak for itself. Its real import may not be tucked away, apart from its terms. Yet another
requirement is that competitors should be treated equally, in the sense that they should all be
entitled to tender for the same thing. Competiveness is not served by only one or some of the
tenderers knowing what is the true subject of tender. One of the results of the adoption of a
procedure such as Mr McNaught argues was followed is that one simply cannot say what tenders
may or may not have been submitted, if it had been known generally that a fixed quantities contract
for ten years for the original list of products, and some more, was on offer. That would deprive the
public of the benefit of an open competitive process.'29
[41] Finally, it is necessary to make reference to the National Treasury Regulations
issued in terms of s 76 of the PFMA. The Treasury Regulations place a high premium
on the need to develop and implement an effective and efficient supply chain
management system in regard to the procurement of goods and services. That system
is required to be fair, equitable, transparent, competitive and cost-effective as
decreed by s 217 of the Constitution. The learned author of The Law of Government
27 Millennium Waste Management (Pty) Ltd v Chairperson of the Tender Board: Limpopo Province and Others [2007]
ZASCA 165; [2007] SCA 165 (RSA); 2008 (2) SA 481; 2008 (5) BCLR 508; 2008 (2) SA 481 (SCA) para 4.
28 Premier of the Free State Provincial Government and Others v Firechem Free State (Pty) Ltd [2000] ZASCA 28;
2000 (4) SA 413 (SCA); [2000] 3 All SA 247 (A) (Firechem).
29 Ibid para 30.
Procurement in South Africa 30 says the following in regard to the underlying
rationale for a competitive and fair procurement process:
'One of the primary reasons for the express inclusion of the five principles in section 217(1) of the
Constitution is to safeguard the integrity of the government procurement process. The inclusion of
the principles, in addition to ensuring the prudent use of public resources, is aimed at preventing
corruption.'31
[42] Of fundamental importance in the context of the facts of this case is Treasury
Regulation 16A which pertinently regulates supply chain management processes in
relation to, inter alia, government departments. In Allpay Consolidated, the
Constitutional Court emphasised, albeit in a difference context, that '[t]he facts of
each case will determine what any shortfall in the requirements of the procurement
system – unfairness, inequity, lack of transparency, lack of competitiveness or cost-
efficiency – may lead to…'.32 As already indicated above, in awarding the tender and
pursuant to which the Department concluded the contract and PPA with the Joint
Venture, the Department was exercising public power. And as we are here dealing
with a self-review by a government department, the principle of legality is the only
permissible avenue through which the decisions at issue here may be reviewed.
Accordingly, as Madlanga J and Pretorius AJ observed in State Information
Technology Agency SOC Limited v Gijima Holdings (Pty) Limited (Sita),33 the
pertinent question is:
'[d]id the award conform to legal prescripts? If it did, that is the end of the matter. If it did not, it
may be reviewed and possibly set aside under legality review.'34
30 Bolton The Law of Government Procurement in South Africa 2007.
31 Ibid at 57.
32 Allpay Consolidated para 43.
33 State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited [2017] ZACC 40; 2018 (2)
BCLR 240 (CC); 2018 (2) SA 23 (CC).
34 Ibid para 40.
[43] In this case there was no dispute that the process preceding the award of the
tender did not accord with the dictates of s 217 of the Constitution. This is because
the BEC and the BAC, both of which were central to the ultimate award of the tender,
failed at every turn in conscientiously discharging their constitutional and statutory
responsibilities. This then raises the question as to whether the Department acted
contrary to the dictates of the Constitution which is the supreme law in this country.35
[44] Before us, lead counsel for the government parties addressed the substantive
merits of the review first, and the issue of delay last. In this judgment, I shall adopt
the same approach.36
[45] It is timely at this stage to address the substantive merits of the review itself.
Two important points in this regard need to be emphasised. First, in a review of
administrative action taken under the procurement process, courts are enjoined to
assess the evidence that impugns the procurement process to establish whether such
evidence justifies the conclusion that any one of the grounds of review has been
established. And, as the Constitutional Court held in Allpay Consolidated, albeit in
a different context, if the reviewing court finds that 'there are valid grounds for
review, it must declare the procurement process to be constitutionally invalid and set
it aside.'37
[46] What the Constitutional Court said in Allpay Consolidated bears repeating.
The Constitutional Court stated that:
35 Section 2 of the Constitution decrees that the Constitution ‘is the supreme law of the Republic; law or conduct
inconsistent with it is invalid, and the obligations imposed by it must be fulfilled.’
36 Compare: South African National Roads Agency Limited v City of Cape Town [2016] ZASCA 122; [2016] 4 All
SA 332 (SCA); 2017 (1) SA 468 (SCA) para 81.
37 Allpay Consolidated paras 44 and 45.
'The materiality of irregularities is determined primarily by assessing whether the purposes the
tender requirements serve have been substantively achieved.'38
[47] In dealing with the substantive merits of the review itself, it will be helpful to
set out again in broad terms what the RFPs required of prospective bidders for the
tender under consideration in this case. The following represents the key components
of the tender gleaned from the RFPs that were not met by the Joint Venture:
(a) bidders were required to submit audited financial statements for the three-year
period preceding the tender;
(b) the successful bidder was required to acquire the land and provide office and
residential accommodation at own cost;
(c) the prospective bidders were required to demonstrate that they had the requisite
financial resources to undertake the project; and
(d) where a bid is submitted by a consortium or joint venture, each member of the
consortium or joint venture was required to submit audited financial statements for
the three-year period preceding the bid.
[48] As already indicated in paragraph 10 above, only two bids were received by
the closing date. One of them was disqualified at the outset since it had not provided
audited financial statements for the preceding three financial years as required. The
remaining tender, submitted by the Joint Venture, was referred to the BEC for
evaluation. Having considered the bid, the BEC recommended to the BAC that it
ought to be accepted. For its part, the BAC, in turn, recommended to the
Director-General that the Simeka Group's bid should be accepted. This
38 Ibid para 58.
recommendation found favour with the Director-General who accepted it and
thereafter concluded an agreement with Simeka Group.
[49] Against the foregoing backdrop, the complaints raised by the government
parties will now be considered. In order to avoid prolixity, not all of the complaints
raised against the award will be traversed in this judgment. This judgment will be
confined to those complaints that either individually or cumulatively lead to one
conclusion that the BEC or BAC or both deviated in material respects from the
requirements of the RFPs.
Failure to submit complete set of audited financial statements
[50] Amongst the criteria stipulated in the RFPs, is that set out in clause 7.1.2. It
required bidders who submit bids either as a consortium or joint venture, to submit
audited financial statements for each member of the consortium or joint venture.
Simeka Group does not have qualms with this criterion, nor does it dispute that it
failed to provide audited financial statements for the preceding three years. Simeka
Group attributes its failure to do so to the fact that it was in the process of changing
its auditors. The failure by Simeka Group to meet this requirement was heavily relied
upon by the government parties both in the heads of argument and in oral argument
before us.
[51] Whilst accepting that Simeka Group failed to submit audited financial
statements, counsel for the respondents argued that the BEC required to evaluate the
bid elected to overlook this requirement presumably because it 'saw no difficulty
with this requirement' for the reason that it considered that the requirements of clause
7.1.2 had been satisfied. Instead the BEC 'urged that the financial statements ... must
be forwarded to Internal Audit for [thorough investigation] of the financial position
of the company'. Building on this, it was contended that the BEC must be taken to
have either waived this requirement because the provisions of the RFPs permitted
waiver, or, alternatively, decided to 'prequalify the Simeka Group' provided that its
unaudited financial statements were 'sent to Internal Audit for thorough
investigation'.
[52] I do not think that the contentions advanced on behalf of the respondents can
avail them. To uphold these contentions would undermine the letter and spirit of
s 217 of the Constitution that seeks to ensure that the procurement of goods and
services by organs of state is 'fair, equitable, transparent, competitive and cost-
effective'. As the Constitutional Court aptly put it in Allpay Consolidated:
'Compliance with the requirements for a valid tender process, issued in accordance with the
constitutional and legislative procurement framework, is thus legally required. These requirements
are not merely internal prescripts that ... may [be] disregard[ed] at whim. To hold otherwise would
undermine the demands of equal treatment, transparency and efficiency under the Constitution.'39
[53] In these circumstances counsel's reliance on Airports Company South Africa
v Tswelokgotso Trading Enterprises CC (Airports Company)40 does not assist the
respondents. Airports Company was concerned with an entirely different issue and
the passage upon which counsel relied was made in the context of the facts of that
case. Nor is it helpful for the respondents to invoke the case of City of Cape Town v
Aurecon South Africa (Pty) Ltd (Aurecon).41 What the Constitutional Court said in
39 Para 40.
40 Airports Company South Africa v Tswelokgotso Trading Enterprises CC [2018] ZAGPJHC 476; 2019 (1) SA 204
(GJ) para 28.
41 City of Cape Town v Aurecon South Africa (Pty) Ltd [2017] ZACC 5; 2017 (6) BCLR 730 (CC); 2017 (4) SA 223
(CC).
Aurecon,42 was in the context of determining the question whether the delay in
instituting the review was unreasonable or not. And the Constitutional Court there,
said that since the BEC and BAC were domestic committees mandated by the City
itself for purposes of the tender process their knowledge had to be imputed to the
City.43
Failure to submit relevant documentation by each member of the Joint Venture
[54] The RFPs required, in terms of clause 7.1.3 thereof, that where a bid is
submitted in the name of, for example, a Joint Venture, the bid documents must be
submitted in the name of all the parties to the joint venture. Here, the crux of the
complaint is that the bid documents were submitted in the name of Simeka Group
only, excluding Regiments Capital that was said to be a party to the Joint Venture.
In this case, there is no dispute that the bid documents were in the name of Simeka
Group only. The submissions advanced by the respondents in contesting this ground
are multi-pronged. The first is that the Department itself had, in its letter of 26 April
2018 addressed to the National Treasury, effectively asserted that this ground lacked
substance. It was therefore argued that the Department has not explained why it later
changed tack in its review application and contended that its acceptance of the bid
documents of Simeka Group was an error without explaining how the error came
about.
[55] Moreover, counsel for the respondents relied on Buffalo City Metropolitan
Municipality v Asla Construction (Pty) Limited (Asla)44 in which Cameron J in a
42 Ibid para 39.
43 Ibid.
44 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited [2019] ZACC 15; 2019 (6) BCLR 661
(CC); 2019 (4) SA 331 (CC).
minority judgment emphasised that courts '[s]hould be vigilant in ensuring that state
self-review is not brought by state officials with a personal interest in evading the
consequences of their prior decisions'.45 I do not think that the respondents' reliance
on the remarks of Cameron J in Asla is necessarily helpful for present purpose. What
is clear from this passage is that Cameron J's remarks were made in the context of
determining whether an unreasonable delay ought to be overlooked. What is of
paramount importance is whether there is evidence that the state officials have
brought the self-review application for ulterior motives. In this case the conspectus
of the evidence, such as it emerged from the record, does not suggest that this is the
position. Thus, the passage from Asla seized upon by the respondents finds no
application in the present context where the issue has solely to do with
non-compliance with the requirements of the RFPs which is not in dispute. In Govan
Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd,46 this Court was
dealing with a similar situation when it stressed that the conduct of the officials who
institute a legality review should be scrutinised to ensure that they do not
unjustifiably claim high moral ground in circumstances where it is through their own
malfeasance that the illegality complained of came about.
The Joint Venture's ability to raise the required funding
[56] Insofar as the Joint Venture's ability to raise the required funding is concerned,
the government parties invoked clause 7.1.6 of the RFPs. This clause stipulated,
amongst others, that the 'minimum requirements to be met by bidders in order to
proceed to the next round of the evaluation process' were 'proven ability to raise the
required funding in the form of a financial institution letter'. Allied to this clause are
45 Ibid para 139.
46 Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd [2021] ZASCA 34; [2021] 2 All SA 700
(SCA); 2021 (4) SA 436 (SCA) para 45.
clause 2, Item 3 of clause 7.2.2 and clause 9.6.5. The latter clauses stipulated that
the successful bidder must be 'able to finance, procure and maintain, accommodation
and act as landlord to the Government of the RSA' and to 'demonstrate its ability to
finance the property acquisition ... at ... own cost and risk' respectively. To that end
'the audited financial statements of the Bidders' would be scrutinised.
[57] The clauses to which reference has been made in the preceding paragraph
were no doubt designed to serve at least three critical purposes. The purpose of
clause 7.1.6 was to require the bidders to satisfy the Department by way of
objectively verifiable information that the bidders had sufficient funds to deliver on
what the RFPs contemplated, hence bidders were required to demonstrate their
ability to do so. Finally, bidders had to demonstrate their ability to raise the required
funding by providing a letter from a financial institution to do so. The letter of 12
April 2016 submitted by the Joint Venture from Rand Merchant Bank (RMB)
purported to demonstrate the Joint Venture's ability to raise the required funding.
However, at best for the Joint Venture this letter confirmed only one thing, namely
that 'Simeka and its shareholders' were long-standing clients of the Firstrand Group
and therefore RMB expressed confidence in the ability of Simeka's shareholders 'to
provide the requisite equity and deliver the project successfully'.
[58] The government parties contended that the shortcomings in the letter from
RMB were palpable. First, the letter said nothing about the ability of the Joint
Venture to raise the required funding. Second, on its fair reading, the letter did not
purport to confirm that the Joint Venture had the ability to provide the requisite
funding having regard to the fact that the project would cost in excess of
US $159 000 000. More fundamentally, argued the government parties, the
conclusion of the PPA represented a radical departure from what the RFPs had
required. Consequently, there was in fact no competitive process, so the argument
concluded. It was submitted that the terms of the PPA reinforced the notion that the
Joint Venture lacked the ability to raise the required funding. It was therefore argued
that the cumulative effect of these factors was that the public was deprived of the
benefit of an open competitive process. In support of these contentions, the
government parties called in aid the decision of this Court in Firechem.47
[59] The common thread running through the respondents' counter argument is that
none of the complaints raised by the government parties has merit. The broad stroke
of the argument is that the BEC and BAC had both satisfied themselves that the
requirements of the tender had been met. As to the letter from RMB, it was argued
that it 'confirm[ed] a number of things', namely that: (a) RMB stated its ability to
fund the transaction; (b) RMB was aware of the nature of the Project that it was
willing to finance; (c) it was aware that the Project involved Simeka and Regiments
Capital as a joint venture; (d) Serendipity had been incorporated; and (e) it knew
what was required in terms of funding.
[60] However, what is beyond question is that the RMB's letter did not explicitly
state that Simeka Group and Regiments Capital, as parties to the Joint Venture,
individually had the requisite ability to raise the required capital. The RFPs required
bidders themselves to demonstrate their ability to fund the project and not, as has
been seen in this case, the ability of RMB to fund the project. Differently put, the
ability required by the RFPs is that of the Joint Venture and not RMB.
47 Firechem para 30. See also: Asla paras 89-92.
[61] As is invariably the case when it comes to procurement of goods and services
by organs of state, the RFPs is designed to serve at least two crucial purposes. First,
it informs the prospective bidders of what is required of them. Second, it
foreshadows the terms of the contract that would be concluded between the organ of
state and the successful bidder to be incorporated in the contract. In the context of
the facts of this case, there can be no doubt as to what the RFPs required.
[62] This judgment therefore concludes that the Joint Venture was not able to
provide what the Department desired and unambiguously required. Furthermore,
having regard to the irregularities of which the government parties complain in this
litigation, a finding that such irregularities have been established and are material
must ineluctably lead to the conclusion that the ensuing contract concluded between
the Department and the Joint Venture during May 2016 falls to be declared
constitutionally invalid and thus unlawful.
Delay
[63] This then brings me to the issue of delay. Insofar as the substantive merits of
this case are concerned, this judgment has already concluded above that the award
of the tender was contrary to the dictates of s 217 of the Constitution and the RFPs
itself. Coupled with this, is the fact that those intimately involved in the
implementation of the project subsequently agreed on something that was
fundamentally at variance with the requirements of the RFPs. Therefore, it is now
timely to determine whether the admitted delay was, as the high court found, both
unreasonable and unexplained. In the event that the delay is found to be
unreasonable, it will be necessary to determine whether it should nevertheless be
overlooked.
[64] It is as well to remember that here, we are dealing with a legality review which
is not subject to the time constraints prescribed by s 7(1) of PAJA.
[65] Nevertheless, even before the advent of our constitutional order and the
enactment of PAJA, our courts had long held that reviews must, as a general rule, be
instituted without undue delay. The rationale for this time-honoured requirement
was explained by Brand JA in Associated Institutions Pension Fund and Others v
Van Zyl and Others48 as follows:
'It is a longstanding rule that courts have the power, as part of their inherent jurisdiction to regulate
their own proceedings, to refuse a review application if the aggrieved party had been guilty of
unreasonable delay in initiating the proceedings. The effect is that, in a sense, delay would
'validate' the invalid administrative action (see eg Oudekraal Estates (Pty) Ltd v City of Cape Town
and others [2004] 3 All SA 1 (SCA) 10b-d, para 27). The raison d'etre of the rule is said to be
twofold. First, the failure to bring a review within a reasonable time may cause prejudice to the
respondent. Second, there is a public interest element in the finality of administrative decisions
and the exercise of administrative functions (see eg Wolgroeiers Afslaers (Edms) Bpk v
Munisipaliteit van Kaapstad 1978 (1) SA 13 (A) 41).
The scope and content of the rule has been the subject of investigation in two decisions of this
court. They are the Wolgroeiers case and Setsokosane Busdiens (Edms) Bpk v Voorsitter,
Nasionale Vervoerkommissie en 'n Ander 1986 (2) SA 57 (A). As appears from these two cases
and the numerous decisions in which they have been followed, application of the rule requires
consideration of two questions:
(a) Was there an unreasonable delay?
(b) If so, should the delay in all the circumstances be condoned?
(See Wolgroeiers 39 C-D.)
48 Associated Institutions Pension Fund and Others v Van Zyl and Others [2004] 4 All SA 133 (SCA) paras 46 – 48.
The reasonableness or unreasonableness of a delay is entirely dependent on the facts and
circumstances of any particular case (see eg Setsokosana 86G). The investigation into the
reasonableness of the delay has nothing to do with the court's discretion. It is an investigation into
the facts of the matter in order to determine whether, in all the circumstances of that case, the delay
was reasonable. Though this question does imply a value judgment it is not to be equated with the
judicial discretion involved in the next question, if it arises, namely, whether a delay which has
been found to be unreasonable, should be condoned (See Setsokosane 86E-F).'49
[66] Cameron J endorsed this abiding principle in Merafong City Local
Municipality v AngloGold Ashanti Limited50 and reiterated that:
'... The rule against delay in instituting review exists for good reason: to curb the potential prejudice
that would ensue if the lawfulness of the decision remains uncertain. Protracted delays could give
rise to calamitous effects. Not just for those who rely upon the decision but also for the efficient
functioning of the decision-making body itself.'51
[67] In Khumalo and Another v Member of the Executive Council for Education:
KwaZulu Natal (Khumalo)52 Skweyiya J, whilst acknowledging the indisputable
existence of the delay rule, observed that courts nevertheless have a discretion to
overlook a delay where appropriate. He said:
'[A] court should be slow to allow procedural obstacles to prevent it from looking into a challenge
to the lawfulness of an exercise of public power. But that does not mean that the Constitution has
dispensed with the basic procedural requirement that review proceedings are to be brought without
undue delay or with a court's discretion to overlook a delay.'53
49 See Setsokosane Busdiens (Edms) Bpk v Voorsitter, Nasionale Vervoerkommissie en 'n Ander 1986 (2) SA 57 (A)
at 86 E-F.
50 Merafong City Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017
(2) SA 211 (CC)
51 Ibid para 73.
52 Khumalo and Another v Member of the Executive Council for Education: KwaZulu Natal [2013] ZACC 49; 2014
(3) BCLR 333 (CC); (2014) 35 ILJ 613 (CC); 2014 (5) SA 579 (CC).
53 Ibid para 45.
[68] In support of this statement Skweyiya J relied on s 23754 of the Constitution
and held:
'... Section 237 acknowledges the significance of timeous compliance with constitutional
prescripts. It elevates expeditious and diligent compliance with constitutional duties to an
obligation in itself. The principle is thus a requirement of legality.
This requirement is based on sound judicial policy that includes an understanding of the strong
public interest in both certainty and finality. People may base their actions on the assumption of
the lawfulness of a particular decision and the undoing of the decision threatens a myriad of
consequent actions.
In addition, it is important to understand that the passage of a considerable length of time may
weaken the ability of a court to assess an instance of unlawfulness on the facts. The clarity and
accuracy of decision-makers' memories are bound to decline with time. Documents and evidence
may be lost, or destroyed when no longer required to be kept in archives. Thus the very purpose
of a court undertaking the review is potentially undermined where, at the cause of a lengthy delay,
its ability to evaluate fully an allegation of illegality is impaired.'55 (Footnotes omitted.)
[69] However, it is as well to remember, as the Constitutional Court in Sita
emphasised, that '[n]o discretion can be exercised in the air' and that '[t]here must be
a basis ... to do so'. The Constitutional Court there concluded that '[t]hat basis may
be gleaned from facts placed [before the court] by the parties or objectively available
factors'.56
54 Section 237 which is headed 'Diligent performance of obligations' provides:
'All constitutional obligations must be performed diligently and without delay.'
55 Khumalo paras 46 – 48.
56 Sita para 49.
[70] Reverting to the aspect of the discretion vesting in a court to condone a delay
in instituting review proceedings, it bears emphasising that the Constitutional Court
cautioned that:
'While a court "should be slow to allow procedural obstacles to prevent it from looking into a
challenge to the lawfulness of an exercise of public power", it is equally a feature of the rule of
law that undue delay should not be tolerated. Delay can prejudice the respondent, weaken the
ability of a court to consider the merits of a review, and undermine the public interest in bringing
certainty and finality to administrative action. A court should therefore exhibit vigilance,
consideration and propriety before overlooking a late review ... .'57 (Footnotes omitted.)
[71] In determining the issue of whether the delay in instituting the review
proceedings was unreasonable, the high court held, with reference to judicial
authority,58 that the delay in this instance was unreasonable. And that the extent of
the delay militated against such delay being overlooked.
[72] In essence, the high court reasoned:59
'The conduct of the Department in unacceptable. This is apparent from the fact that National
Treasury on 26 January 2018 actually placed the Department on terms to take action in light of the
irregularity they had determined. The Department ... was dogmatic when it did not heed the advice
of the irregularity provided on 16 October 2017. In fact, it proceeded ahead as though the
pronouncement by National Treasury had not been made and that the Department was correct in
awarding the tender to Simeka.
... the Department has failed to be open, responsive, forthright and accountable, as a State organ
ought to be, who seeks a self-review ... the Department ... has not submitted a full explanation for
the unreasonable delay in launching this review application.'
57 Department of Transport and Others v Tasima (Pty) Limited [2016] ZACC 39; 2017 (1) BCLR 1 (CC); 2017 (2)
SA 622 (CC) (Tasima I) para 160.
58 Tasima I para 48. See also: Asla paras 48 – 54; Khumalo paras 48-49.
59 High court judgment paras 45-46.
[73] It then continued:
'The crucial correspondence of 16 October 201760 has been omitted and no reason is advanced for
such omission. There is no information regarding how the decision was researched to do an about
turn after it had been persisting with the project even in light of the irregular pronouncement. In
essence, the conduct of the Department from the beginning was that they need not seek
condonation and when called to explain just provided a weak response. Thus, where there is no
full explanation this amounts to no explanation to explain the delay.
Therefore, there is no basis upon which I can overlook the inordinate delay, that being the case, I
therefore cannot be expected to exercise my discretion to afford the Department the relief it
seeks.'61 (Footnotes omitted.)
[74] The high court was nevertheless cognisant of the implications of the National
Treasury's refusal to grant the TA III approval for the project, describing the refusal
as 'monumental'. It also acknowledged that the inevitable consequence of the
National Treasury's refusal to grant the TA III approval meant that 'the lease of the
60 This was a reference to the letter addressed by National Treasury to the Department which reads:
'PROCUREMENT OF OFFICE AND RESIDENTIAL ACCOMODATION FOR SOUTH AFRICAN MISSION IN
NEW YORK CITY
I refer to the meeting between your department and the National Treasury (NT) on 19 January 2018 concerning the
procurement of land and development for the mission in New York City. I also refer to the procurement process issues
identified by the Office of the Chief Procurement Officer of NT communicated to your department in a letter dated
16 October 2017 (attached.)
The National Treasury will not be in position to issue Treasury Approval III for the Public Private Partnership (PPP)
to implement the project if the procurement issues are not resolved by your department. It is therefore advisable that
the department starts a new tender process and ensures that the correct procurement processes are followed.
As accounting officer you, should decide whether either-
(a)
to continue with procuring the land through the appointed service provider which is likely to entail irregular
expenditure given the procurement issues raised by the OCPO and/or the absence of Treasury approval III for the PPP;
or
(b)
to cancel the transaction with the service provider, which will result in fruitless and wasteful expenditure if
the deposit for the purchasing of the land is forfeited.
The department should consider soliciting its own legal opinion on the purchase of the land in the light of the
procurement process issues identified by the Office of the Chief Procurement Officer and all legal requirements
applicable to the transaction.'
61 High court judgment paras 47-48.
land already secured in the United States of America ... brings the entire project to
an abrupt halt'.62
[75] The high court, however, concluded that 'Simeka [was] now at the short end
of the stick, due to the Department seeking to avoid a declaration that it is responsible
for fruitless and wasteful expenditure'.63
[76] I interpose here to observe that the implication of the statement quoted in the
preceding paragraph is that the review proceedings were not instituted bona fide and
that the government parties were instead actuated by ulterior motives, thereby in
effect seeking 'to evade [their] constitutional obligation by way of a self-review'. In
coming to this conclusion the high court relied on a decision of this Court in Altech
Radio Holdings (Pty) Limited and Others v City of Tshwane Metropolitan
Municipality.64
[77] Ultimately, the high court exercised its discretion and, as already indicated,
refused to condone the delay concluding that 'the possible breach of legality does
not outweigh the undue delay absent an explanation'. (Emphasis added.)
[78] The high court's refusal to condone the delay in this case raises the question
whether in so doing, it exercised its discretion judicially. On this score, it is as well
to bear in mind that the discretion vesting in the high court was a narrow discretion
62 High court judgment para 51.
63 Ibid para 63.
64 Altech Radio Holdings (Pty) Limited and Others v City of Tshwane Metropolitan Municipality [2020] ZASCA 122;
2021 (3) SA 25 (SCA) paras 69 – 70.
that is invariably called a discretion in the true sense.65 And accepting, as one must,
that courts are enjoined to 'exhibit vigilance, consideration and propriety' before
overlooking a late review, this then sharply raises the question whether in the context
of the facts of this case, the interests of justice dictate that the admitted delay should
be overlooked.
[79] That the government parties delayed in instituting the review proceedings
(which the protagonists agreed was – in a worst case scenario – approximately 29
months) brooks no argument to the contrary. The government parties sought to
overcome this procedural obstacle by proffering an explanation therefor. In essence,
they asserted that:
(a) whilst this is admittedly a self-review, it was however explained that once the
National Treasury was adamant that procurement processes undertaken by the
Department were irregular, it became necessary to consult with members of the BEC
in order to 'ascertain whether they had an answer' to the National Treasury's
statement questioning the regularity of the procurement process;
(b) because the members of the BEC 'were all in diplomatic missions scattered
around the world' assembling them for consultation with counsel in South Africa
turned out to be a protracted and time-consuming mission;
(c) on 26 April 2017, and after consulting members of the BEC, the Department
responded to the National Treasury's queries;
(d) in the interim, on 26 January 2018, the National Treasury painted its colours to
the mast and unequivocally stated that it would not grant the requisite TA III
approval;
65 See in this regard: Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd
[1992] 2 All SA 453 (A); 1992 (4) SA 791 (A) at 800G-H.
(e) on 15 and 18 May 2018, the National Treasury again indicated in no uncertain
terms that it remained unpersuaded and persisted in its stance that the tender process
was irregular and therefore remained resolute that the TA III approval would not be
granted; and
(f) finally, given the enormity of the task, collating the mound of documentation
provided to counsel for purposes of drafting the founding papers, the preparation of
the review application papers was, despite best endeavours by counsel, also time-
consuming.
[80] In Swifambo Rail Leasing (Pty) Limited v Passenger Rail Agency of South
Africa,66 a delay of three years was condoned in circumstances where the full extent
of malfeasance at PRASA was concealed from the Board.67 There, this Court, inter
alia, held that some of the important considerations that would weigh heavily with a
court considering the question as to whether to condone delay, are the interests of
justice 68 and the public interest. In the context of the facts of this case these
considerations loom large, especially in the light of the breath-taking amount of
public funds involved and the extent to which the requirements of the RFPs were
deviated from both during evaluation and adjudication stages and, significantly,
when the PPA was concluded. And as the Constitutional Court observed in Allpay
Consolidated, the 'facts of each case will determine what any shortfall in the
requirements of the procurement system' as prescribed by s 217 of the Constitution
should lead to.69
66 Swifambo Rail Leasing (Pty) Limited v Passenger Rail Agency of South Africa [2018] ZASCA 167; 2020 (1) SA 76
(SCA) (Swifambo).
67 Ibid paras 34 and 36.
68 Swifambo paras 40-42. See, for example, Grootboom v National Prosecuting Authority and Another [2013] ZACC
37; 2014 (2) SA 68 (CC); 2014 (1) BCLR 65 (CC); [2014] 1 BLLR 1 (CC); (2014) 35 ILJ 121 (CC) para 51.
69 Allpay Consolidated para 43.
[81] In Aurecon, the Constitutional Court held that '[t]he interests of clean
governance ... require judicial intervention' where irregularities uncovered by an
investigation raised a spectre of corruption, collusion or fraud in the tender process.
In such circumstances a court might well be justified in 'look[ing] less askance in
condoning the delay'. 70 Although the government parties have disavowed any
reliance on corruption, collusion or fraud in this case, both in their heads of argument
and before us, it is to be noted that in Central Energy Fund SOC Ltd and Another v
Venus Rays Trade (Pty) Ltd and Others,71 this Court said that, as a general rule even
innocent counterparties are not entitled to benefit or profit from an unlawful contract.
[82] The substantive merits of the appeal have already been addressed above.72
The conclusion reached in relation thereto, and for the reasons already articulated,
is that the entire procurement process in this matter was riddled with unexplained
irregularities. This is borne out by objective facts which reveal that the requirements
of a constitutionally fair, equitable, transparent, competitive and cost-effective
procurement system were flouted at every turn. What is more, is that once the tender
was awarded to the Joint Venture, the members of the Steering Committee arrogated
to themselves the power to deviate from the requirements of the RFPs in a most
fundamental way that was at odds with both constitutional 73 and statutory
prescripts.74
70 Aurecon para 50.
71 Central Energy Fund SOC Ltd and Another v Venus Rays Trade (Pty) Ltd and Others [2022] ZASCA 54; 2022 (5)
SA 56 (SCA) para 42.
72 See paras 48 – 64.
73 Section 217 of the Constitution.
74 See, for example, ss 2, 3(a) and 38 of the Public Finance Management Act 1 of 1999.
[83] Whilst the RFPs, for example, envisaged a long term lease or 'lease to buy
property option' that entailed that the entity ultimately awarded the tender would
'identify and secure land', 'design and develop' the land to the Department's
specifications, 'operate, manage and maintain the facilities' and, importantly, 'raise
the required funding to finance both the capital and operational costs of acquiring
and managing the facilities', all of these were altered in material respects after the
award of the tender. This material and extra-ordinary deviation had the effect of
relieving the Joint Venture of its financial obligations which thereafter became the
sole responsibility of the Department contrary to what the RFPs had required.
Consequently, the requirements of a constitutionally fair, equitable, transparent,
competitive and cost-effective procurement system were subverted in the most
egregious manner.
[84] It bears emphasising that all of this occurred against the backdrop that the
project in issue was massive and required substantial financial resources from the
successful bidder. It is therefore unsurprising that ultimately, the RFPs caught the
attention of only two bidders, one of which was disqualified at the outset for failing
to meet the requirements of the RFPs.
[85] Whilst one must accept that the Department could have acted with more
urgency than it did in unravelling the facts, given that it sought to review its own
decision, sight should nevertheless not be lost of the fact that the bureaucratic
machinery is notorious for moving slowly even though the exigencies of a particular
case might require that matters be dealt with expeditiously. However, it must be
emphasised that recognising this reality in no way seeks to excuse laxity. It is more
to say that, notwithstanding the constitutional dictates of a responsive and
accountable public administration, the reality is that public administration in our
country has over time been allowed to slide to a quagmire of inefficiency. This is a
state of affairs that is antithetical to the values underpinning our constitutional order
that the citizenry holds dear.
[86] In this case, the tender was awarded to the Joint Venture – which in effect was
the only bidder after Lephuthing/Menzibali Construction had been disqualified at
the evaluation stage – on 17 May 2016. Pursuant thereto, on 24 March 2017, the
PPA was concluded. Thereafter, several steps, including applications made to the
National Treasury for approval of TA I; TA II and TA III, aimed at implementing
the project, were taken. Although the National Treasury had been instrumental in
some of the steps taken, it subsequently began to question the propriety of the tender.
This led to an exchange of correspondence between the Department and the National
Treasury over several months in which the latter raised questions about the
legitimacy of the procurement process. Ultimately, on 18 May 2018, the National
Treasury advised the Department that it would not grant the requisite TA III
approval.
[87] The review proceedings were then instituted on 10 October 2018. Thus,
reckoned from the date of the award of the tender, ie. 17 May 2017, the legality
review was instituted approximately 29 months thereafter. Although not entirely
comparable to the facts of the present case in which corruption, collusion or fraud
have been disavowed, in Swifambo this Court condoned a delay extending over three
years.
[88] As already indicated above, in refusing to overlook the admitted delay in
instituting the legality review, the high court exercised a narrow discretion. When
exercising a narrow discretion a court must, in the words of Hefer JA in Shepstone
& Wylie and Others v Geyser NO,75 'decide each case upon a consideration of all
relevant features, without adopting a predisposition in favour of or against' 76
granting appropriate relief.
[89] Accordingly, the power of an appellate court to interfere with the exercise of
such a discretion is circumscribed. The ambit of this power was described by the
Constitutional Court in Biowatch Trust v Registrar Genetic Resources and Others77
thus:
' the ordinary rule is that the approach of an appellate court to an appeal against the exercise of a
discretion by another court will depend upon the nature of the discretion concerned. Thus where
the discretion contemplates that the Court may choose from a range of options, the discretion
would be a discretion in the strict sense ...
"[T]he 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.'78
75 Shepstone & Wylie and Others v Geyser NO 1998 (3) SA 1036 (SCA); [1998] 3 All SA 349 (A).
76 Ibid at 1045I-J. See also in this regard: MTN Service Provider (Pty) Ltd v Afro Call (Pty) Ltd [2007] ZASCA 97;
[2007] SCA 97 (RSA); [2008] 1 All SA 329 (SCA); 2007 (6) SA 620 (SCA) para 16.
77 Biowatch Trust v Registrar Genetic Resources and Others [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009 (10)
BCLR 1014 (CC).
78 Ibid para 29.
The rationale for this principle is, as Cloete J aptly observed, that a narrow discretion
'requires in essence the exercise of a value judgment and there may well be a
legitimate difference of opinion as to the appropriate conclusion".'79
[90] In Florence v Government of the Republic of South Africa80 the Constitutional
Court elaborated on this theme and said:
'Where a court is granted wide decision-making powers with a number of options or variables, an
appellate court may not interfere unless it is clear that the choice the court has preferred is at odds
with the law. If the impugned decision lies within a range of permissible decisions, an appeal court
may not interfere only because it favours a different option within the range. This principle of
appellate restraint preserves judicial comity. It fosters certainty in the application of the law and
favours finality in judicial decision-making.'81
[91] Therefore, for interference by this Court with the exercise by the high court
of its discretion not to overlook the delay in this case to be warranted, it must be
satisfied, for example, that the high court's discretion has not been exercised
judicially or has been exercised based on a wrong appreciation of the facts or wrong
principles of law. Moreover, as the Constitutional Court emphasised in Giddey NO
v JC Barnard and Partners,82 that '[I]f the court [of first instance] takes into account
irrelevant considerations, or bases the exercise of its discretion on wrong principles,
its judgment may be overturned on appeal'.83 It is thus to that topic that I now turn.
79 Bookworks (Pty) Ltd v Greater Johannesburg Transitional Metropolitan Council and Another 1999 (4) SA 799 (W)
at 800E-F.
80 Florence v Government of the Republic of South Africa [2014] ZACC 22; 2014 (6) SA 456 (CC); 2014 (10) BCLR
1137 (CC).
81 Ibid para 113.
82 Giddey NO v JC Barnard and Partners [2006] ZACC 13; 2007 (5) SA 525 (CC); 2007 (2) BCLR 125 (CC).
83 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 109 A-B.
[92] Bearing in mind the legal principles discussed in paragraphs 65 – 70 above in
regard to the proper approach when a court considers whether an unreasonable delay
should nevertheless be overlooked, I proceed to deal with the question whether in
this instance the high court exercised its discretion judicially when it refused to
overlook the delay. For reasons that will become apparent below, it is my judgment
that in the context of the facts of this case the high court failed to exercise its
discretion judicially. Put differently, it exercised its discretion based on a wrong
appreciation of the true facts or wrong principles of law. In Asla, the Constitutional
Court explained that '[I]n both assessments the proverbial clock starts running from
the date that the applicant became aware or reasonably ought to have become aware
of the action taken'.84 The Constitutional Court then continued:
'The approach to undue delay within the context of a legality challenge necessarily involves the
exercise of a broader discretion than that traditionally applied to section 7 of PAJA. The 180-day
bar in PAJA does not play a pronounced role in the context of legality. Rather, the question is first
one of reasonableness, and then (if the delay is found to be unreasonable) whether the interests of
justice require an overlooking of that unreasonable delay.'85
[93] I pause here to observe that the principle that one can extract from the passage
quoted in the preceding paragraph is that where the delay is found not to be
unreasonable that would in itself strongly militate in favour of overlooking the delay
and thus, paving the way for the court to enter into the substantive merits of the
review. Indeed, this is what the minority judgment in Asla recognised in instances
where there was no delay, noting that in that event a declaration of unlawfulness
should invariably follow describing this as a default position that accorded with the
principle of legality. 86
84 Asla para 49.
85 Ibid para 50.
86 Ibid para 118.
[94] Even in circumstances where the delay is found to be unreasonable, the
Constitutional Court tells us in Asla that a court will still be required to determine
whether such a delay should nevertheless be overlooked. This is what the Court said:
'Courts have the power in a legality review to refuse an application where there is an undue delay
in initiating proceedings or discretion to overlook the delay. There must however be a basis for a
court to exercise its discretion to overlook the delay. That basis must be gleaned from the facts
made available or objectively available factors.'87 (Footnotes omitted.)
The Constitutional Court then continued:
'The approach to overlooking a delay in a legality review is flexible. In Tasima I, Khampepe J
made reference to the "factual, multi-factor, context-sensitive framework" expounded in Khumalo.
This entails a legal evaluation taking into account a number of factors. The first of these factors is
potential prejudice to affected parties as well as the possible consequences of setting aside the
impugned decision. The potential prejudice to affected parties and the consequences of declaring
conduct unlawful may in certain circumstances be ameliorated by this Court's power to grant a just
and equitable remedy and this ought to be taken into account.'88(Footnotes omitted.)
[95] Moreover, Khumalo also tells us that 'an additional consideration in
overlooking an unreasonable delay lies in the nature of the impugned decision and
considering the legal challenges made against that decision'.89 We are also reminded
by Asla that the merits of the impugned decision 'must be a critical factor when a
court embarks on a consideration of all the circumstances of a case in order to
determine whether the interests of justice dictate that the delay should be condoned.
It would have to include a consideration of whether the non-compliance with
statutory prescripts was egregious'.90
87 Ibid para 53.
88 Para 54.
89 Para 57.
90 Para 56.
[96] The Constitutional Court went further and said:
'... [T]he extent and nature of the illegality may be a crucial factor in determining the relief to be
granted when faced with a delayed review. Therefore, this Court may consider, as part of assessing
the delay, the lawfulness of the contract under the principle of legality.'91 (Emphasis added.)
[97] Accordingly, the more egregious the non-compliance with constitutional and
statutory prescripts is when viewed against the extent and unreasonableness of the
delay the more a court will be inclined to overlook the delay. As it was put in Asla,
reviewing courts are therefore enjoined to 'balance the seriousness of the possible
illegality with the extent and unreasonableness of the delay'.92 On this score it is well
to remember that maladministration is inconsistent with the rule of law and
antithetical to our constitutional ethos that seeks to foster an open, accountable and
responsive government.
[98] In determining the issue of whether there was a delay in instituting the review,
the high court considered a number of factors. After outlining the general approach
to such issue, the high court observed that courts are generally intolerant of undue
delays because they undermine the court's ability to properly adjudicate disputes
between parties. It further noted that there should be a satisfactory explanation for
the delay. In evaluating the explanation proffered for the delay, the high court held
that it was patently deficient because the Department had, inter alia, woefully failed
to explain how the decision to award the tender was reached. This was further
compounded, the high court opined, by the fact that the Department had initially
defended its decision even in the face of grave concerns raised by the National
91 Asla para 58.
92 See minority judgment of Cameron and Froneman JJ in Asla para 147.
Treasury. In the event, the high court concluded that 'there was no basis upon which
[it could] overlook the inordinate delay'. Hence the dismissal of the application.
[99] Insofar as the delay in instituting the review is concerned, counsel for Simeka
Group argued that putting the facts in their proper perspective there can be no doubt
that the delay in this case was unreasonable. Further, so argued counsel, the
explanation proffered for the delay, such as it was, did not cover the entire period.
In elaboration, it was submitted that the decision sought to be reviewed was made
on 17 May 2016 and yet the review was instituted 29 months thereafter, on
18 October 2018. This, despite the fact that National Treasury had written to the
Department on 16 October 2017 indicating that '[T]here were some irregularities –
set out in detail in the letter from the National Treasury – in the appointment of
Simeka Group (Pty) Ltd'.
[100] In this case, there seems to be no dispute that the government parties delayed
in instituting the review proceedings. Thus, the crucial question that arises for
determination is whether the delay should be overlooked. The test for determining
this aspect of the case has been described as a flexible one, based on the proven facts
of each case and other objectively available considerations.93 Various factors bear
on this issue. First, this calls for a 'factual, multi-factor and context sensitive' enquiry
in which a whole range of factors are considered and evaluated.94 In this regard a
court is enjoined to take into account:
(a) any potential prejudice to interested parties;
93 Central Energy Fund SOC Ltd and Another v Venus Rays Trade (Pty) Ltd and Others [2020] ZAWCHC 164 para
290.
94 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.
(b) the potential consequences of setting aside the impugned decision; and
(c) how such potential prejudice could be ameliorated by invocation of s 172(1)(b)
of the Constitution which empowers a court deciding a constitutional issue to make
'any order that is just and equitable'.
[101] Secondly, the nature of the impugned decision and the extent and nature of
the illegality bear on this issue. On this score, Asla tells us that the stronger the
prospects of success, the more will a court readily incline in favour of overlooking
an unreasonable delay. Finally, the conduct of the functionaries is also relevant.
Here, the court must be vigilant to ensure that a self-review is designed to 'promote
open, responsive and accountable government rather than self-interest of state
officials seeking to evade the consequences of their prior decision'.95 I pause here to
observe that curiously, in the context of the facts of this case, the Departmental
officials persisted in their spirited defence of their decision to award the tender to
the Joint Venture even in the face of relentless promptings from the National
Treasury that the award was bedevilled by irredeemable irregularities.
[102] As already mentioned above, the conclusion of the high court was that the
delay in instituting the review proceedings was unreasonable. It then went on to hold
that:
(a) Simeka Group was not complicit in any corruption and whatever was asserted by
the Department to support the allegations of corruption was simply unsubstantiated;
(b) the Department had always been an enthusiastic supporter of the project;
(c) the 'entire process of attaining the land, leasing thereof, paying of the deposit and
payment of preparatory works and costs, occurred within the prescripts of the
95 Asla para 120.
Request for Proposals, the PPA … with the cooperation and consent of the
Department';
(d) the Department supported the award even after the National Treasury had
pronounced that the award of the tender was irrational; and
(e) the Department withheld the damning letter from the National Treasury stating
that '[T]here were some irregularities in the appointment of Simeka Group (Pty) Ltd'.
[103] Counsel for the respondents contended that the Department 'did nothing for
the 17 month period from the award of the tender' on 17 May 2016 and when the
National Treasury pointed out the irregularities on 16 October 2017. It was therefore
argued that it did not avail the Department that it was oblivious to these irregularities
until the National Treasury alerted it to them. This, asserted the respondents, was not
the end of the Department's difficulties. When, on 26 January 2018, the National
Treasury implored the Department to 'start a new tender process and ensure that the
correct procurement processes [were] followed', the Department should have there
and then immediately launched its review application and yet failed to do so until
some eight months thereafter, on 10 October 2018. Ultimately, it was submitted that
the sum total of these factors ineluctably lead to one conclusion which is that the
delay was unreasonable. Therefore, so it was argued, the conclusion of the high court
on this score was unassailable.
[104] In the light of the foregoing, it was submitted on behalf of the respondents that
there would be no basis for this Court to interfere with the high court's exercise of
the discretion vested in it not the condone the delay. That the high court was vested
with a discretion in the true sense is beyond question. Thus, the powers of this Court
to interfere with the exercise of such discretion are circumscribed. The
Constitutional Court explained the ambit of such a discretion, albeit in a different
context, thus:
'A court of appeal is not entitled to set aside the decision of a lower court granting or refusing a
postponement in the exercise of its discretion merely because the court of appeal would itself, on
the facts of the matter before the lower court, have come to a different conclusion; it may interfere
only when it appears that the lower court had not exercised its discretion judicially, or that it had
been influenced by wrong principles or a misdirection on the facts, or that it had reached a decision
which in the result could not reasonably have been made by a court properly directing itself to all
the relevant facts and principles.'96 (Footnotes omitted.)
On this score both Tasima I97 and Asla98 say that an unreasonable delay cannot be
'evaluated in a vacuum'. The court must in that event determine whether the delay
ought to be overlooked, and the basis for doing so 'must be gleaned from the facts
… or objectively available factors'.
[105] It was further submitted on behalf of the respondents that the obdurate stance
adopted by the Department in defending the award of the tender when the National
Treasury questioned its rationality is a clear indicator that it still believed that the
award of the tender was in line with constitutional prescripts. Whilst at first blush
there is much to be said for the proposition that the Department is to a large extent
the author of its misfortune, it is however necessary to put things in their proper
perspective.
[106] Although the high court considered the question whether the delay should be
overlooked and some of the relevant factors that bear on this question, it did not
96 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others 2000 (2) SA
1; 2000 (1) BCLR 39 para 11. See further: Mathale v Linda and Another [2015] ZACC 38; 2016 (2) BCLR 226 (CC);
2016 (2) SA 461 (CC) para 40.
97 Tasima I para 159.
98 Asla para 53.
consider, as it appears from its judgment, the interests of justice as enjoined by
judicial authority, having regard both to the requirements of the RFPs and the
material deviation from what the RFPs had required. That the deviation from the
requirements of the RFPs was egregious brooks no argument to the contrary. As
already pointed out in para 11 above, the RFPs explicitly required that the successful
bidder must itself acquire land and provide finance for the construction of the office
and residential accommodation. The Department was only to be a lessee and hire the
accommodation for the duration of the lease. All of this, was materially varied after
the award of the tender pursuant to the decisions taken by the members of the
Steering Committee.
[107] The foundation upon which the underlying reasoning of the high court rested
in declining to overlook the delay has already been summarised in paragraph 7 above
and need not be repeated here. Those factors were central to the way in which the
high court ultimately exercised its discretion not to overlook the delay. Due to the
fact that the high court was influenced by wrong principles or could not reasonably
have made its decision had it properly directed itself to all the relevant facts and
principles, the foundation for its decision must necessarily disintegrate. Moreover,
it is not in dispute that during both the evaluation and adjudication stages there were
material deviations from the requirements of the RFPs. This much was not contested
by the respondents. Instead, the high water mark of their case, as I understood
counsel, was that the department's role-players who were instrumental in evaluating
and adjudicating the tender did not bother to take the high court into their confidence
and explain why they took the decisions they did. That there was no explanation
proffered from the officials of the Department who were intimately involved in these
processes to explain how these deviations came about, as should have been the case,
cannot in my view redound to the benefit of the respondents. These relevant factors,
too, were not adverted to by the high court in the exercise of its discretion. Nor, it
seems, was the high court cognisant that it was dealing with a legality review and
therefore vested with broader discretion than that traditionally applied to reviews
under PAJA.
[108] As it turns out, the interests of justice and the unexplained egregious material
deviations from the tender requirements coupled with the onerous financial burden
that the revision of the tender requirements post its award to Simeka Group are all
relevant factors that, amongst others, were not sufficiently accorded due weight by
the high court in determining whether the unreasonable delay should be overlooked.
[109] As to the interests of justice, the remarks of the Constitutional Court in
Brummer v Gorfil Brothers Investments (Pty) Ltd and Others99 are instructive. The
Constitutional Court there said that:
'The interests of justice must be determined by reference to all relevant factors including the nature
of the relief sought, the extent and cause of the delay, the nature and cause of any other defect in
respect of which condonation is sought, the effect on the administration of justice, prejudice and
the reasonableness of the applicant's explanation for the delay ... .'100
[110] In similar vein, this Court emphasised in Aurecon South Africa (Pty) Ltd v
City of Cape Town,101 with reference to judicial authority, that '[w]hether it is in the
interests of justice to condone a delay depends entirely on the facts and
circumstances of each case. The relevant factors in that enquiry generally include
99 Brummer v Gorfil Brothers Investments (Pty) Ltd and Others 2000 (5) BCLR 465; 2000 (2) SA 837 (CC).
100 Ibid para 3.
101 Aurecon South Africa (Pty) Ltd v City of Cape Town [2015] ZASCA 209; [2016] 1 All SA 313 (SCA); 2016 (2)
SA 199 (SCA) para 17.
the nature of the relief sought, the extent and cause of the delay, its effect on the
administration of justice and other litigants, … the importance of the issue to be
raised, and the prospects of success'.
[111] Notwithstanding the fact that the explanation for the delay is not entirely
satisfactory in certain respects, this shortcoming is compensated by the strong
prospects in favour of the Department. In particular, the enormous financial burden
that would be assumed by the Department following the material deviations from
the tender requirements as against the huge financial rewards that the Simeka Group
stands to reap if the tender remains intact in its revised form. As already indicated
above, the tender envisaged that Simeka Group – and not the Department – must
alone provide the funding for the project and bear sole responsibility for the
operational costs of the project. The cumulative effect of these factors and the high
stakes, especially for the Department, impels the conclusion that the delay ought to
be overlooked and the substantive merits of the review be considered. In these
circumstances, the present is an appropriate case where the high court should have
exercised its 'broader discretion in the context of a legality review' by overlooking
the unreasonable delay encountered in this case.
[112] To sum up: approaching the matter holistically, one cannot say with
conviction that the government parties were not in certain respects tardy in bringing
the review application. Thus, to a limited extent, one is constrained to share the
reserve expressed by the respondents that the review application could and should
have been instituted much earlier than what happened in this case. Nevertheless, that
the delay in this case, although inordinate, did not manifest indifference to what was
at stake is a weighty consideration that must tip the scales in favour of overlooking
the delay. This is particularly so, if the interests of justice, the substantive merits of
the review itself, and the extent of the material deviations from the requirements of
the RFPs coupled with the whopping amount that would be foisted on the
Department and indeed the fiscus if the review is dismissed solely on the basis of
delay without regard to the substantive merits of the review. Accordingly, given the
egregious nature of the infractions that occurred during the procurement process in
this case, the interests of justice dictate that procedural obstacles ought not to be
allowed to stand in the way of inquiring into the lawfulness or otherwise of the
exercise of public power.
[113] It is therefore my judgment that the high court failed to properly exercise a
judicial discretion as enjoined by judicial authority. The inevitable consequence of
this conclusion is that this Court is at large to itself exercise the discretion and, for
the reasons already stated, to overlook the delay in instituting the review
proceedings.
Relief
[114] In paragraph 4 of their notice of motion, the government parties sought an
order directing the respondents to repay the Rand equivalent of the deposit that the
Department paid towards the acquisition of the land in the USA. The Department
paid a deposit of US $9 million. It also claimed interest on this amount at the
prescribed rate from the date on which the high court order repayment of the deposit.
The conclusion reached in this judgment as to the merits of the review is that the
award of the tender to the Joint Venture was not in accordance with constitutional
prescripts. In terms of s 172(1)(a)102 of the Constitution our courts are obliged to
102 Section 172(1)(a) provides:
declare any law or conduct that is inconsistent with the Constitution invalid to the
extent of its inconsistency. However, in order to ameliorate the harsh consequences
flowing from a declaration of invalidity, our courts are empowered under s 172(1)(b)
of the Constitution to make 'any order that is just and equitable'.
[115] Although the power of the court under s 172(1)(b) has been described as wide,
it is, however, 'bounded ... by considerations of justice and equity'.103 In this case,
the parties agreed in the high court to separate and postpone the relief sought in terms
of prayer 4 of the notice of motion for later determination. Thus, the parties'
agreement in regard to this aspect of the case need not detain us for present purposes
and nothing more needs to be said on this aspect.
Costs
[116] There remains the question of costs to address. The government parties were
represented by four counsel in this Court. Whilst content with costs of two counsel
in the high court, lead counsel for the government parties asked for costs of four
counsel in this Court in the event of the appeal being successful.
[117] It is trite that a court enjoys a wide discretion in considering the question
whether costs of more than one counsel in any particular matter should be allowed.
Such discretion must be exercised judicially on a consideration of all the relevant
factors. The question always is, as Colman J posited in Koekemoer v Parity
Insurance Co Ltd and Another:104
'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.'
103 Sita para 5.
104 Koekemoer v Parity Insurance Co Ltd and Another (Koekemoer) 1964 (4) SA 138 (T).
'... whether, in all the circumstances, the expenses incurred in the employment of more than one
counsel were "necessary or proper for the attainment of justice or for defending the rights of the
parties", and were not incurred through "over-caution, negligence or mistake".'105
The learned Judge went on to mention, amongst others, the following as being some
of the relevant considerations: (a) the volume of evidence (oral or written) dealt with
by counsel or which she or he or they could reasonably have expected to be called
upon to deal with: (b) the complexity of the facts or the law relevant to the case; (c)
any difficulties or obscurities in the relevant legal principles or in their application
to the facts of the case; (d) the importance of the matter in issue, in so far as that
importance may have added to the burden of responsibility undertaken by counsel.106
This is by no means an exhaustive list. Ultimately, how a court should exercise its
discretion is essentially a matter of fairness to both sides.
[118] The general rule is that costs of four counsel will be allowed only if it is clearly
shown that the employment of more than two counsel was justified for purposes of
doing justice between the parties.107 The proper approach has been formulated in
various forms. In Stent v Roos,108 where costs of three counsel were sought, Innes
CJ stated that before costs of three counsel could be allowed, it must be shown that
a reasonable litigant would not have gone to court without the assistance of the third
counsel. In Umhlatuzi Valley Co., Ltd. v Hulett & Sons, Ltd,109 albeit in a different
context, Dove-Wilson JP stated that he was unable to say that the case before him
105 Id at 144F-145A. See also: Reilly v Seligson and Clare Ltd 1977 (1) SA 626 (A) at 641E-H.
106 Koekemoer at 144H.
107 Compare: South African Railways and Harbours v Illovo Sugar Estates Ltd and Another 1954 (4) SA 425 (N) and
the cases therein cited where three counsel were engaged.
108 Stent v Roos 1909 TS 1057 at 1064.
109 Umhlatuzi Valley Co., Ltd v Hulett & Sons, Ltd. 1914 35 NPD 224 at 226.
was one of such extraordinary difficulty or complexity as to warrant overriding the
Taxing Master's disallowance of the fees of third counsel.110
[119] What Jansen JA said in Scott and Another v Roupard and Another,111 with
reference to the remarks of Hiemstra J in the court of first instance, bears mentioning.
The learned Judge of Appeal stated the following:
'[I]t must be a very complicated case either as to the facts, which should require considerable
research and investigation, or because it involves very difficult and novel points of law before
costs of more than two counsel may be allowed.'112
[120] In Commissioner for South African Revenue Service v Hawker Air Services
(Pty) Ltd; Commissioner for South African Revenue Service v Hawker Aviation
Services Partnership and Others,113 this Court overturned the judgment of the court
of first instance where the latter court had awarded the costs of four counsel. Writing
for a unanimous court, Cameron JA, although he did not pertinently say anything
about the fact that costs of four counsel had been allowed in the high court because
its judgment was ultimately overturned, he nevertheless alluded to the fact that the
judgment was incorrect and the punitive scale114 of costs on the 'attorney and own
scale' were all predicated on the harsh criticism against SARS's office which this
Court found unjustified.
110 See also: Grobelaar v Havenga 1964 (3) SA 522 (N) at 530C where Harcourt J said that when more than two
counsel are involved it must be an exceptional case to warrant allowance of their fees.
111 Scott and Another v Roupard and Another 1972 (1) SA 686 (A).
112 Ibid at 690F.
113 Commissioner for South African Revenue Service v Hawker Air Services (Pty) Ltd; Commissioner for South African
Revenue Service v Hawker Aviation Services Partnership and Others [2006] ZASCA 51; 2006 (4) SA 292 (SCA);
[2006] 2 All SA 565 (SCA).
114 Ibid para 2-3.
[121] Whilst there can be no doubt that in preparing for the institution of the review
proceedings counsel would have waded through voluminous documentation in order
to distil the crux of the case of the government parties, I remain unpersuaded that
costs of four counsel on appeal will be justified. I have earlier alluded to the fact that
lead counsel was content with the costs of two counsel in the high court where
considerable work would have been undertaken in collating various documents, and
yet, counsel was happy to live with costs of two counsel without demur. We also
had the advantage of perusing the record and hearing argument on issues that were
germane for purposes of the appeal. In these circumstances, and taking a broad view
of the matter, I do not consider that it would be fair for purposes of doing justice
between the parties to allow the costs of four counsel on appeal. In this regard, it is
not without significance that although the respondents were represented by three
counsel on appeal, they asked for costs of two counsel only.
[122] Before making the order, I am constrained to mention that the finalisation of
this judgment was inordinately delayed due to a concatenation of various factors that
are unnecessary to traverse in this judgment. The cumulative effect of these factors
rendered it impossible for this judgment to be finalised expeditiously in keeping with
the abiding traditions of this Court. Nevertheless, I take full responsibility for this
delay which is deeply regretted.
[123] In the result 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 in its place is substituted the
following order:
'1
The late institution of the application for a legality review is condoned.
The award of the tender for the appointment of a development partner
for the design, construction, operation, maintenance and financing of a
suitable and sustainable office and residential accommodation for South
African diplomatic missions in Manhattan, New York City, New York
pursuant to a request for proposal (DIRCO 10/2015/16) to the joint venture
comprising Simeka Group (Pty) Ltd and Regiments Capital (Pty) Ltd is
declared constitutionally invalid and therefore unlawful.
The award of the tender referred to in paragraph 2 of this order is
reviewed and set aside.
The Project Management Agreement concluded between the
Department of International Relations and Cooperation and Lemascene (Pty)
Ltd pursuant to the award of the tender is declared to be of no legal force and
effect, reviewed and set aside.
The respondents, jointly and severally, are ordered to pay the costs of
this application, including the costs of two counsel where so employed.'
X M PETSE
DEPUTY PRESIDENT
SUPREME COURT OF APPEAL
Appearances:
For appellants:
G I Hulley SC (with S A Wentzel,
L Segeels-Nchube and V J Heideman)
Instructed by:
State Attorney, Pretoria
State Attorney, Bloemfontein
For respondents:
A E Bham SC (with L Sisilana and L S Crow)
Instructed by:
Mkabela Huntley Attorneys Inc., Sandton
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:
14 June 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Minister of International Relations and Cooperation and Others v Simeka Group (Pty) Ltd and Others
(610/2021) [2023] ZASCA 98 (14 June 2023)
Today the Supreme Court of Appeal (SCA) upheld the appellants’ appeal with costs including costs of
two counsel. It further set aside and replaced the order of the Gauteng Division of the High Court,
Pretoria (the high court).
The appeal, involving the Minister of International Relations and Cooperation, the Director General:
Department of International Relations and Cooperation and the Department of International Relations
and Cooperation as the first to third appellants respectively (the government parties), and Simeka Group
(Pty) Ltd (Simeka Group), Regiments Capital (Pty) Ltd (Regiments Capital), Lemascene (Pty) Ltd
(Lemascene) and Serendipity Investments SA LLC (Serendipity) as the first to fourth respondents
respectively, concerned a dispute which had its genesis in the award of a tender for the appointment of
a development partner for the design, construction, operation, maintenance and financing of suitable
and sustainable office and residential accommodation for South African diplomatic missions in
Manhattan, New York City, New York in the United States of America. The tender was awarded on 17
May 2016 by the third appellant, the Department of International Relations and Cooperation (the
Department), to a joint venture comprising the first and second respondent namely, Simeka Group and
Regiments Capital (the Joint Venture).
The substantive question before the SCA entailed a legality review concerning whether the award of
the tender to the Joint Venture, by the Department, was constitutionally valid and thus unimpeachable.
In addition to the reviewing of the tender award, the anterior question to be determined by the SCA was
whether there was an inordinate delay by the Department in instituting its legality review and, if so,
whether such a delay was inexcusable.
On 4 March 2016, the Department issued a Request for Proposals (the RFPs) for the appointment of a
development partner for the purposes indicated above. More specifically, the Department made it clear
that it sought to enter into a ‘long term lease’ or, a ‘lease to buy property’ option with a South African
incorporated entity that had ‘presence or collaboration’ in New York and ‘able to finance, procure and
maintain accommodation and act as landlord to the Government’ of the Republic of South Africa. To
achieve this objective, prospective bidders were explicitly requested to ‘identify and secure land’ in
Manhattan, New York City and to ‘design and develop or redevelop’ such land in accordance with the
Department’s tender specifications. The RFPs further required that the successful tenderer ‘raise the
required funding to finance both the capital and operational costs of acquiring and managing the
facilities’ for the beneficial use of the Department. On 17 May 2016, after evaluation and
recommendation by the Bid Evaluation Committee (the BEC) and adjudication by the Bid Adjudication
Committee (BAC), the tender was awarded by the Director General to the Joint Venture as the preferred
bidder for the project as the other competing bidder, a consortium comprising Lephuthing Investment
CC and Menzibali Construction CC, was disqualified on the basis that it had not submitted audited
financial statements in compliance with the requirements of the RFPs.
Following the award of the tender to the Joint Venture, a Steering Committee (the Committee)
comprising representatives of the Department, the Joint Venture and National Treasury, whose primary
objective was to monitor the implementation of the project, was established. The Committee proposed
that the envisaged lease agreement should constitute a finance lease which, according to legislation,
requires the approval of National Treasury. Upon being approached to grant the requisite approvals,
National Treasury granted exemptions in relation to Treasury Approval I – Treasury Approval IIB, stating
that the exemptions were granted by virtue of ‘the developments that have already taken place’.
However, National Treasury insisted on due compliance with respect to Treasury Approval III (TA III)
which required the Department to submit certain documentation namely, the final draft Public Private
Partnership (PPP) agreement, the final draft nominee agreement, the final financial model, the PPP
contract management plan and documents indicating the preferred bidder’s capacity and track record
in the financing, design and construction of buildings and facilities management.
At the Committee’s first meeting held on 21 June 2016, it was agreed that an offer to purchase the land
had been verbally accepted by the current owners and that a written agreement should be concluded
by 30 June 2021; thereafter the transaction had metamorphosised into a finance lease and the
Department was expected to contribute towards the purchase of the land; and Simeka Group would
represent the Department as its agent in the acquisition of the land with the South African Government
effectively becoming the purchaser of the land. At a subsequent meeting held on 19 January 2017, the
members of the Committee agreed that the Government would pay a non-refundable deposit of US $60
million towards the acquisition of land for the project in terms of a Project Preparation Agreement (PPA)
that was at that stage envisaged. The Committee further agreed that the PPA should be submitted by
27 January 2017, the TA III application should be submitted to National Treasury by 31 March 2017
and the target date for the TA III approval was 30 April 2017. Subsequently, on 25 March 2017, the
Government, represented by the Department on the one hand and Lemascene and Regiments Capital
on the other, concluded the PPA.
The PPA explicitly provided, in clause 4.5 thereof, that Lemascene and Serendipity ‘shall have no
beneficial interest or rights nor assume any obligations in terms of or in the Land Purchase Agreement
or the Chosen Site’ meaning that the Department was going to be the sole party that would purchase
the land and generally fund the project which was at variance with the explicit requirements of the RFPs
that provided that the successful tenderer would solely bear such an obligation. Clause 7 of the PPA
further provided that the Department shall make an advance payment of USD 9 000 000.00, which
represented twenty per cent of the Project Sites’ purchase price, to Lemascene for the execution of the
Preparatory Work which is inclusive of the payment of a deposit of US $5 million.
On 29 August 2017, and as explicitly provided for in the PPA, the Department, acting in collaboration
with Lemascene, prepared a letter under the hand of the then Director General to National Treasury in
terms of which an application was made for the TA III approval. The Department proposed to present
the project to National Treasury on 11 September 2017. However, in the wake of allegations that a
member of the Joint Venture, ie Regiments Capital, was associated with a well-known family perceived
to have corruptly siphoned vast sums of money from the government, National Treasury expressed
some misgivings about granting the required TA III approval. In reaction to this, Simeka Group wrote to
the Department, proposing that Regimens Capital should withdraw from the Joint Venture so that
Simeka Group could then proceed with the project on its own. This found favour with the Department
and subsequently the Joint Venture concluded a termination agreement during December 2017 in terms
of which Regiments Capital terminated the Joint Venture. Regardless of this, National Treasury was
still not convinced and, as a result, refused to grant TA III approval.
The Department consulted the State Attorney who, on 29 June 2018, wrote to the attorneys
representing the respondents indicating, inter alia, that the award of the tender to the Joint Venture was
fraught with irregularities. On 10 October 2018, the government parties instituted review proceedings
in the high court. The review application failed before the high court and was dismissed solely on the
basis of delay which the high court held was inordinate, unreasonable and not adequately explained.
Consequently, the high court did not enter into the substantive merits of the review.
In addressing the first issue, the SCA pointed out that this case required the SCA to determine firstly,
whether there was any non-compliance with the requirements of the RFPs and if so, whether non-
compliance with the tender requirements as required by the law was material. The SCA then went on
to state that in this case there was no dispute that the process preceding the award of the tender did
not accord with the dictates of s 217 of the Constitution because both the BEC and the BAC that were
central to the ultimate award of the tender failed at every turn in faithfully discharging their constitutional
and statutory responsibilities. Additionally, the SCA reasoned that when it comes to procurement of
goods and services by organs of state, the RFPs are designed to serve at least two crucial purposes,
that being to inform the prospective bidders of what is required of them and also to foreshadow the
terms of the contract that will be concluded between the organ of state and the successful bidder. In
concluding on the first issue, the SCA held that Simeka Group was not able to provide what the
Department desired and unambiguously required and that in having regard to the irregularities of which
the government parties complain, a finding that such irregularities have been established must
ineluctably lead to the conclusion that the ensuing contract concluded between the Department and
Simeka Group during May 2016 falls to be declared constitutionally invalid and thus unlawful.
On the issue of the inordinate delay by the Department in instituting its legality review, the SCA held
that there was no dispute that the government parties delayed in instituting the review proceedings,
thus raising the critical question for determination as to whether the delay ought to be overlooked. The
Court further held that in the context of the facts of this case, the high court failed to exercise its
discretion judicially in that it exercised its discretion based on a wrong appreciation of the true facts or
wrong principles of law. The SCA reasoned that although the high court considered the question
whether the delay should be overlooked and some of the relevant factors that bear on that question, it
did not consider the interests of justice as enjoined by judicial authority, having regard both to the
requirements of the RFPs and the material deviations from what the RFPs had required. The interests
of justice and the unexplained egregious material deviations from the tender requirements coupled with
the onerous financial burden that the revision of the tender post its award to the Simeka Group were all
relevant factors that, amongst others, were not sufficiently accorded due weight by the high court in
determining whether the unreasonable delay should be overlooked. In conclusion, the SCA, on this
point, held that the high court failed to properly exercise a judicial discretion as enjoined by judicial
authority.
In the result, the SCA made an order upholding the appeal with costs including costs of two counsel
and further setting aside and substituting the order of the high court, granting relief to the appellants as
prayed in their notice of motion.
--------oOo--------
|
2658
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 882/2013
NON-REPORTABLE
In the matter between:
X-PROCURE SOFTWARE SA (PTY) LTD
APPELLANT
and
SUTHERLAND, TERRY LINDA
RESPONDENT
Neutral citation:
X-Procure Software (Pty) Ltd v Sutherland (882/13) [2014]
ZASCA 196 (28 November 2014)
Coram:
Maya, Leach, Willis and Saldulker JJA and Mocumie AJA
Heard:
18 November 2014
Delivered:
28 November 2014
Summary:
Interpretation of a written contract – claim for commission - context
and also the need for a sensible and businesslike result required an
interpretation that commission would be payable – appeal dismissed
with costs.
ORDER
On appeal from: South Gauteng High Court, Johannesburg (Boruchowitz J sitting
as the court of first instance)
The appeal is dismissed with costs.
JUDGMENT
Willis JA (Maya, Leach and Saldulker JJA and Mocumie AJA concurring):
[1] The appellant, the defendant in the high court, appeals with the leave of that
court. The high court had granted judgment in favour of the respondent. The high
court found that there was an amount due to her as commission, arising from a
written agreement concluded between the parties on 9 October 2003, and granted its
order accordingly. The sum awarded was R447 873. Judgment included interest
thereupon and costs.
[2] The respondent had sued for specific performance, which was alleged to
have been the payment of commission due to her from advertising agreements
which she had concluded on the appellant’s behalf with the appellant’s customers.
The respondent had based her action on a term of this written ‘Outsource Sales
Agreement’ (the agreement), clause 10 of which provides as follows:
‘X/procure [the appellant] shall effect payment to the marketer [the respondent] of an amount
equal to 20% of the gross amount payable to X/procure less any commission payable to
advertising agencies for and in respect of each advertising agreement concluded solely by
reason of the efforts of the [the respondent] pursuant to and in terms of this agreement.’ (My
emphasis.)
[3] The agreement terminated on 31 March 2004 as a result of disagreements
between the respondent and Mr Dirk Odendaal, the founder, majority shareholder
and executive chairman of the appellant. In her particulars of claim, the respondent
alleged that she had been entitled to the amount of her claim by reason of various
advertising agreements which had been concluded on behalf of the appellant solely
by reason of her efforts. The appellant’s case was that the only advertising
agreements which had been concluded solely by reason of the respondent’s efforts
had been two agreements concluded between the appellant and pharmaceutical
companies known respectively as ‘Beyers Health Care’ and ‘Roche’. The appellant
averred that the amount due to the respondent, arising from these agreements was
R35 248.62.
[4] After various preliminary skirmishes between the parties, which included a
later abandoned claim in reconvention by the appellant, the respondent reduced her
claim to the amount awarded to her by the high court: viz R447 873.
[5] The case turns on whether the clause in paragraph 2 above is to be
interpreted so as to mean that the respondent was entitled to commission only on
contracts which she concluded on behalf of the appellant with new customers or
whether it applied to renewals or extensions of existing contracts with the appellant
and its customers as well. The appellant contended that, by reason of the fact that
there had been pre-existing advertising agreements with certain of the appellant’s
customers, renewals or extensions thereof could not be regarded as having been
concluded ‘solely by reason of the efforts of’ the respondent.
[6] By reason of the fact that there is disagreement over whether the expression
‘solely by reason of the efforts of’ is ambiguous, and whether there can therefore be
a departure from the parol evidence rule, it is necessary first to deal with the
question of whether there is ambiguity in the expression.
[7] As a contract is a bilateral juristic act (there must, at the very least, be a
meeting of two minds, even if one and the same person acts in different capacities),
no contract can ever come into being solely as a result of the efforts of one person,
except if that person is acting in different capacities.1 Inasmuch as it is common
cause that a contract had indeed come into being between the parties, the use of the
word ‘solely’ in the clause is inherently ambiguous. This type of ambiguity in question
has been described as a ‘latent ambiguity’ in Delmas Milling Co Ltd v Du Plessis,2
which has been followed in innumerable cases since then. Referring to Delmas
Milling, the trial court used this term to describe the expression that was in
contention between the parties. Having referred to the Oxford Dictionary, the trial
court took a similar view regarding the ambiguity of the word ‘solely’ in this context.
[8] Where the language of a written contract is ambiguous, extrinsic evidence is
admissible in order to construe its meaning, by reference to its ‘context’ or the
‘factual matrix’ in which the contract was concluded.3 Moreover, the apparent
purpose to which the contract was directed may be considered when interpreting it.4
The high court therefore correctly admitted and had regard to extrinsic evidence in
order to determine what was probably in the minds of the parties when the
agreement was concluded.
[9] Relevant to the interpretation of the agreement is the definition of ‘advertising
agreements’, which is as follows:
‘the standard form agreements used and prescribed by [the appellant] from time to time to
contract with manufacturers, wholesalers and distributors of pharmaceutical products
stipulating the terms and conditions in terms whereof [the appellant] sells advertising space
on [the appellant] to such manufacturers, wholesalers and distributors of pharmaceutical
products.’
Implicit in the use of the words ‘from time to time’ in this definition is that existing
agreements between the appellant and its customers could be varied.
[10] The agreement also provides that:
1 See for example Vaal Reefs Exploration and Mining Co Ltd v Burger 1999 (4) SA 1161 (SCA) para
8; Van der Merwe v Nedcor Bank Bpk 2003 (1) SA 169 (SCA) paras 4 to 8.
2 Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) at 454G.
3 See Coopers & Lybrand & others v Bryant & others 1995 (3) SA 761 (A) at 768C-D. See also Van
der Westhuizen v Arnold 2002 (6) SA 453 (SCA) paras 22 and 23; Masstores (Pty) Ltd v Murray &
Roberts Construction (Pty) Ltd & another 2008 (6) SA 654 (SCA) para 7; KPMG Chartered
Accountants (SA) v Securefin Ltd & another 2009 (4) SA 399 (SCA) para 39; Potgieter & another v
Potgieter NO & others 2012 (1) 637 (SCA) para 24 and North East Finance (Pty) Ltd v Standard Bank
of South Africa Ltd 2013 (5) SA 1 (SCA) para 2.
4 See Communicare & others v Khan & another 2013 (4) SA 482 (SCA) para 31.
‘In addition to its other obligations under this agreement the marketer shall:
11.1 use its best efforts to promote, sell and service the products within the territory using
trained and qualified personnel;
11.2 be responsible for all costs and expenses related to its performance under this
agreement.’
It is significant that the promotion, sale and service of products is not qualified in any
way suggestive of the interpretation which the appellant has sought to place on the
agreement. The contrary is true. The word service is indicative of a continuing
relationship with an existing customer.
[11] Clause 5 of the standard advertising agreement between the appellant and its
customers provides that:
‘This agreement shall thereafter commence on the date of signature thereof by or on behalf
of the parties and shall continue indefinitely until 6 (six) calendar months written notice of
termination is given by either party to the other, unless otherwise stated’.
Despite the seemingly indefinite nature of the advertising agreement, it refers also to
annexures thereto. In these annexures are set out different products of the appellant
and the rates to be applied thereto. It was the evidence not only of the respondent
but also Mr Lewis, who had been the managing director of the appellant at the
relevant time, that the advertising agreements were often varied by adding to or
substituting previous annexures.
[12] In addition to the definition of ‘advertising agreements’ in the agreement
between the parties and the terms of clause 5 of the standard advertising
agreement, there are various other pointers to what must have been intended
between the parties when they entered into their agreement. These pointers are to
be found against the background that not only had the respondent been appointed to
market the appellant’s products that had been defined in the agreement as types of
‘advertising space’ known as ‘banners, browser pages, screen savers and linked
adverts’ but also the respondent’s remuneration of the appellant was derived entirely
from commission.
[13] The undisputed evidence of the respondent was that 90 per cent of her time
had been spent maintaining the appellant’s relationship with these existing
customers and it was as a result of the respondent’s sole efforts that existing
advertising agreements had either been renewed or extended. Furthermore, she had
to carry all the administrative expenses relating to the procurement of advertising
agreements herself, regardless of whether these related to new customers or
renewals or extensions of these agreements with pre-existing customers. There was
no evidence that anyone else, within the appellant, was responsible for the renewal
or extension of agreements with these pre-existing customers. Self-evidently, the
renewal or extension of the agreements would not have occurred either
automatically or autonomously. As the trial court correctly observed:
‘It is highly improbable and makes unreasonable business sense to think that the
respondent would have expended all her financial and personal efforts in procuring
advertisements when she, on the version of the appellant, would not have been remunerated
at all in respect of these agreements.’
[14] An analysis of the notes of the appellant’s negotiations with Bayer shows that
the appellant had introduced Bayer to its products prior to Bayer having had any
dealings or association with Bayer. Nevertheless, the appellant had remunerated the
respondent for agreements concluded between Bayer and the appellant between
September 2003 and June 2004, during which period the respondent had actively
participated in the negotiations. Similar considerations apply in respect of advertising
contracts concluded between the appellant and Roche.
[15] It is common cause that, during the currency of the agreement, the
respondent had received R109 002.37 from the appellant as commission for
concluding advertising agreements with these existing customers. This payment was
not made in a lump sum but on an ongoing basis. Tax was deducted on these sums
and made over to the South African Revenue Service. Mr Odendaal, who testified on
behalf of the appellant, said that these payments had been made ‘ex gratia’. In its
plea and in its affidavit resisting summary judgment, the appellant described these
payments as having been ‘overpayments’. No satisfactory explanation for this
discrepancy in versions could be given by Mr Odendaal when he was cross-
examined thereupon.
[16] Mr Lewis, the former operations manager of the appellant, who at one stage
in his evidence said that the sum of R109 002.37 was an ‘overpayment’, under
cross-examination later said that he did not know how the payments to the
respondent had been calculated as he had not been responsible therefore. He also
conceded under cross-examination that the respondent would have been entitled to
commission for new business which she had generated from existing customers of
the appellant. This is a clear indication that the appellant itself did not understand its
agreement with the respondent to be as it now purports to interpret it.
[17] It is obvious that renewals or extensions of existing contracts between the
appellant and its existing customer could not be self-generating. The decision to
renew would depend, inter alia, on the following: the historical effectiveness of past
advertising arrangements, budgets, experience of the appellant’s competitors and
the introduction of new products and/or the discontinuance of other by the customer.
The decision would also depend on the building of relationships between the
appellant and its customers which would include advice and guidance from the
appellant’s representative. It is in this regard, that the contribution from the
respondent would have played a significant role.
[18] The appellant’s case was that the only commission to which the appellant
had become entitled was an amount of R35 248.62. It was not in dispute that the
appellant had paid the plaintiffs an amount of R139 746.63 in respect of various a
commissions. This, the appellant claimed, was an overpayment. In its counterclaim
the appellant claimed the difference between these two amounts. This claim was
later abandoned by the appellant.
[19] In proving the aggregate of her claim the respondent relied on an exhibited
schedule of contracts, for each individual item of the claim. Although she was cross-
examined in general terms about her claims, most of the individual items were not
disputed. Cross-examination focused on whether she could correctly assert that the
contracts were concluded ‘solely’ as a result of her efforts. The arithmetic of the
schedules was not in question. The respondent stood up well under cross-
examination. There was no reason to disbelieve her. The concessions that the
respondent made under cross-examination and that were seized upon by counsel for
the appellant in an attempt to show that she had admitted that these contracts had
not been concluded solely by her on the appellant’s behalf did not, in the context in
which they were made, detract from her essential version of events. That account of
affairs is that, without her efforts the appellant, would in all probability, not have
secured the renewal or extension of contracts as it did. The trial court correctly held
that each extension or renewal relating to contracts concluded with existing clients
constituted a new advertising agreement.
[20] Accordingly, the trial court cannot be criticised for having accepted the
respondent’s version. The trial court also correctly found that, as the respondent’s
contentions in respect of the interpretation of the agreement had prevailed over
those of the appellant, she had succeeded in proving her revised claim for R447 873.
[21] The trial court relied strongly on the decision of this court in Natal Joint
Municipal Pension Fund v Endumeni Municipality5 to conclude that not only context
but also the need for a sensible and businesslike result required an interpretation
that commission would be payable in respect of new sales in respect of advertising
agreements concluded not only between the appellant and its new customers, but
also existing customers. In reaching this conclusion, the trial court relied on the
following facts:
(a)
the respondent had been remunerated purely on a commission basis;
(b)
by a huge margin, most of her time had been spent maintaining the
appellant’s relationship with these existing customers;
(c)
it was as a result of the respondent’s sole efforts that existing advertising
agreements had either been renewed or extended;
(d)
the respondent had to carry all administrative expenses relating to the
procurement of advertising agreements herself;
(e)
she had, during the currency of the agreement, received commission for
concluding advertising agreements with these existing customers;
5 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18.
(f)
the ‘internally contradictory’ evidence of Mr Odendaal and Mr Lewis, as to
whether the payments for commission had been made ‘ex gratia’ or were
‘overpayments’;
(g)
the improbability and absurdity that the parties could have intended the clause
in contention to have the interpretation which the appellant wishes now to
have place on it.
In my opinion, the reasoning of the trial court cannot be faulted.
[22] The following order is made:
The appeal is dismissed with costs.
_______________________
N P WILLIS
JUDGE OF APPEAL
APPEARANCES:
For the Appellant:
M D Cochrane
Instructed by:
Harris Billings Attorneys, Johannesburg
c/o Honey Attorneys, Bloemfontein
For the Respondent:
A R G Mundell SC
Instructed by:
Van Zyl Hertenberger, Johannesburg
c/o Kramer Wehmann & Joubert 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
November 2014
STATUS
Immediate
X-Procure Software SA (PTY) LTD (882/2013)
Please note that the media summary is for the benefit of the media and does
not form part of the judgment.
Today the Supreme Court of Appeal (SCA) dismissed an appeal against the order
obtained by the respondent in her favour in the high court, in terms of which the
appellant was required to pay her R447 873, including interest thereupon and costs.
The respondent had claimed specific performance in terms of a so-called ‘outsource
sales agreement’ concluded between the parties.
Ultimately the appeal turned on the interpretation of the phrase ‘solely by reason of
the efforts of’ the respondent, as contained in paragraph 2 of the agreement, the
ambiguity thereof and, as a result, whether a strict application of the parol evidence
rule was to be followed in this particular instance. While the appellant contended
that the respondent was entitled to commission payable in terms of contracts
concluded only by the recruitment of new customers as a result of the efforts of the
respondent, her version was that she was entitled, in addition, to commission in
respect of existing customers retained as such due to her sole efforts and in respect
of which there had been renewals or extensions of contracts with existing customers
of the appellant.
The SCA contended that no fault could be found in the trial court’s reasoning. The
SCA decided that context and the need for a sensible and businesslike result
required an interpretation that commission would be payable not only in respect of
advertising agreements concluded between the appellant and its newly recruited
customers, but also to renewals and extensions of agreements with existing
customers.
|
3904
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 326/2021
In the matter between:
IMPERIAL LOGISTICS ADVANCE (PTY) LTD
Appellant
and
REMNANT WEALTH HOLDINGS (PTY) LTD
Respondent
Neutral Citation:
Imperial Logistics Advance (Pty) Ltd v Remnant Wealth
Holdings (Pty) Ltd (326/2021) [2022] ZASCA 143 (24
October 2022)
Coram:
ZONDI, PLASKET and MABINDLA-BOQWANA JJA and
DAFFUE and SIWENDU AJJA
Heard:
25 August 2022
Delivered:
24 October 2022
Summary:
Procedure – application for postponement – unavailability
of current legal representative – no satisfactory explanation furnished for
postponement – company law – application for a final order of liquidation –
debt admitted by the respondent – indebtedness not disputed on bona fide
and reasonable grounds – existence of a counterclaim not established –
provisional liquidation order granted.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Hughes J
sitting as court of first instance):
The application for postponement is dismissed with costs.
The appeal is upheld with costs, including costs of two counsel.
The order of the Gauteng Division of the High Court, Pretoria, is set
aside and is replaced with the following order:
‘1 The respondent is placed under provisional order of winding-up.
2 A rule nisi is issued calling upon the respondent to show cause on
Monday, 10 October 2022 at 10h00 or as soon thereafter as counsel
may be heard why:
(a) it should not be placed under a final order of winding-up; and
(b) the costs of this application should not be costs in the winding up.
3 Service of this order shall be effected by the Sheriff:
(a) On the respondent at its registered address, namely 23 Ebbehout
Street, Chantelle, Akasia, Pretoria, and care of its attorneys of record,
Saleem Ebrahim Attorneys, 37 Quinn Street, The Newton, Ground
Floor, Newton, Johannesburg;
(b) On the Companies and Intellectual Property Commission of South
Africa;
(c) On the Master of the High Court, Pretoria;
(d) On the South African Revenue Service, Pretoria; and
(e) On the respondent’s employees, if any, at the respondent’s
registered address set out in paragraph 3(a) above, and on any trade
union that may represent those employees.
4 A copy of this order is to be published once in both the Government
Gazette and the Citizen newspaper.’
______________________________________________________________
JUDGMENT
______________________________________________________________
Zondi JA (Plasket and Mabindla-Boqwana JJA and Daffue and Siwendu
AJJA concurring):
Introduction
[1] This is an appeal against the judgment and order of the Gauteng
Division of the High Court, Pretoria (the high court), dismissing Imperial
Logistics Advance (Pty) Ltd’s (the appellant) application for the final liquidation
of Remnant Wealth Holdings (Pty) Ltd (the respondent) for want of urgency.
The appeal is with leave of the high court.
[2] The appeal was set down for hearing in this Court on 25 August 2022.
On 1 August 2022, the respondent’s attorneys addressed a letter to the
appellant’s attorneys requesting that they consent to the removal of the matter
from the roll and tendered costs associated with the removal. The reasons
given for this were that the respondent’s counsel was not available on 25
August 2022 to argue the matter and that obtaining alternative counsel was
not possible as the respondent preferred the current counsel to proceed with
the matter since he was fully acquainted with the facts. The appellant’s
attorneys refused the request for the removal.
[3] Thereafter the respondent’s attorneys wrote a letter to the Registrar of
this Court requesting the postponement of the matter. On 15 August 2022, the
Registrar informed the parties that if they were unable to agree to a
postponement before 25 August 2022, the matter would proceed as
scheduled and that any request for a postponement would have to be dealt
with on the date of the hearing.
[4] This prompted the respondent to bring an urgent application for a
postponement on 23 August 2022, in which the appellant was called upon to
file an answering affidavit by 24 August 2022. As expected, the appellant took
exception to the time period set for filing the answering affidavit. It instructed
its attorneys of record to oppose the application on the basis that it was mala
fide, designedly late and failed to make out a case for the postponement.
[5] On the date of the hearing, 25 August 2022, counsel for the
respondent, informed us that he was new in the matter, his instruction was
only to argue the application for a postponement of the matter, and he had no
mandate to argue the appeal. After hearing arguments from the parties’ legal
representatives, we dismissed the application and excused the respondent’s
counsel as requested by him. The appeal proceeded in the absence of the
respondent or its legal representative. Having heard the submissions made by
the appellant’s counsel, we upheld the appeal, set aside the order of the high
court, and replaced it with an order placing the respondent under a provisional
order of liquidation. We indicated that the reasons for both orders would be
furnished in due course. These are the reasons.
Application for postponement
[6] The court has a discretion as to whether an application for a
postponement should be granted or refused. It may refuse a postponement
even when wasted costs are tendered. An applicant in an application for a
postponement must furnish a full and satisfactory explanation of the
circumstances that gave rise to the application.1 The Constitutional Court in
Lekolwane and Another v Minister of Justice held:2
‘The postponement of a matter set down for hearing on a particular date cannot be
claimed as a right. An applicant for a postponement seeks an indulgence from the
court. A postponement will not be granted, unless this Court is satisfied that it is in
the interests of justice to do so. In this respect the applicant must ordinarily show that
there is good cause for the postponement. Whether a postponement will be granted
is therefore in the discretion of the court. In exercising that discretion, this Court takes
into account a number of factors, including (but not limited to) whether the application
has been timeously made, whether the explanation given by the applicant for
1 Myburgh Transport v Botha t/a S A Truck Bodies [1991] 4 All SA 574 (NmS); 1991 (3) SA
310 (Nms) at 576-578.
2 Lekolwane and Another v Minister of Justice [2006] ZACC 19; 2007(3) BCLR 280 (CC) para
17. (Footnotes Omitted.)
postponement is full and satisfactory, whether there is prejudice to any of the parties,
whether the application is opposed and the broader public interest. All these factors,
to the extent appropriate, together with the prospects of success on the merits of the
matter, will be weighed by the court to determine whether it is in the interests of
justice to grant the application.’
[7] Turning to the facts of this case, the reasons advanced by the
respondent for the postponement are that the respondent was not aware of
the set down date, as its correspondent attorneys in Bloemfontein had
emailed a notice of set down to Mr Madhi, who at the relevant time was no
longer with the firm. Mr Ntaka, who took over the matter after the departure of
Mr Madhi, did not have access to Mr Madhi’s email account. Mr Ntaka
fortuitously became aware of the set down date on 26 July 2022 when the
firm’s secretary, who had access to the central email account for the firm,
brought him the appellant’s replacement heads which the correspondent
attorneys had transmitted to Mr Madhi’s email account. Mr Ntaka notified the
respondent’s junior counsel of the date of the set down of the appeal. Counsel
informed Mr Ntaka that he and the senior counsel were not available on 25
August 2022 to argue the appeal.
[8] The respondent’s attorneys of record further alleged that seeing that
the appellant had by then replaced the heads of argument that it had initially
served and filed, it became apparent to the respondent that it would be
prejudicial to it to appoint new counsel. The new counsel would have to read
the voluminous record to prepare for the appeal. Moreover, to secure the
services of counsel, especially senior counsel, the respondent would have
had to raise a substantial amount of fees. According to the respondent, the
arrangement it had with the current counsel was that counsel would only
invoice the respondent after arguing the appeal, which would have given the
respondent sufficient time to raise funds.
[9] The appellant opposed the application. It argued that unavailability of
counsel is not an excuse as this Court’s and the Constitutional Court’s matters
take precedence over matters in other courts.
[10] The explanation given by the respondent for postponement is not
satisfactory. It is not explained why the secretary of the respondent’s firm did
not access the email account of Mr Madhi before 25 July 2022. In any event,
unavailability of counsel is not an excuse. When the respondent’s attorneys of
record became aware that the preferred counsel would not be available, they
had almost a month to find an alternative counsel. The application was made
only two days before the hearing of the appeal putting the appellant under
limited time constraints in which to file an answering affidavit. In addition, the
record was not ‘voluminous’ as suggested by the respondent and neither were
the issues of fact and law complex. The application for a postponement was
accordingly dismissed with costs.
The merits of the appeal
[11] As regards the merits, the facts are straightforward. The respondent is
indebted to one of the appellant’s trading divisions, KWS Logistics (KWS), in
an amount of more than R80 802 540.29 plus interest. KWS rendered
transport services to the respondent as a subcontractor. It rendered these
services, on behalf of the respondent, to the respondent’s sole client, South
32 SA Ltd (South 32). The respondent received an aggregate amount of more
than R304 405 111.03 from South 32 for the services rendered by KWS.
[12] Despite the respondent’s receipt of such payments from South 32 and
the respondent executing an acknowledgement of debt (AOD) in favour of
KWS, it failed to pay the substantial amounts owed by it to KWS. The
respondent’s reasons for its failure to make such payment to KWS are
inexplicable. So too, is its refusal to account for the revenue it received from
South 32.
[13] On 27 July 2020, the appellant brought an application for the liquidation
of the respondent on an urgent basis, on the grounds that the appellant is a
substantial unsatisfied creditor of the respondent as contemplated by s
346(1)(b) of the Companies Act, 1973 (the Act); the respondent is
commercially and factually insolvent; the respondent is unable to pay its debts
as envisaged in s 344(f), as read with s 345(1)(c) of the Act; and it is also just
and equitable that the respondent be wound-up as provided for in terms of s
344(h) of the Act.
[14] This liquidation application was preceded by an application brought on
an ex parte basis, in which the appellant sought the freezing of the
respondent’s bank accounts, getting access to its bank statements and their
financial interest, and interdicting and restraining the respondent and its
director, Mr Mulinda Neluheni (Neluheni), the deponent to the answering
affidavit, from disposing of, encumbering or dealing with their property and
vehicles pending the outcome of the proceedings that were to be brought
(anti-dissipation application). The anti-dissipation order was granted on 30
June 2020 with a return date of 25 August 2020.
[15] The
liquidation
and
anti-dissipation
applications
were
later
consolidated, and heard by Hughes J. On 1 December 2020, the learned
judge discharged the rule nisi relating to the anti-dissipation application and
dismissed the application for the liquidation of the respondent for want of
urgency. The appellant’s application for leave to appeal against the discharge
of the rule nisi was dismissed. Nothing further needs to be said about the anti-
dissipation application. The high court granted the appellant leave to appeal
against an order dismissing the liquidation application. It is this appeal that
concerns this Court. As I have already stated, the appeal is with leave of that
court.
[16] The issues are, firstly, whether the high court was correct in
determining that the winding-up application was not urgent and dismissing it
on that ground, and secondly, whether a case for the winding-up of the
respondent had been made out.
[17] The issues must be considered against the following factual
background. During 2018, the respondent submitted a bid for the provision of
logistical services to South 32, for the transportation of manganese products
from South 32’s operations in Hotazel and Meyerton to, among others, the
Durban, Saldana Bay, and Richard’s Bay ports or the South 32 Alloys
Meyerton Branch. The transportation of the manganese products was to be
done with 34-ton capacity tipper trucks. The respondent was the successful
bidder and entered into a contract with South 32 to render the logistical
services for South 32 on about 13 December 2018. The respondent did not
have sufficient trucks to transport South 32’s manganese products. The
appellant offered to make its trucks available for use by the respondent on a
sub-contract basis.
[18] Initially, KWS rendered the transport services in terms of the oral
agreement, which covered the initial period of the respondent’s ‘onboarding’
with South 32. On 7 February 2020, KWS and the respondent concluded a
formal three-year transport services agreement in terms of which KWS would
render logistics services to the respondent as an independent contractor to
allow it to perform and meet its obligations under the agreement with South
32.
[19] KWS complied with its contractual obligations by providing services to
the respondent and invoicing it for services rendered. KWS alleged that the
respondent is indebted to it in the sum of R80 802 540.29 plus interest for the
services it rendered in terms of the transport services agreement. On or about
January 2020, the respondent admitted that it was indebted to KWS in the
sum of R68 011 880.16, in respect of which the respondent signed an AOD.
[20] On 24 April 2020, the appellant, through its attorneys, addressed a
letter of demand to the respondent demanding payment of the amount owing
in terms of the AOD and transport services agreement. The amount
outstanding under the AOD was R42 309 259.07 plus R34 893 142.80 for
unpaid invoices for January 2020 to March 2020.
[21] On 4 May 2020, the parties concluded a written addendum to the AOD,
the purpose of which was to set out the payment plan for the amount of
R42 309 259.07.
[22] In opposing the liquidation application, the respondent sought to
dispute its indebtedness to the appellant. It contended that the application
was not brought bona fide. It argued that the purpose of the application was to
get South 32 to cancel the contract so that the appellant could reclaim it. The
respondent alleged that the appellant failed to disclose a verbal agreement
concluded in April 2019, which preceded the written transport services
agreement.
[23] The respondent alleged that in terms of a verbal agreement, the
appellant would be a principal sub-contractor on the contract; the respondent
would pay the appellant after 14 days of the submission of an invoice, and the
respondent would be entitled to five per cent (5%) of the invoice submitted to
South 32 in terms of the contract between it and South 32. The appellant
would get 95 per cent (95%) of the invoice.
[24] The respondent alleged that it would invoice South 32 every Monday
for the previous week’s work. South 32 would, in turn, make payment after 7
to 10 days of the invoice submission. It later came to its attention that the
invoices issued by the appellant would sometimes be higher than what the
respondent had invoiced South 32.
[25] The respondent conceded that some of the appellant’s invoices were
paid late. But it contended that the appellant was partly to blame for the delay
because there were discrepancies in the invoices submitted by the appellant.
It further stated that the tonnage did not tally up and therefore the invoices
submitted by the appellant needed to be reconciled. Mr Neluheni alleged that
the appellant refused to meet with him. Additionally, the respondent’s
business account had a daily limit of R4.99 million, and anything above that
amount would be paid the next day.
[26] As regards the respondent’s liability to the appellant, Mr Neluheni
claimed that the AOD he signed on 20 January 2020 for the arrear amounts
for November 2019, December 2019, and January 2020 and the addendum
he signed on 17 March 2020 are invalid in that he signed them under duress
(under threat of withdrawing the appellant’s trucks).
[27] Mr Neluheni admitted that he informed the appellant’s representative
that he had been involved in an RDP project in association with his brother in
which he had invested R3 million. He had hoped that he would use whatever
return on this investment to settle his indebtedness to the appellant. He later
discovered that the project was a scam, and lost his entire investment.
[28] The respondent denied that it was commercially and factually insolvent.
It alleged that in addition to the claim of R52 375 595.17 against South 32 and
a claim of R11 million against the appellant, it has assets to the value of
R41 137 696.69, which, when taken together, far exceeded the amount of
R80,8 million claimed by the appellant.
[29] As alluded to above, the high court dismissed the winding-up
application for lack of urgency. It held:
‘In light of the aforesaid has this winding up application been legitimately launched as
an urgent winding up application? In my view, it has not. In the result the application
for winding up the respondent, alternatively provisional winding up of the respondent
is dismissed for want of urgency with costs.’
[30] The high court erred. Winding-up applications are, in general by their
nature, urgent.3 The urgency, the appellant alleged, lay in the fact that the
respondent’s director had made false statements to it regarding the source of
funds which he represented would permit payment to be made by the
respondent of the amounts owed to the appellant. Further, the respondent
had been receiving payment from South 32 but was not paying the appellant.
[31] Even if the high court was correct to find that the application was not
urgent, it should have struck the application off the urgent roll, not dismissed
3 Van Greunen v Sigma Switchboard Manufacturing CC [2003] ZAECHC 12 para 8-10.
it. As Cameron JA in Commissioner for SARS v Hawker Services (Pty) Ltd
explained:4
‘Urgency is a reason that may justify deviation from the times and forms the rules
prescribe. It relates to form, not substance, and is not a prerequisite to a claim for
substantive relief. Where an application is brought on the basis of urgency, the rules
of court permit a court (or a judge in chambers) to dispense with the forms and
service usually required, and to dispose of it ‘as to it seems meet’ (Rule 6(12)(a)).
This in effect permits an urgent applicant, subject to the court’s control, to forge its
own rules (which must ‘as far as practicable be in accordance with’ the rules). Where
the application lacks the requisite element or degree of urgency, the court can for
that reason decline to exercise its powers under Rule 6(12)(a). The matter is then not
properly on the court’s roll, and it declines to hear it. The appropriate order is
generally to strike the application from the roll. This enables the applicant to set the
matter down again, on proper notice and compliance.’
[32] The dismissal of the application on the basis that it lacked urgency was
therefore, not competent. The matter was urgent and should have been
treated as such by the high court.
[33] The next question is whether the appellant had made out a case for the
liquidation of the respondent. It is trite that winding-up proceedings are not to
be used to enforce payment of a debt that is disputed on bona fide and
reasonable grounds. The procedure for winding-up is not designed for the
resolution of disputes as to the existence or non-existence of a debt.5
[34] Where, however, the respondent’s indebtedness has prima facie been
established, the onus is on it to show that this indebtedness is indeed
disputed on bona fide and reasonable grounds.6 In addition to its statutory
discretion, the court has an inherent jurisdiction to prevent abuse of its
process and, therefore, even where a good ground for winding-up is
established, the court will not grant the order where the sole or predominant
4 Commissioner for South African Revenue Service v Hawker Air Services (Pty) Ltd;
Commissioner for South African Revenue Service v Hawker Aviation Services Partnership
and Others [2006] ZASCA 51; 2006 (4) SA 292 (SCA); [2006] 2 All SA 565 (SCA) para 9.
5 Badenhorst v Northern Construction Enterprise (Pty) Ltd [1956] (2) SA 346 (T) para 347-
348.
6 Kalil v Decotex (Pty) Ltd and Another 1988(1) SA 943 (A) at 980D.
motive or purpose of the applicant is something other than the bona fide
bringing of the company’s liquidation for its own sake.
[35] In my view, the appellant has established the respondent’s
indebtedness. I say this because it is common cause, alternatively, it cannot
be seriously disputed that: KWS rendered transport services to the
respondent (as a subcontractor) for its transport services obligations to South
32, and KWS issued valid tax invoices to the respondent for the services
rendered. Initially, KWS rendered the transport services in terms of the oral
agreement, which covered the initial period of the respondent’s ‘onboarding’
with South 32.
[36] The terms of this antecedent oral agreement are, however, irrelevant
within the broader context of, inter alia, the respondent’s subsequent
furnishing of an AOD, the conclusion of a written agreement, and a
subsequent addendum to the AOD.
[37] The question which arises is whether the respondent has established
that it has reasonable grounds for disputing the existence of the appellant’s
claims. This calls for scrutiny of the allegations forming the basis of the
respondent’s defences. Firstly, there is no substance to the respondent’s
claims that the winding-up application was brought in order to get South 32 to
cancel the contract with the respondent, so that the appellant could reclaim it.
It is apparent from the evidence that the appellant’s claims against the
respondent are based on the AOD and unpaid invoices for the transport
services rendered by the appellant on behalf of the respondent. The AOD, the
transport services agreement, and the addendum to the AOD were not signed
under duress as claimed by Mr Neluheni, an accomplished and experienced
businessman. The amended AOD was only signed and returned to the
appellant 10 days after the meeting in which the parties discussed the terms,
indicating that Mr Neluheni had sufficient time to reflect.
[38] Secondly, as to the alleged counterclaim which is sought to be
asserted by the respondent against the appellant, its formulation is not clear
because, after the suspension of the contract between South 32 and the
respondent, the appellant was free to provide transport services to South 32
as the respondent’s contract with South 32 contained no exclusivity clause.
[39] Thirdly, as regards its solvency, the respondent alleged that South 32
owes it a substantial amount of money being a balance on the transportation
of 72 978.02 tons of manganese that the appellant and its subcontractors
made on the respondent’s behalf. As such, the respondent asserted that it
has a claim in respect of this tonnage differential against South 32. But the
respondent has, however, not provided any sustainable and admissible
evidence of how this amount will be calculated.
[40] Prima facie, the respondent’s defences do not have prospects of
success, and the appellant would suffer more prejudice if postponement were
to be granted than if it was refused. The respondent’s indebtedness to the
appellant is substantial, and the appellant, as an unpaid creditor, has a right,
ex debito justitiae, to a winding-up order against the respondent company that
has not discharged that debt.
[41] In the result, we made the following order:
The application for postponement is dismissed with costs.
The appeal is upheld with costs, including costs of two counsel.
The order of the Gauteng Division of the High Court, Pretoria, is set
aside and is replaced with the following order:
‘1 The respondent is placed under provisional order of winding-up.
2 A rule nisi is issued calling upon the respondent to show cause on Monday,
10 October 2022 at 10h00 or as soon thereafter as counsel may be heard
why:
(a) it should not be placed under a final order of winding-up; and
(b) the costs of this application should not be costs in the winding up.
3 Service of this order shall be effected by the Sheriff:
(a) On the respondent at its registered address, namely 23 Ebbehout Street,
Chantelle, Akasia, Pretoria, and care of its attorneys of record, Saleem
Ebrahim Attorneys, 37 Quinn Street, The Newton, Ground Floor, Newton,
Johannesburg;
(b) On the Companies and Intellectual Property Commission of South Africa;
(c) On the Master of the High Court, Pretoria;
(d) On the South African Revenue Service, Pretoria; and
(e) On the respondent’s employees, if any, at the respondent’s registered
address set out in paragraph 3(a) above, and on any trade union that may
represent those employees.
4 A copy of this order is to be published once in both the Government Gazette
and the Citizen newspaper.’
________________________
DH Zondi
Judge of Appeal
Appearances
For appellant:
M R Hellens SC (with G Amm and G Mamabolo)
Instructed by:
Webber Wentzel Attorneys, Johannesburg
Symington & De Kok Attorneys, Bloemfontein
For respondent:
S E Motloung
Instructed by:
Saleem Ebrahim Attorneys, Johannesburg
Bezuidenhouts Incorporated, 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 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
Imperial Logistics Advance (Pty) Ltd v Remnant Wealth Holdings (Pty) Ltd (326/2021) [2022] ZASCA
143 (24 October 2022)
Today the Supreme Court of Appeal (SCA) upheld Imperial Logistics Advance (Pty) Ltd’s (the appellant)
appeal with costs including costs of two counsel. It further dismissed the application for postponement
by Remnant Wealth Holdings (Pty) Ltd (the respondent) and set aside the order of the Gauteng Division
of the High Court, Pretoria (the high court), replacing it with an order placing the respondent under a
provisional liquidation order.
The appeal was set down for hearing in the SCA on 25 August 2022. The respondent sought
postponement. The reasons advanced for the application for postponement by the respondent were
that the respondent was not aware of the set down date, as its correspondent attorneys in Bloemfontein
had emailed a notice of set down to one Mr Madhi, who at the relevant time was no longer with the firm.
Mr Ntaka, who took over the matter after the departure of Mr Madhi, did not have access to Mr Madhi’s
email account. Mr Ntaka fortuitously became aware of the set down date on 26 July 2022 when the
firm’s secretary, who had access to the central email account for the firm, brought him the appellant’s
replacement heads which the correspondent attorneys had transmitted to Mr Madhi’s email account.
Mr Ntaka notified the respondent’s junior counsel of the date of the set down of the appeal. Counsel
informed Mr Ntaka that he and the senior counsel were not available on 25 August 2022 to argue the
appeal.
The respondent’s attorneys of record further alleged that seeing that the appellant had by then replaced
the heads of argument that it had initially served and filed, it became apparent to the respondent that it
would be prejudicial to it to appoint new counsel as the new counsel would have to read the voluminous
record to prepare for the appeal. The appellant opposed this application stating that unavailability of
counsel is not an excuse as the SCA and the Constitutional Court’s matters take precedence over
matters in other courts. The SCA, in dismissing the application for postponement, held that the
explanation given by the respondent is not satisfactory, that the record was not voluminous as
suggested by the respondent and that neither were the issues of fact and law complex.
Regarding the merits, the respondent is indebted to one of the appellant’s trading divisions, KWS
Logistics (KWS), in an amount of more than R80 802 540.29 plus interest. KWS rendered transport
services to the respondent as a subcontractor. It rendered these services, on behalf of the respondent,
to the respondent’s sole client, South 32 SA Ltd (South 32). The respondent received an aggregate
amount of more than R304 405 111.03 from South 32 for the services rendered by KWS. Despite the
respondent’s receipt of such payments from South 32 and the respondent executing an
acknowledgement of debt (AOD) in favour of KWS, the respondent failed to pay the substantial amounts
owed by it to KWS. The reasons for its failure to make such payment to KWS are inexplicable. So too,
is its refusal to account for the revenue received by it from South 32.
On 27 July 2020, the appellant brought an application for the liquidation of the respondent on an urgent
basis, on the grounds that the appellant is a substantial unsatisfied creditor of the respondent as
contemplated by s 346(1)(b) of the Companies Act, 1973 (the Act); the respondent is commercially and
factually insolvent; the respondent is unable to pay its debts as envisaged in s 344(f), as read with s
345(1)(c) of the Act; and it is also just and equitable that the respondent be wound-up as provided for
in terms of s 344(h) of the Act.
This liquidation application was preceded by an application brought on an ex parte basis, in which the
appellant sought the freezing of the respondent’s bank accounts, getting access to its bank statements
and their financial interest, and interdicting and restraining the respondent and its director from
disposing of, encumbering or dealing with their property and vehicles pending the outcome of the
proceedings that were to be brought (anti-dissipation application). The anti-dissipation order was
granted on 30 June 2020 with a return date of 25 August 2020.
The liquidation and anti-dissipation applications were later consolidated, and heard by the high court.
On 1 December 2020, the high court discharged the rule nisi relating to the anti-dissipation application
and dismissed the application for the liquidation of the respondent for want of urgency. The appellant’s
application for leave to appeal against the discharge of the rule nisi was dismissed. The high court
granted the appellant leave to appeal against an order dismissing the liquidation application.
The issues on appeal concern firstly, whether the high court was correct in determining that the winding-
up application was not urgent and dismissing it on that ground, and secondly, whether a case for the
winding-up of the respondent had been made out.
In addressing the first issue of lack of urgency, the SCA held that the high court erred as winding-up
applications are, in general by their nature, urgent. The SCA went further to state that the urgency
alleged by the appellant lay in the fact that the respondent’s director had made false statements to it
regarding the source of funds which he represented would permit payment to be made by the
respondent of the amounts owed to the appellant and also lay in the fact that the respondent had been
receiving payment from South 32 but was not paying the appellant.
In reaching a conclusion on the second issue regarding whether a case for the winding-up of the
respondent had been properly made out, the SCA held that the appellant had prima facie established
the respondent’s indebtedness because it is common cause, alternatively, it cannot be seriously
disputed that: KWS rendered transport services to the respondent (as a subcontractor) for its transport
services obligations to South 32, and KWS issued valid tax invoices to the respondent for the services
rendered.
Regarding whether or not the respondent had established that it had reasonable grounds for disputing
the existence of the appellant’s claims, the SCA held that, prima facie, the respondent’s defences do
not have prospects of success and that the appellant would suffer more prejudice if postponement were
to be granted than if it was refused. The SCA held further, that the respondent’s indebtedness to the
appellant is substantial, and the appellant, as an unpaid creditor, has a right, ex debito justitiae, to a
winding-up order against the respondent company that has not discharged that debt.
In the result, the SCA made an order dismissing the respondent’s application for postponement with
costs, upholding the appeal with costs including costs of two counsel and setting aside the order of the
high court, replacing it with an order placing the respondent under a provisional liquidation order.
--------oOo--------
|
125
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1383/2016
In the matter between:
THE MINISTER OF HOME AFFAIRS
FIRST APPELLANT
THE DIRECTOR-GENERAL, HOME AFFAIRS
SECOND APPELLANT
and
TASHRIQ AHMED
FIRST RESPONDENT
ARIFA MUSADDIK FAHME
SECOND RESPONDENT
KUZIKESA JULES VALERY SWINDA
THIRD RESPONDENT
JABBAR AHMED
FOURTH RESPONDENT
Neutral citation: The Minister of Home Affairs v Ahmed (1383/2016) [2017] ZASCA
123 (26 September 2017)
Bench:
Ponnan, Leach and Majiedt JJA and Plasket and Schippers AJJA
Heard:
28 August 2017
Delivered:
26 September 2017
Summary:
Asylum seekers in terms of the Refugees Act 130 of 1998 may not, while
they are in the country, apply for a visa in terms of s 10(2) of the Immigration Act 13 of
2002, read with regulation 9(2) of the Immigration Regulations.
_____________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Western Cape Division, Cape Town (Sher AJ sitting as court of first
instance):
The appeal is upheld.
The order of the court below is set aside and replaced by the following order:
‘The application is dismissed.’
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Ponnan JA (Leach and Majiedt JJA and Plasket and Schippers AJJA concurring):
[1] The question raised by this appeal is whether holders of asylum seeker permits
in terms of s 22 of the Refugees Act 130 of 1998 (the RA) may, whilst they are within
this country, apply for a visa in terms of the Immigration Act 13 of 2002 (the IA). The
court a quo (Western Cape Division, Cape Town) (per Sher AJ) held that they are
entitled to do so.1 The appellants – the Minister of Home Affairs (the Minister) and
Director General of that Department (the DG) (collectively referred to as the DHA)
appeal that decision with the leave of Sher AJ.
[2] The second, third and fourth respondents are in South Africa as asylum seekers.
Each applied for a visa in terms of the IA. The DHA rejected those applications
ostensibly in line with departmental policy. The policy was set out in Immigration Policy
1 The judgment of the court a quo is reported sub nom Ahmed & others v Minister of Home Affairs &
another [2016] ZAWCHC 123; [2016] 4 All SA 864 (WCC).
Directive 21 of 2015 issued by the DG on 3 February 2016 (Directive 21). Aggrieved by
that refusal, the three respondents and their attorney (the first respondent) applied on
21 April 2016 to the court a quo for urgent relief. The application succeeded before the
court a quo and on 21 September 2016 the following order issued:
‘(i)
Immigration Directive 21 of 2015, which was issued by the Director-General of the
Department of Home Affairs on 3 February 2016, is declared to be inconsistent with the
Constitution of the Republic of South Africa 1996 and invalid, and is set aside.
(ii)
Second respondent is directed to permit the second applicant to submit an application
for a visitor’s visa in terms of s 11(b)(iv) of the Immigration Act, no. 13 of 2002, within 15 days
from date of this Order.
(iii)
Second respondent is directed to consider third applicant’s appeal against the refusal of
his application for a critical skills visa, as rejected by him on 4 January 2016, in the light of this
judgment and to make a decision in the appeal within 15 days of the date of this order.
(iv)
Second respondent is directed to consider fourth applicant’s appeal against the refusal
of his application for a critical skills visa, as rejected by him on 6 October 2015, in the light of
this judgment and to make a decision in the appeal within 15 days of the date of this order.
(v)
Second respondent shall be liable for applicants’ costs of suit, including the costs of two
counsel where so employed.’
[3] According to the first respondent, who deposed to the founding affidavit in
support of the relief sought in the court a quo, during September 2003 the Cape Town
office of the Legal Resources Centre brought an application against the DHA on behalf
of thirteen asylum seekers. That matter was settled and an order, which came to be
known as the ‘Dabone Order’,2 issued by agreement between the parties. Following
upon the Dabone Order, the DG issued a directive, namely Circular 10 of 2008. Circular
10 provided that ‘asylum seekers in possession of a permit issued in terms of s 22 of
the [RA] can apply for one of the temporary residence permits contemplated in the [IA],
as well as permanent residence in terms of section 26 or 27 of the [IA].’
2 The first applicant in that matter was Mr Moustafa Dabone.
[4] On 3 February 2016 the DG issued a new directive – Directive 21 – which is
headed: ‘Withdrawal of Circular 10 of 2008 confirming the 11 November 2003 Dabone
Court Order’ and provides in material part as follows:
‘It is the considered view of the Department that no change of condition or status should be
premised on the provisions of the Immigration Act for a holder of an asylum seeker permit
whose claim to asylum has not been formally recognized by [the Standing Committee for
Refugee Affairs].’
The Directive concluded with these words:
‘In view of the above provisions I wish to advise all Immigration Officials that Departmental
Circular 10 of 2008 has fallen away since the 26th of May 2014 and is hereby officially
withdrawn. . . . All applications for change of status from asylum seeker permit to temporary
residence visa which are still pending in the system should be processed as per this directive
regardless of the date of application.’
[5] Such details as can be gleaned from the papers pertaining to each of the second,
third and fourth respondents are somewhat sketchy. The second respondent, Ms Arifa
Fahme, is married to Mohamed Fahme. Both are Indian citizens. Mr Fahme is the
holder of a work permit pursuant to which he is employed as the manager of a
supermarket. Ms Fahme is the holder of an asylum seeker permit in terms of s 22 of the
RA. She first entered the country on 3 June 2009. Her permit was extended on 12
occasions and eventually expired in 2016. Mr Fahme entered the Republic of South
Africa in 2015. Ms Fahme applied for a visitor’s visa in terms of s 11 of the IA. The
DHA’s agent, VFS Global, refused to accept the application. It apparently did so on the
strength of Directive 21. The third respondent, Mr Kuzikesa Swinda, is a citizen of the
Democratic Republic of Congo. His details were first captured on 19 April 2010 by an
Refugee Reception Officer (RRO). His permit was extended on 13 occasions and
eventually expired on 1 August 2016. In the interim, Mr Swinda applied for a critical
skills visa in terms of s 19 of the IA. The critical skill he is said to possess is that of an IT
Security Specialist. On 4 January 2016 his application for a critical skills visa was
rejected. The fourth respondent, Mr Jabbar Ahmed, is a Pakistani national. His details
were first captured by an RRO on 26 September 2014. His permit was extended twice
and expired on 26 October 2015. Like the third respondent, he too made an application
for a critical skills visa - in his case as a sheep shearer. On 6 October 2015 his
application was also rejected.
[6] The written reasons given by the DHA for rejecting the applications of the third
and fourth respondents for critical skills visas were in identical terms, namely:
‘The applicant cannot be granted a temporary residence visa (trv) until their asylum application
has been finalized and their asylum claims have been proven to be true as currently the
application has been referred to rab [note: Refugees Appeal Board] as the asylum claims were
found to be unfounded and thereby rejected. The applicant has been granted an opportunity to
exhaust his or her rights of appeal and sec 26(2) of the Refugees Act No 130, 1998 states that
the appeal board may after hearing an appeal confirm, set aside or substitute any decision
taken by a refugee status determination officer, as an adjudicator in permitting a decision to
grant trv would not be correct/premature as the applicant’s asylum status has yet to be finalized
(which could result in confirmation, setting aside or substitution of the current rejection), such
decision will then provide direction in the processing of a trv.’
Both Mr Swinda and Mr Ahmed lodged internal appeals with the DHA against those
decisions. Those appeals have been held in abeyance because, so the contention
goes, if the argument advanced on behalf of the DHA carries the day, then all three
respondents could not even have applied for the visas in question whilst in this country,
much less require the DHA to consider and determine them.
[7] In my view, the court a quo’s conclusions appear to rest on an erroneous
interpretation of the IA. Accordingly, the IA is where one must start. Section 10 of that
Act, headed ‘Visas to temporarily sojourn in Republic’, provides:
‘(1)
Upon admission, a foreigner,3 who is not a holder of a permanent residence permit, may
enter and sojourn in the Republic only if in possession of a visa issued by the Director-General
for a prescribed period.
(2)
Subject to this Act, upon application in person and in the prescribed manner, a foreigner
may be issued one of the following visas for purposes of –
. . .
(l)
applying for asylum as contemplated in section 23.’4
3 A foreigner is defined as an individual who is not a citizen.
Thus, the regulation of refugees starts, ironically, with s 23 of the IA, which provides:
‘(1)
The Director-General may, subject to the prescribed procedure under which an asylum
transit visa may be granted, issue an asylum transit visa to a person who at a port of entry
claims to be an asylum seeker, valid for a period of five days only, to travel to the nearest
Refugee Reception Office in order to apply for asylum.
(2)
Despite anything contained in any other law, when the visa contemplated in subsection
(1) expires before the holder reports in person at a Refugee Reception Office in order to apply
for asylum in terms of s 21 of the Refugees Act, 1998 (Act 130 of 1998), the holder of that visa
shall become an illegal foreigner and be dealt with in accordance with this Act.’
[8] Refugees entering the Republic of South Africa are not automatically recognized
as such. In order to have their status recognized they must fulfil the requirements for
asylum in terms of the RA. The RA distinguishes between asylum seekers and
refugees.5 As Minister of Home Affairs v Somali Association of SA Eastern Cape &
another [2015] ZASCA 35; 2015 (3) SA 545 para 3 observed:
‘It is thus important to understand how asylum is sought and conferred in terms of our law.
According to s 21 of the [RA],6 every person who wishes to obtain asylum must apply in person
to a Refugee Reception Officer (the Officer) at any Refugee Reception Office (RRO). To that
end, the Officer must ensure that the application form is properly completed and where
necessary assist the applicant in that regard. The Officer may conduct such enquiry as is
deemed necessary in order to verify the information furnished by the applicant and, thereafter
submit the application together with such information as may have been obtained to a Refugee
4 The other types of visas contemplated by s 10(2) of the IA are:
(a) transit through the Republic as contemplated in section 10B;
(b) a visit as contemplated in section 11;
(c) study as contemplated in section 13;
(d) conducting activities in the Republic in terms of an international agreement to which the Republic is a
party as contemplated in section 14;
(e) establishing or investing in a business as contemplated in section 15;
(f) working as a crew member of a conveyance in the Republic as contemplated in section 16;
(g) obtaining medical treatment as contemplated in section 17;
(h) staying with a relative as contemplated in section 18;
(i) working as contemplated in section 19 or 21;
(j) retirement as contemplated in section 20;
(k) an exchange program as contemplated in section 22.
5 The RA defines an ‘asylum seeker’ as ‘a person who is seeking recognition as a refugee in the Republic’
and a ‘refugee’ as ‘a person who has been granted asylum in terms of this Act’.
6 Section 21 of the RA, headed ‘Application for asylum’, reads:
‘(1) An application for asylum must be made in person in accordance with the prescribed procedures to a
Refugee Reception Officer at any Refugee Reception Office.’
Status Determination Officer (RSDO). Pending the outcome of that application the Officer must,
in terms of s 22 of the [RA],7 issue such applicant with an asylum seeker permit allowing him or
her to sojourn in the Republic temporarily. Until the issuance of a s 22 permit (also described as
an asylum seeker permit), such person is considered an illegal foreigner and subject to
apprehension, detention and deportation in terms of the [IA]. . . . An asylum seeker permit is
thus essential to enable an asylum seeker to live, work and function in South Africa prior to the
determination of his or her status.’
Once asylum is granted, a refugee has a range of rights including the entitlement to
apply in terms of s 27(c) of the RA for an immigration permit.8
[9] Section 10(2) of the IA expressly envisages an ‘application in person and in the
prescribed manner’. As to the prescribed manner: it is to the Immigration Regulations9
that one must look. Regulations 9(1) and 9(2) prescribe the manner in which most visa
applications must be made. They read:
‘(1)
An application for any visa referred to in section 11 up to and including sections 20 and
22 of the Act shall be made on Form 8 illustrated in Annexure A together with all supporting
documents and accompanied by . . . 10
7 Section 22 of the RA, headed ‘Asylum seeker permit’, reads:
‘(1) The Refugee Reception Officer must, pending the outcome of an application in terms of section 21(1),
issue to the applicant an asylum seeker permit in the prescribed form allowing the applicant to sojourn in
the Republic temporarily, subject to any conditions, determined by the Standing Committee, which are not
in conflict with the Constitution or international law and are endorsed by the Refugee Reception Officer on
the permit.
(2) Upon the issue of a permit in terms of subsection (1), any permit issued to the applicant in terms of
the Aliens Control Act, 1991 [Immigration Act], become null and void, and must forthwith be returned to
the Director-General for cancellation.’
8 Section 27(c) provides: ‘A refugee is entitled to apply for an immigration permit in terms of the Aliens
Control Act, 1991,8 after five years’ continuous residence in the Republic from the date on which he or
she was granted asylum, if the Standing Committee certifies that he or she will remain a refugee
indefinitely.’
9 GN R413, GG 37679, 22 May 2014.
10 The documents envisaged by Regulation 9(1) are:
‘(a) a valid passport in respect of each applicant;
(b) a yellow fever vaccination certificate if that person travelled or intends travelling from or transiting
through a yellow fever endemic area: Provided that the certificate shall not be required where that person
travelled or intends travelling in direct transit through such area;
(c) a medical and radiological report in respect of each applicant, excluding applicants for the visa
contemplated in s 11(1)(a) of the Act: Provided that a radiological report shall not be required in respect of
children under the age of 12 years or pregnant women;
(d) in respect of dependent children accompanying the applicant or joining the applicant in the Republic,
proof of parental responsibilities and rights or written consent in the form of an affidavit from the other
parent or legal guardian, as the case may be;
(e) in respect of a spouse accompanying the applicant or joining the applicant in the Republic, a copy of a
(2)
Any applicant for any visa referred to in subregulation (1) must submit his or her
application in person to –
(a)
any foreign mission of the Republic where the applicant is ordinarily resident or holds
citizenship; or
(b)
any mission of the Republic that may from time to time be designated by the Director-
General to receive applications in respect of any country in which a mission of the Republic has
not been established.’
Importantly, in terms of s 10(8) of the IA, an application for a change in status does not
provide a status and does not entitle the applicant to any benefit under the Act, except
for those explicitly set out in the Act, or to sojourn in the Republic pending the decision
in respect of that application.
[10] The general rule therefore is that an application for a visas by a foreigner must
be made abroad and not in South Africa. That general rule applies to the respondents’
visa applications for a visitor’s visa (in the case of the second respondent) in terms of s
11 and a work visa (in the case of each of the third and fourth respondents) in terms of s
19 of the IA. It follows that the respondents could not lawfully apply for either a visitor’s
or work visa in South Africa. Applications for visas of that kind could only have been
made abroad.
[11] The main exception to that general rule is to be found in s 10(6) of the IA, which
allows certain foreigners, who are in South Africa, to apply for a change in their status.
In that regard s 10(6) provides:
‘(a)
Subject to this Act, a foreigner, other than the holder of a visitor’s or medical treatment
visa, may apply to the Director-General in the prescribed manner to change his or her status or
terms and conditions attached to his or her visa, or both such status and terms and conditions,
as the case may be, while in the Republic.
(b)
An application for a change of status attached to a visitor’s or medical treatment visa
shall not be made by the visa holder while in the Republic, except in exceptional circumstances
as prescribed.’
marriage certificate or proof of a relationship as contemplated in regulation 3; and
(f) payment of the applicable application fee.’
‘Status’, according to s 1(1) of the IA, means ‘the status of the person as determined by
the relevant visa or permanent residence permit granted to a person in terms of this
Act’. And that section defines a ‘visa’ to mean visas issued in terms of the IA.
Regulation 9(5) elaborates:
‘(5)
A foreigner who is in the Republic and applies for a change of status or terms and
conditions relating to his or her visa shall –
(a)
submit his or her application, on Form 9 illustrated in Annexure A, no less than 60 days
prior to the expiry date of his or her visa; and
(b)
provide proof that he or she has been admitted lawfully into the Republic,
Provided that no person holding a visitor’s or medical treatment visa may apply for a change of
status to his or her visa while in the Republic, unless exceptional circumstances set out in
subregulation (9) exist.’
[12] These provisions create an exception to the general rule that visa applications
must be made abroad. They also make clear that the exception only applies to the
holders of certain categories of visa issued in terms of the IA. Section 10(6)(a) provides
in the first place for an application for a change in ‘status’ and in the second for a
change in the ‘terms and conditions attached to his or her visa’. By definition both are
confined to those who are here under visas issued in terms of the IA. The definition of
‘status’ makes it clear that it relates to a person’s status under a visa or permanent
residence permit issued in terms of the IA. They do not apply to asylum seekers, who
do not have any status under the IA and are in the country pursuant to asylum seeker
permits issued in terms of the RA. Both s 10(6)(a) and regulation 9(5) exclude the
holders of visitor’s and medical treatment visas from this exemption. Holders of those
visas ordinarily may not apply for a change of status in South Africa. The general rule,
that applications for visas must be made abroad, prevails in their case. It would thus be
most anomalous not to allow them the benefit of the exemption but to extend it to
asylum seekers who enjoy no status under the IA at all.
[13] When asylum seekers arrive at a South African border post, they are given an
asylum transit visa for only five days to allow them to apply for asylum at the nearest
RRO. They thereafter become subject to the RA and do not enjoy any status under the
IA. Section 22(2) of the RA puts this beyond doubt. It states that, upon the issue of any
asylum seeker permit to an applicant, ‘any permit issued to the applicant in terms of the
[IA], becomes null and void, and must forthwith be returned to the Director-General for
cancellation.’ This provision militates against any suggestion that an asylum seeker
enjoys any status under the IA.
[14] Asylum seekers are thus bound by the general rule laid down by s 10(2) of the IA
read with regulation 9(2) of the Immigration Regulations that applications for visas must
be made abroad. The respondents could not lawfully apply for visitor’s and work visas
within South Africa. The DHA therefore correctly declined their applications. The court a
quo found that nothing prevented the two Acts being read together such that an asylum
seeker or refugee could make application for the full range of visas and permits
provided for by the Immigration Act. In that, the court overlooked this general rule.
[15] One final aspect remains: The court a quo took the view that the Minister may, in
terms of s 31(2)(c) of the IA, for good cause waive any prescribed requirement. It
opined ‘there was no suggestion by the [DHA] that any of the requirements necessary to
obtain either a visitor’s visa . . . or a so-called critical skills visa . . . could not be so
waived by the Minister if he or she deemed it appropriate’. In terms of s 31(2)(c) ‘upon
application, the Minister may under terms and conditions determined by him or her for
good cause, waive any prescribed requirement or form. This provision does not avail
the respondents because they did not apply to the Minister to waive the requirement
that applications for visas be made abroad. If they had made such an application, and
the Minister had refused it, their remedy would have been an application for review. The
Minister’s power to waive is thus of no assistance to them in this case.
[16] It follows that the appeal must succeed. The appellants did not seek costs either
in this court or the one below.
[17] In the result:
1.
The appeal is upheld.
2.
The order of the court below is set aside and replaced by the following order:
‘The application is dismissed.’
_________________
V M Ponnan
Judge of Appeal
APPEARANCES:
For the Appellants:
W H Trengrove SC (with him K Pillay and A Nacerodien)
Instructed by:
State Attorney, Cape Town
State Attorney, Bloemfontein
For the Respondents:
A Katz SC (with him A Brink)
Instructed by:
Kassell Sklaar Cohen Attorneys, Cape Town
Symington & De Kok 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
26 September 2017
STATUS
Immediate
Minister of Home Affairs & another v Ahmed & others (1383/2016) [2017] ZASCA 123
(26 September 2017)
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 brought by the appellants, the Minister
of Home Affairs and the Director-General of that Department (collectively referred to as the DHA)
against a judgment of the Western Cape Division of the High Court, Cape Town (court a quo). The
issue was whether holders of asylum seeker permits in terms of s 22 of the Refugees Act 130 of
1998 (the RA) may, whilst they are within this country, apply for a visa in terms of the Immigration Act
13 of 2002 (the IA). The court below held that they are entitled to do so.
The second, third and fourth respondents are in South Africa as asylum seekers in terms of s22 of the
RA. The second respondent first entered the country on 3 June 2009. Her permit was extended on 12
occasions and eventually expired in 2016. She then applied for a visitor’s visa in terms of s11 of the
IA but the DHA’s agent, VFS Global, refused to accept the application. The third and fourth
respondents applied for a critical skills visa in terms of s19 of the IA but the DHA rejected their
applications.
The DHA refused and rejected all three applications on the strength of a departmental policy which
was set out in an Immigration Policy Directive 21 of 2015 issued by the Director-General of Home
Affairs on 3 February 2016. The departmental policy states that asylum seekers do not qualify for
change of condition or status within the Republic and that such application must be made abroad.
In the court a quo, it was held that asylum seekers are entitled to apply for visitor’s and work visas
while in South Africa. It based its finding on, amongst other things, that there was nothing in the IA
and the RA that would ‘make it inherently inimical or offensive to their legislative scheme, for a failed
asylum seeker to apply for temporary residence and work rights under the Immigration Act.’ The court
below thus held the departmental policy to be inconsistent with the Constitution and invalid, and set it
aside. It directed that all three respondents should be permitted to submit their applications for visas
in terms of the IA.
On appeal, the SCA held that asylum seekers are bound by the general rule laid down by s 10(2) of
the IA read with regulation 9(2) of the Immigration Regulations that applications for visas must be
made abroad. The respondents could not lawfully apply for visitor’s and work visas within South
Africa. The DHA therefore correctly declined their applications. The SCA further stated that the court a
quo’s finding that nothing prevented the two Acts being read together such that an asylum seeker or
refugee could make application for the full range of visas and permits provided for by the Immigration
Act, overlooked this general rule.
As a result, the appeal was upheld.
|
2896
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 34/2014
Reportable
In the matter between:
DEUTSCHES ALTERSHEIM ZU PRETORIA
APPELLANT
and
ROLAND HEINRICH DOHMEN
FIRST RESPONDENT
DANIëL HEINRICH DOHMEN
SECOND RESPONDENT
MARGRETHA ANNA BOTHA
THIRD RESPONDENT
THE CITY OF TSHWANE METROPOLITAN
MUNICIPALITY
FOURTH RESPONDENT
Neutral citation:
Deutsches Altersheim Zu Pretoria v Roland Heinrich Dohmen
(34/14) [2015] ZASCA 3 (5 March 2015)
Bench:
Ponnan, Mhlantla, Leach and Zondi JJA and Mayat AJA
Heard:
19 February 2015
Delivered:
5 March 2015
Summary: Costs – death of respondent rendering appeal academic – liability for
costs.
____________________________________________________________________
ORDER
____________________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (Maumela J (Jordaan J
concurring) sitting as court of appeal):
Save for ordering the appellant to pay two thirds of the respondents‟ costs, the matter
is struck off the roll.
____________________________________________________________________
JUDGMENT
____________________________________________________________________
Ponnan JA (Mhlantla, Leach and Zondi JJA and Mayat AJA concurring):
[1] On 5 March 2007 the appellant, the Deutsches Altersheim Zu Pretoria, a home
for the aged, concluded a written agreement with Mr Roland Heinrich Dohmen, in
terms whereof it undertook to provide him with „board and lodging‟ and „care in its frail
care section‟ against a monthly payment of R3 420. The preamble to the agreement
recorded:
„The parties to this agreement concur that in principle the care for the elderly is the
responsibility of their next-of-kin and/or relatives, who for that reason act as Guarantor for the
due fulfilment of the financial obligations towards the HOME, who offers its services to the
LESSEE and on behalf of the LESSEE‟s relatives, as hereinafter set out in detail‟.
Accordingly, Mr Dohmen‟s son, Daniël Heinrich Dohmen, and daughter, Magretha
Anna Botha, signed the agreement as „guarantors‟.
[2] On 21 September 2009 the management committee of the appellant wrote to
Mr Dohmen: „Considering the events of these last months, various correspondence and
discussions, we have no other option than to give you Notice, effective 31 October 2009, in
terms of the provisions of paragraph 9 of the lease agreement.
This decision was not taken easily and we had discussed it in detail with our legal advisor‟.
The written notice notwithstanding, Mr Dohmen refused to vacate his room and as a
consequence on 5 March 2010 and in terms of s 4 of the Prevention of Illegal Eviction
from and Unlawful Occupation of Land Act 19 of 1998, the appellant commenced
proceedings in the Pretoria Magistrates‟ Court for his eviction. In his answering
affidavit Mr Dohmen stated:
„3.2
Ex facie the document attached to the Applicant‟s founding affidavit it was entered into
between various parties including the Applicant, myself as well as Mrs M A Botha and Mr D H
Dohmen (the latter being my daughter and son respectively).
3.3
As such all parties to the alleged written agreement have an interest in the relief
sought by the Applicant‟.
In the event, Mr Dohmen‟s son and daughter came to be joined to the proceedings as
the second and third respondents (the respondents). On 18 March 2011 the
magistrates‟ court issued an eviction order to take effect on or before 30 April 2011. Mr
Dohmen was also ordered to pay costs on the attorney and own client scale.
Aggrieved, Mr Dohmen appealed to the North Gauteng High Court, Pretoria. His
appeal succeeded with costs. The further appeal by the appellant is with the leave of
this court.
[3] The appeal was set down for hearing before this court on 19 February 2015. On
27 January 2015 a supplementary practice note was filed on behalf of the respondents
with the registrar of this court. That practice note purported to take issue with certain
omissions from the appeal record filed by the appellant and recorded in passing that
Mr Dohmen had died on 12 January 2015. In the light of that disclosure and by notice
emanating from the registrar of this court on 2 February 2015 the Appellant was
required as a matter of urgency to intimate whether it still persists with the appeal. If
so, so the notice continued:
„the parties will be required at the hearing of the matter to address full argument on whether
the judgment sought on appeal will have any practical effect or result as contemplated by
s16(2)(a) of the Superior Courts Act 10 of 2013 (formerly s 21A of the Supreme Court Act).‟
[4] In response to the registrar‟s notice, the appellant‟s attorney wrote on 2
February 2015:
„2.
We kindly request that the appeal – set-down for 19/02/2015 – should proceed.
. . .
4.
The judgment, handed down by two Judges in the North Gauteng High Court (against
which this appeal has been noted) lent an interpretation to the written agreement concluded
between the parties, as well as the circumstances governing the relationship between the
parties. This interpretation, unfortunately, has an adverse effect on all the existing and future
agreements concluded with residents of the Appellant which is, with respect, to the detriment
of the Appellant. As matters stand, the Appellant is bound by this North Gauteng High Court
decision. The Appellant is further of the humble view that it shall also be in the public interest
that the appeal be heard, keeping the following in mind:
4.1.1. The judgment of the High Court has far reaching consequences, not only for the
Appellant, but also for other owners of similar establishments;
4.1.2. The judgment also deals with the provisions of the Prevention of Illegal Eviction from
and Unlawful Occupation of Land Act and the Older Persons Act;
4.1.3. Both the cannons of legislation and its proper interpretation is of considerable
importance for the broader public and legal community;
4.1.4. The judgment of the High Court therefor has consequences, not only for the Appellant,
but also for other owners, extending beyond this case.‟
But that was to fundamentally misconceive the position, for, as Innes CJ observed as
long ago as Geldenhuys and Neethling v Beuthin 1918 AD 426 at 441:
„Courts of Law exist for the settlement of concrete controversies and actual
infringements of rights, not to pronounce upon abstract questions, or to advise upon
differing contentions, however important.‟1
That principle has been emphasised in a long line of cases of this court. (See Legal-
Aid South Africa v Magidiwana and others [2014] 4 All SA 570 (SCA) and the cases
there cited.)
[5] Indeed, as Wallis JA pointed out in Qoboshiyane NO and others v Avusa
Publishing Eastern Cape (Pty) Ltd and others 2013 (3) SA 315 (SCA) para 5:
„The 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. With those cases must be contrasted a number where the Court
has refused to deal with the merits. 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
1 In National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others
2000 (2) SA 1 (CC) 2000 (1) para 21 fn 18 the Constitutional Court echoed what the learned Chief
Justice had stated over eight decades earlier 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.‟
future and on which the adjudication of this Court was required, whilst in the latter no such
issue arose.‟ 2
This matter plainly falls into the latter of the two categories alluded to by Wallis JA. To
once again borrow from Innes CJ, practitioners do not seem to make themselves
acquainted with important decisions of this court (Stevenson v MacIver 1922 AD 413
at 414).
[6] The respondents‟ attorney, on the other hand, took the view „that the relief
sought by the appellant has become moot‟. His letter written on 4 February 2015 in
response to the registrar‟s notice added:
„2.
On behalf of the respondents in the appeal we confirm that none of them intend to
pursue the matter.
3.
In our view (and this will be respectfully conveyed to the Honourable Supreme Court of
Appeal in heads of argument to be filed in due course, if necessary) the appeal, if persisted
with by the appellant, should be struck from the roll with costs.‟
After an exchange of correspondence between the parties it ultimately came to be
accepted by the appellant that the appeal had indeed become academic. What
thereafter occupied the attention of the parties were debates about costs. In due
course the appellant filed supplementary heads of argument with this court. It read:
„7.
It is common cause between the Old Age Home and the attorney acting for the Second
and Third Respondents that the appeal has become moot.
8.
Section 16(2)(a)(i) of the Superior Court‟s Act, provides that an appeal may be
dismissed on the ground that the decision in the appeal will have no practical effect or result.
As a result thereof the Old Age Home, as indicated to the Registrar of the above Honourable
Court and the attorney for Second and Third Respondents, that the Old Age Home does not
intend to argue the appeal, but will remove the matter from the roll. The Second and Third
Respondents however persist that unless their costs are tendered, the matter must proceed.
. . .
13.
The Old Age Home would of course preferred to proceed with the appeal, but keep in
mind the salutary principle why the above Honourable Court should not be detained with
issues relating to costs only, decided to remove the matter from the roll. It is through no fault
of the Old Age Home that the appeal has become academic, and having regard to the
2 See also Natal Rugby Union v Gould 1999 (1) SA 432 (SCA) at 444I-445B; The Merak S: Sea Melody
Enterprises SA v Bulktrans (Europe) Corporation 2002 (4) SA 273 SCA para 4; Land en
Landbouontwikkelingsbank van Suid-Afrika v Conradie 2005 (4) SA 506 (SCA) paras 5-7; Executive
Officer of the Financial Services Board v Dynamic Wealth Ltd and others [2012] 1 All SA 135; 2012 (1)
SA 453 (SCA) paras 43-46.
discretion a Court has regarding the award of costs, the correct approach should be that no
costs should have been awarded.
14.
It is therefore respectfully submitted, that should Second and Third Respondents
persist that the matter should proceed on 19 February 2015 only for the issue of cost, that the
following order should be made:
“1.
The appeal is removed from the roll;
2.
Each party pays its own costs up and until 6 February 2015;
3.
Second and Third Respondents are ordered to pay the Appellants costs from 7
February 2015 on the scale as between attorney and client.”‟
[7] The respondents also availed themselves of the opportunity to file
supplementary heads of argument, which read:
„1.
These supplementary heads are filed in direct response to the appellant‟s failure
and/or refusal to withdraw the appeal and the appellant‟s supplementary heads of argument of
13 February 2014.
2.
The second and third respondents have been appointed as executors of the estate of
the first respondent and all parties are duly represented.
3.
It is common cause between the parties that the appeal is moot.
4.
Contrary to the appellant‟s allegation the respondents are not of the view that the
matter should proceed on 19 February 2015. It is the respondents‟ view, as stated in the
correspondence with the appellant, that the appellant, being dominus litis, should withdraw the
matter with a tender of costs. The appellant has refused and/or failed to withdraw the matter.‟
[8] And so, fresh battle lines having been drawn between parties, it came to pass
that this court had to be convened on 19 February 2015. Given the conceptual
confusion that permeated some of the submissions from the bar in this court, it may be
as well to identify precisely what still remains for determination in the matter. Clause 9
of the agreement provided:
„This agreement may be terminated by either party giving the other party one calendar month
notice, in writing, terminating this agreement. The agreement will terminate automatically on
the day of the LESSEE‟S death without prejudice in either case to any accrued liability of the
LESSEE or the GUARANTOR to the home‟.
The practical effect of clause 9 was therefore that the agreement would terminate
automatically upon the death of Mr Dohmen. That being so, there can certainly no
longer be any dispute or lis between the parties on the issue initially raised by them for
determination in the appeal. In those circumstances there can hardly be an appeal on
the merits that this court has any power to deal with (Legal-Aid South Africa v
Magidiwana (above)). Legal-Aid South Africa v Magidiwana held (para 20-22) that
once the parties settled, the litigation between them terminated and there were
thereafter no disputes between them upon which this court could exercise its appellate
jurisdiction. That principle, no doubt, applies with equal force to a situation such as the
present where the death of a party brings to an end the underlying lis. In those
circumstances this court can hardly enter into the merits of the appeal (Nxaba v Nxaba
1926 AD 392 at 394). It must therefore follow that the appeal falls to be struck off the
roll (Kett v Afro Ventures (Pty) Ltd [1997] 1 All SA 1 (A)).
[9] It still remains nonetheless to consider the ancillary issue - the question of costs
- that continued to occupy the parties in debate and the attention of this court in
argument from the bar. There can be no dispute that much of the costs of the appeal
would necessarily have been incurred by the parties prior to the death of Mr Dohmen.
For it is clear, I think, that an attorney in the position of either party‟s attorney would
have been entitled to charge his clients for his services in respect of the contemplated
appeal. And by then, one suspects, counsel would have been briefed and would
necessarily have had to be prepared to argue the merits of the appeal.
[10] Ordinarily where an appeal is withdrawn the appellant is liable for the costs
incurred up until the time of the withdrawal (Eisenstadt v Barone 1931 AD 486). The
appellant ultimately having accepted that the appeal had been rendered moot by the
death of Mr Dohmen, the respondents, relying on the „usual order‟ (Kett v Afro
Ventures at 3), claimed costs. The appellant, in contradistinction, contended that this
was the kind of matter where it would be appropriate for no order as to costs to issue.
It is indeed so that there are cases where this court has made no order as to costs.3
But those were cases where both parties, to a greater or lesser extent, co-operated or
acquiesced in pursuing an incorrect procedure. On the other hand where a point was
successfully raised by the court itself on appeal, the usual order has been that the
appellant pays the costs, particularly where the appellant did not concede the non-
3 Union Government (Minister of the Interior) and Registrar of Asiatics v Naidoo 1916 AD 50 at 52;
Nxaba v Nxaba 1926 AD 392 at 394; Tropical (Commercial and Industrial) Ltd v Plywood Products Ltd
1956 (1) SA 339 (A) at 345A-346C; Clear Enterprises (Pty) Ltd v Commissioner, SARS and others
[2011] ZASCA 164; [2011] JOL 27974 (SCA).
appealability of the orders appealed against and the respondent was compelled to
come to court to have the decision set aside.4
[11] However, as Centlivres CJ observed in Tropical (Commercial and Industrial) Ltd
v Plywood Products Ltd 1956 (1) SA 339 (A) at 346A:
„None of the cases purport to lay down a hard and fast rule in a matter such as this nor
can they be said to deprive the Court of its inherent discretion to make such an order
as to costs as may be just in the circumstances of any particular case.‟5
In exercising that discretion the following factors are relevant: First, the appellant was
dominus litis - it initiated and prosecuted the appeal. The respondents were thus not
brought before this court as willing parties. And, even when it ought to have been clear
to the appellant that the relief originally sought, namely an eviction order, had been
rendered moot, it initially, in response to the notice from the registrar of this court,
persisted in its contention that the appeal be adjudicated on its merits. What is worse –
and this is the second factor – is that it sought punitive costs against the respondents
from this court when there was plainly no warrant for such an order. Thus, whatever
the merits of the respondents‟ other contentions, they were wholly justified in
instructing counsel to appear before this court to resist the grant of that order. On the
other hand (this is the third factor) – we are not dealing here with an abortive appeal
on the merits on account of any fault on the part of the appellant or because the
matter was prematurely or wrongly brought to this court. The appellant had sought and
obtained the leave of this court for the further prosecution of the appeal. Without in
4 Stevenson v MacIver 1922 AD 413 at 414; Western Johannesburg Rent Board v Ursula Mansions
(Pty) Ltd 1948 (3) SA 353 (A) at 355; Desai v Engar and Engar 1966 (4) SA 647 (A) at 655; Charugo
Development Co (Pty) Ltd v Maree NO 1973 (3) SA 759 (A) at 764G-H; SA Motor Industry Employers’
Assoc v SA Bank of Athens 1980 (3) SA (A) 91 at 98F-H; Levco Investments (Pty) Ltd v Standard Bank
of SA Ltd 1983 (4) SA 921 at 929A; Wellington Court Shareblock v Johannesburg City Council; Agar
Properties (Pty) Ltd v Johannesburg City Council 1995 (3) SA 827 (A) at 835; Coin Security Group (Pty)
Ltd v SA National Union for Security Officers and others 2001 (2) SA 872) (SCA) para 12; Port
Elizabeth Municipality v Smit 2002 (4) SA 241 (SCA) paras 6,7 and 12; Rand Water Board v Rotek
Industries (Pty) Ltd 2003 (4) SA 58 (SCA) paras 1 and 27; Radio Pretoria v Chairman, Independent
Communications Authority of SA 2005 (1) SA 47; [2004] 4 All SA 16 (SCA) para 46; South African
Police Service Medical Scheme v Lamana 2011 (4) SA 456 (SCA) para 14; Kenmont School and
another v DM and others [2013] ZASCA 79; [2013] JOL 31055 (SCA) para 14; Ethekwini Municipality v
SAMWU [2013] ZASCA 135 para 20; Qoboshiyane NO and others v Avusa Publishing Eastern Cape
(Pty) Ltd and others 2013 (3) SA 315 (SCA) paras 14-15.
5 See for example Tecmed Africa (Pty) Ltd v Minister of Health and another [2012] 4 All SA 149 (SCA)
para 22 where the respondent raised the point for the first time at an advanced stage of the appeal, until
then neither was an unwilling participant, each party was ordered to bear its own costs until the date
when the point was raised and the appellant was ordered to pay the costs of appeal beyond that date.
any way delving into the merits of the matter, it must nonetheless be accepted that
leave to appeal was granted because it was thought that the appeal had reasonable
prospects of succeeding. Thus, one must suppose that but for the untimely death of
Mr Dohmen, the appellant would have had every intention of prosecuting the appeal to
its conclusion. One is not dealing here with an appellant who chooses of its own
volition to abandon an appeal because it, on reconsideration, has misgivings about the
merits of the appeal. Nor, is one dealing with an appellant whose attention is drawn by
either this court or its opponent to the fact that the appeal has been wrongly brought to
this court. The appellant in this instance was forced to reconsider its position because
of the death of an opponent - an event beyond its control. Fourth, in filing a
supplementary practice note with this court after the death of Mr Dohmen, it was
patent that the respondents were minded to persist with the appeal. To that extent
they were equally remiss in not appreciating and bringing to the attention of the
appellant and this court that it would be futile for any further steps to be taken in the
prosecution of the appeal as the matter had become academic. Accordingly, the point
had to be raised by this court. Even then there was no real pause for reflection on the
part of the appellant. Undaunted, it filed additional heads of argument, in which it
sought punitive costs from the respondents. Nor, even after further time for reflection,
was there any modification of that stance in argument before us.
[12] Finally, that the parties chose, when the writing was clearly on the wall, to
forego pragmatism for obdurateness is to be decried. The intransigence on the part of
both, no doubt, must have further inflated the considerable costs already incurred,
leaving one to wonder whether the game was indeed worth the candle. In that regard
the following dictum by Harcourt J in Mashaoane v Mashaoane 1962 (2) SA 684 (D) at
687G is apposite:
„However, . . . when a case has to all intents and purposes been settled, apart from the
question of costs, it is undesirable to permit the question of such costs to become an occasion
for incurring a great many further costs and, incidentally, to occupy the time of the Court which
could perhaps have been better spent in the disposal of other litigation. I naturally accept that
the interests of the litigating public are superior to those of the Court in this but the true
interests of the public and the Court probably coincide in this regard and may best be
indicated by repeating the latin phrase: interest rei publicae ut sit finis litium.‟
[13] Thus to the extent that the respondents are also to blame, it seems to me only
but fair that they should bear a portion of their own costs, which I assess to be one
third. In the result, save for ordering the appellant to pay two thirds of the respondents‟
costs, the matter is struck off the roll.
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
M C Erasmus SC
Instructed by:
A B Löwe Attorneys, Pretoria
Honey Attorneys, Bloemfontein
For Respondents:
J Coetzer
Instructed by:
Serfontein Viljoen & Swart, Pretoria
Claude Reid, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
5 March 2015
STATUS
Immediate
Deutsches Altersheim Zu Pretoria v Roland Heinrich Dohmen (34/14) [2015] ZASCA 3 (5 March
2015).
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal
The SCA today handed down judgment in a case concerning the eviction of an elderly man, Mr
Dohmen, (the first respondent) from an Old Age Home, the Deutsches Altersheim Zu Pretoria (the
appellant).
The litigation emanated from a written lease agreement concluded between the parties in March 2007
in terms of which the Old Age Home provided boarding, lodging and care in its frail care section. On
21 September 2009 the Home gave notice of termination of the lease with effect from 31 October
2009 in terms of the agreement. Despite such notice Mr Dohmen refused to vacate the Home. The
Old Age Home then commenced eviction proceedings in the Pretoria Magistrates’ Court and obtained
an eviction court order on 18 March 2011, for Mr Dohmen to vacate the home on or before 30 April
2011. It also ordered him to pay the costs for the eviction on an attorney and own client scale. Mr
Dohmen successfully appealed against the magistrates’ court order to the North Gauteng High Court,
Pretoria.
The Old Age Home then appealed to the SCA against the judgment of the High Court with leave
granted by the former Court. The appeal was set down for hearing in the SCA on 19 February 2015.
On 27 January 2015, the Respondents filed a supplementary Practice Note which revealed that Mr
Dohmen had, in the interim, died on 12 January 2015. From this disclosure the Registrar of the SCA
notified the appellant that it was required to indicate as a matter of urgency whether it still persisted
with the appeal and if so, the parties would be required at the hearing to address whether the
judgment sought will have any practical effect. In response to the registrar’s notice the appellant’s
attorneys wrote a letter on 2 February 2015 in which they said that the judgment of the high court has
far reaching consequences, not only for the appellant, but also for other owners of similar
establishments. Nevertheless, after an exchange of correspondence between the parties the
appellant ultimately accepted that the appeal had no practical effect. What thereafter occupied the
attention of the parties were debates about costs, with the respondents contending that the appellant
must tender their costs and persisting that unless their costs were tendered, the matter must proceed
before the SCA, on the other hand the appellant contended that it was through no fault of the Old Age
Home that the appeal had become academic and accordingly that the correct approach should be
that each party pay their own costs. Resultantly, the SCA convened on 19 February 2015 to resolve
the ancillary issue of costs.
The SCA held that ordinarily where an appeal is withdrawn the appellant is liable for the costs
incurred until the time of the withdrawal. The Court held that there are also cases where the SCA has
made no order as to costs, but those were cases where both parties acquiesced in pursuing an
incorrect procedure. On the other hand where the mootness of an appeal was successfully raised by
the court itself on appeal, the usual order has been that the appellant pays the costs, particularly
where the appellant persisted with the appeal despite its mootness. The SCA held that it is not
deprived in moot cases of its inherent discretion, to make an order as to costs.
The SCA held that in the circumstance of the case, where the both parties chose to forego
pragmatism for obdurateness, further causing considerable costs to be incurred and shared the
blame for persisting with the appeal on the ancillary issue an apportionment of the costs was
warranted. Consequently, the Court ordered that the appellant to pay two thirds of the respondents’
costs.
--- ends ---
|
3468
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1325/2019
In the matter between:
COOPERATIVA MURATORI CEMENTISTI –
CMC Di RAVENNA Società Cooperativa a
Responsabilita Limitata
First Appellant
LIEBENBERG DAWID RYK
VAN DER MERWE NO
Second Appellant
CHRISTOPHER RAYMOND REY N.O.
Third Appellant
and
COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION
First Respondent
ESOR CONSTRUCTION (PTY) LTD
Second Respondent
ABSA BANK LTD
Third Respondent
STEFCOR CONSTRUCTION (PTY) LTD
Fourth Respondent
Neutral citation: CMC v CIPC and Others (1325/2019) [2020] ZASCA
151 (20 November 2020)
Coram:
PONNAN,
WALLIS
and
MOLELMELA
JJA
and
EKSTEEN and MABINDLA-BOQWANA AJJA
Heard:
9 November 2020
Delivered: This judgment was handed down electronically by
circulation to the parties’ representatives by email, publication on the
Supreme Court of Appeal website and release to SAFLII. The date and
time for hand-down of the judgment is deemed to be 09h45 on
20 November 2020.
Summary: Companies Act 71 of 2008 – business rescue – whether
external company can enter business rescue – recognition of foreign
composition among creditors approved by Italian court – who may apply
and basis for recognition.
ORDER
On appeal from: Gauteng Division, Pretoria of the High Court
(Potterill J, sitting as court of first instance):
The application to lead further evidence on appeal is dismissed
with costs on the scale as between attorney and client, including the costs
of two counsel.
The appeal is dismissed with costs, including the costs of two
counsel.
JUDGMENT
Wallis JA (Ponnan and Molemela JJA and Eksteen and
Mabindla-Boqwana AJJA concurring)
[1] The central issue in this appeal is whether a company incorporated
in a country other than South Africa is entitled to take advantage of the
business rescue provisions of the Companies Act 71 of 2008 (the Act).
That issue arose in the following circumstances. The Appellant,
Cooperativa
Muratori
&
Cementisi-CMC
Di
Ravenna
Societá
Cooperativa a Responsibilita Limitata (CMC), is a long-established
company incorporated in Italy and active in the construction industry
internationally. It is registered as an external company in terms of the
Act. In the latter stages of 2018 CMC internationally encountered a cash
flow crisis and significant financial difficulties. This caused it to lodge
with the Court of Ravenna, Bankruptcy Section, a preventive application
for admission to the procedure for the arrangement with creditors
pursuant to article 161 of the Italian Bankruptcy Law. On
7 December 2018 the Court of Ravenna issued an order assigning CMC
sixty days within which to file a proposal for composition with its
creditors; ordered it to submit to possible authorisation requests and to
furnish monthly reports; and appointed three judicial commissioners to
oversee these functions.
[2] Not content with these proceedings in its country of incorporation,
the board of directors of CMC resolved on 14 December 2018 that the
company was financially distressed as contemplated in s 129(1) of the
Act and should be placed under supervision. Pursuant thereto, Messrs
Van der Merwe and Rey, who have played no active role in this litigation,
were appointed as business rescue practitioners (BRPs) to CMC.
However, on 15 February 2019 Mr Rey was advised by the first
respondent, the Companies and Intellectual Property Commission
(CIPC), that because CMC is an external company it could not be placed
under business rescue in terms of the Act. That precipitated the present
application, brought as a matter of urgency on 7 March 2019, for an order
declaring that CMC was under business rescue in terms of the Act,
alternatively declaring that the order issued by the Court of Ravenna was
enforceable in South Africa.
[3] The CIPC was cited as the sole respondent in that application.
However, Esor Construction (Pty) Ltd (Esor), the second respondent;
Absa Bank Ltd (Absa), the third respondent; and Stefcor (Pty) Ltd
(Stefcor), the fourth respondent, sought leave to intervene in the
proceedings. Esor and Stefcor delivered affidavits in opposition to the
relief sought. Stefcor also sought an order for the provisional winding up
of CMC.
[4] The application came before Potterill J in the Gauteng Division of
the High Court, Pretoria. She dismissed CMC’s claims and Stefcor’s
counter-application. The appeal by CMC is with her leave. Only Esor
opposed the appeal. Absa played no active role in the litigation and
Stefcor has indicated that it abides the decision of this court on the
appeal.
Was business rescue available to CMC?
[5] Business rescue is defined in s 128(1)(b) of the Act as meaning
proceedings to facilitate the rehabilitation of a company that is financially
distressed. It does this by placing the company’s affairs under temporary
supervision by a BRP; granting a temporary moratorium on the rights of
claimants against the company or in respect of property in its possession;
and making provision for the approval of a plan to rescue the company by
restructuring its affairs. In terms of s 129(1) the board of a company may
resolve that the company voluntarily begins business rescue proceedings
and place the company under supervision. Any such resolution must be
lodged with the CIPC and the company must appoint a BRP to undertake
the supervision of the business rescue. This is the route that CMC
followed and it appointed Messrs Van der Merwe and Rey as BRPs.
[6] Business rescue is available only to a company. That is defined in
s 1 of the Act as meaning:
‘A juristic person incorporated in terms of this Act, a domesticated company, or a
juristic person that, immediately before the effective date─
(a) was registered in terms of the ─
(i) Companies Act 1973 …, other than as an external company as defined in that Act;
or
(ii) Close Corporations Act 1984 …, if it has subsequently been converted in terms of
Schedule 2;
(b) was in existence and recognised as an ‘existing company’ in terms of the
Companies Act 1973 …; or
(c) was deregistered in terms of the Companies Act 1973 …, and has subsequently
been re-registered in terms of this Act.’
[7] Whether business rescue was available to CMC depended on it
being a company in terms of this definition. In argument it was accepted
that it is not a company in terms of any of the three sub-sections of the
definition. Although it was registered as an external company in terms of
the Companies Act 61 of 1973 (the old Act), sub-section (a) expressly
excludes an external company registered under the old Act and it was
never a close corporation. A company existed and was recognised under
the old Act if it existed and was recognised in terms of the 1926
Companies Act, 46 of 1926, but CMC was not such a company and does
not qualify under sub-section (b). Finally, it was not deregistered under
the old Act so it does not qualify under sub-section (c).
[8] CMC attempted to circumvent this in the following way. The
definition of a 'foreign company' under s 1 of the Act means 'an entity
incorporated outside the Republic' irrespective of whether it is a profit or
non-profit entity, or carrying on business or non-profit activities within
the Republic. The definition of ‘juristic person’ includes a foreign
company and the definition of an ‘external company’:
‘Means a foreign company that is carrying on business, or non-profit activities, as the
case may be, within the Republic, subject to section 23(2).’
[9] The argument proceeded as follows. The definition of 'company'
commences by saying that it is 'a juristic person incorporated in terms of
this Act'. A juristic person includes a foreign company and where that is
carrying on business or non-profit activities within the Republic it is an
external company that is required to register in terms of s 23 of the Act.
The expression 'incorporated in terms of this Act' must therefore be
construed as including a foreign company that had registered in terms of
s 23 of the Act.
[10] There is no merit in this argument, which flies in the face of the
language of the Act. Incorporation and the legal status of companies is
dealt with in Part B of Chapter 2 of the Act. Incorporation takes place in
terms of s 13(1) by the completion and signing of a Memorandum of
Incorporation and filing a Notice of Incorporation with the CIPC. As soon
as possible after accepting the Notice of Incorporation the CIPC assigns a
unique registration number to the company and enters the prescribed
details in the register.1 From the date of registration the company is a
juristic person and exists thereafter until its name is removed from the
register.2 CMC has not been incorporated in terms of this process.
[11] Section 23 of the Act dealing with the registration of foreign
companies is in Part C of Chapter 2 of the Act dealing with
'Transparency, accountability and integrity of companies'. That places it
firmly outside the provisions of the Act dealing with the incorporation of
companies. A foreign company registered as an external company is not
incorporated 'in terms of this Act' as required by the definition of
'company', because it has not been incorporated under the provisions of
the Act that deal with the incorporation of companies.
[12] The final nail in the coffin for this argument is provided by sub-
section (a) of the definition of 'company', which expressly excludes a
1 Section 14(1) of the Act.
2 Section 19 of the Act.
foreign company from being a 'company' under the Act, notwithstanding
that it was registered in terms of the old Act. That shows clearly that
foreign companies were only to be required to register in South Africa for
limited purposes. Where a foreign company is required to comply with
the same provisions of the Act as a domestic company, which is the case
where it wishes to make a public offering of securities in this country in
terms of Chapter 4 of the Act, there is special provision for this. Thus
s 95(1) provides a special definition of 'company' by saying that:
In addition to the meaning set out in section 1, also includes a foreign company.’
That extended definition includes both external companies, that is foreign
companies doing business in South African and registered under the Act,
and any other foreign company that seeks to make a public offer of
securities to the South African public. This is to ensure that any such
offer complies with South African requirements in regard to disclosure
and the like in the making of any such offer. The special definition
reinforces the conclusion that elsewhere in the Act when there is
reference to a company it means a company as defined in s 1. The
inevitable conclusion is that an external company may not be placed
under business rescue and the views of the CIPC that led to this
application were correct.
The Italian proceedings
[13] In the alternative to a declaratory order that the company was in
business rescue, CMC asked for an order in the following terms when
these proceedings were launched in March 2019:
'3.1
the order issued by the Court of Ravenna (Bankruptcy Office) in Italy dated
6 December 2018, granting the Preventative Arrangement sought by the first applicant
in the composition proceedings; ('the Italian order') is hereby recognised in the
Republic of South Africa;
3.2
it is declared that the Italian order is enforceable in the Republic of South
Africa.'
[14] In the English translation annexed to the founding affidavit the
order in question read:
'Assigns the applicant company a deadline of 60 days to file the agreement with
creditors proposal, the certification statement and documentation pursuant to
article 161, sections 2 and 3 of the Bankruptcy Law, or alternatively, the possible
restructuring agreement and the report prepared by the professional certifier, referred
to under section 1 of article 182 bis of the Bankruptcy Law.
Orders the company to submit possible authorisation requests pursuant to article 161,
section 7 of the Bankruptcy Law to the court, and on a monthly basis send a
summarised report, specifying the ordinary and extraordinary magnitude deeds
performed and the payable and receivable transactions that occurred, accompanied by
the bank statements for the relevant period.'
Three individuals were named as judicial commissioners for the purpose
of 'performing the functions referred to in the motivation and any
additional and eventual functions that may become necessary'.
[15] A brief explanatory memorandum by an Italian lawyer indicated
that the process under which the order was made involves an endeavour
by the company to reach an arrangement with its creditors that will enable
it to continue in business. The period of 60 days was directed at enabling
the terms of a proposal to be prepared for submission to creditors. During
that period there appears to be some kind of moratorium on enforcement
of legal claims against the company. On 6 February 2019 the Court of
Ravenna extended the sixty day period until 6 April 2019.
[16] By the time the application was heard by Potterill J matters had
moved on considerably. A plan was lodged with the court on
8 April 2019 and on 12 June 2019 the court granted an order (a) admitting
the company to the pre-insolvency arrangement procedure; (b) appointing
a delegated judge and judicial commissioners; (c) directing that the pre-
insolvency arrangement be communicated to creditors by 31 July 2019;
and (d) providing for a meeting of creditors to be convened by no later
than 13 November 2019 to consider the arrangement.
[17] These changed circumstances did not prompt CMC to amend the
relief it was seeking, namely, the recognition of the order of
6 December 2018. The fact that everything that the Court of Ravenna had
directed should happen in terms of that order had happened and that
further and different orders had been granted was disregarded. It is an
understatement to say that this introduced an air of unreality into the
proceedings.
[18] That air of unreality became even more mystifying after Potterill J
handed down her judgment and granted leave to appeal, because in its
notice of appeal to this court CMC said that, if its argument in regard to
business rescue was not upheld, it would seek in the alternative an order
recognising the order of 6 December 2018. By this stage, as we now
know, the creditors' meetings had taken place and the proposed
composition with creditors approved. This was reflected in CMC's heads
of argument which said that it intended to seek the leave of the court to
adduce further evidence apprising it of the progress of the proceedings in
Italy and the fact that a plan had been approved by the requisite majority
under the Italian Bankruptcy Law. That was on 30 June 2020. The need
for such evidence became clamant when Esor's heads of argument were
filed on 29 July 2020 as they said that they would seek leave to adduce
further evidence that on 29 May 2020, following hearings on
11 and 25 March 2020 the Court of Ravenna had finally approved the
composition on 29 May 2020. In fact they did not do so.
The application to lead further evidence
[19] Notwithstanding the manifest urgency of any application to adduce
further evidence on appeal, nothing was forthcoming until Friday,
6 November 2020, three days before the appeal was to be argued on
Monday, 9 November 2020. This revealed that Esor was correct in saying
that the composition had been approved by a court order granted on
29 May 2020. The composition allegedly dealt with CMC's assets and
liabilities worldwide and the worldwide claims of creditors including
those in South Africa. On 7 August 2020 the Chancellor's Office of the
Court of Ravenna certified that there was no appeal against the order
approving the composition.
[20] The only explanation for this delay was a single paragraph in the
affidavit filed in support of the application, reading as follows:
'In August the courts in Italy are closed for the summer holidays. As a result of this
the decree granted by the Court in Ravenna on the 7th August 2020 was only received
in early September 2020. In addition because of the Covid emergency, obtaining an
appointment for the translation of the decree took some time. Ultimately, the
translation of the decree was only obtained on the 16th October 2020. It was for this
reason that the launch of this application was delayed.'
[21] This explanation was wholly unacceptable as was the delivery of
100 pages of affidavits and annexures in the middle of a court term and
three days before the hearing of the appeal. Describing the explanation as
cursory is to flatter it. The judgment approving the composition reflects
that the president of the court in Ravenna twice directed expedited
hearings in the light of the Covid-19 epidemic and hearings were held
with the use of personal protective equipment and the application of
social distancing guidelines. The judgment showed that the judicial
commissioners supported the composition and only a handful of creditors
expressed objections. These were addressed at a hearing on 20 May 2020
and the judgment approving the compromise was handed down on
29 May 2020. It was translated into English immediately; the translator's
certificate being dated 6 June 2020. This court was not given the
elementary courtesy of it being recognised that adducing additional
evidence required similar urgency from the litigants and their legal
representatives. When this was raised with counsel we were not even
favoured with an apology.
[22] It is inexcusable that this information was not brought to this
court's attention simultaneously with the delivery of the heads of
argument. Instead the heads of argument were inaccurate in saying only
that the creditors had voted in favour of the composition and not
mentioning that it had been approved by the court. There is a cryptic
statement in para 122 of the heads of argument for CMC that CMC is
entitled in its alternative prayer to an order 'recognising the court ordered
arrangement with creditors, granted by the court of Ravenna on
7 December 2018'. It is unclear whether this was possibly hinting at the
order of 29 May 2020. We have no affidavit from the South African
attorney explaining his instructions to counsel and, if they did not refer to
the order of 29 May 2020, why this important information was not
included. Nor do we know whether he was advised by counsel to bring
the application urgently and, if not, why not.
[23] The excuse quoted above in para 20, that the certificate that there
were no appeals pending was only issued on 7 August, when the courts
were closed for the summer holidays, is not born out by the certificate.
That shows that it was issued at the specific request of CMC's lawyer, a
Mr Fabrizio Corsini, on 7 August 2020. It is dated and signed on
7 August and bears what appear to be revenue stamps of four euros. On
the face of it, Mr Corsini had it in his possession on that day and certainly
must have been aware of it. All the relevant information was in the
possession of CMC and its Italian lawyer and should have been in the
possession of its South African lawyer. There was no reason to wait until
16 October 2020 for the certificate to be translated in Italy. There are
Italian translators in this country.3 In any event this uncontroversial
information could have been furnished to the court on the basis of
information and belief in a short affidavit from the South African
attorney.
[24] The additional evidence demonstrated in no uncertain fashion,
what was apparent by the time the case came before the High Court,
namely that the order sought in the original notice of motion and the
notice of appeal had long since ceased to be of any relevance. There is
nothing to recognise in that order. The period it gave CMC to produce a
plan of composition with its creditors has passed and it has done just that.
Everything that has happened since has happened in accordance with
other court orders and provisions of the Italian Bankruptcy Code that
have not been furnished to us.
[25] Mr Brett SC argued that the order of 7 December 2018 was a
process akin to one of judicial management or a section 311 compromise
under the old Act, or business rescue under the Act, and that we should
treat the recognition of the order as a continuation of that process. That is
3 The website of the Italian Consulate has a list of 18 sworn translators.
plainly wrong. An order giving a company a temporary moratorium from
claims while it prepares a plan to place before its creditors is
fundamentally different from an order convening meetings to consider a
plan, or an order approving the adoption of the plan by a meeting of
creditors. Under none of the three processes he identified would an initial
order, for example, the appointment of provisional judicial managers or
an order for meetings to be convened to consider an offer of compromise,
be treated as encompassing the final judicial management order or the
sanction of the compromise.
[26] The last, but by no means the least important, reason for not
admitting this evidence is that, pursuant to it, CMC sought an order, the
effect of which as explained in argument would be to impose upon South
African creditors the terms of the composition approved by the Court of
Ravenna, without their being cited or served or having had any
opportunity to submit evidence or argument against an order having that
effect. That would amount to a wholesale breach of their constitutionally
guaranteed right of access to courts. It cannot be countenanced.
[27] The application to adduce further evidence must be dismissed. An
appropriate penal order for costs should accompany its dismissal.
The alternative relief
[28] For the reasons already canvassed the prayer for alternative relief
in the form of an order recognising the Court of Ravenna's order of
7 December 2018 was moot long before the appeal reached this court.
The prayer was in any event fatally flawed and doomed from the outset to
fail.
[29] In the first place there was nothing in the order of
7 December 2018 that was capable of being enforced or recognised in
South Africa. CMC was given leave to prepare a plan for a composition
with its creditors. It was required to submit certain authorisation requests
and reports to the Court of Ravenna. Neither of those was in any way
executable in South Africa and recognising the order in South Africa
could not possibly have had any effect in this country.
[30] The purpose behind this request was twofold. It was claimed that a
recognition order would put CMC's South African operations under the
supervision of the Board of Commissioners appointed by the Italian court
for so long as the process of securing approval of a composition with
creditors continued in Italy. Second it was suggested that this would
entitle CMC to the same moratorium against claims by creditors in this
country as the Italian proceedings afforded CMC in Italy.
[31] The legal foundation for this was misconceived. Reliance was
placed upon the decision of this court in Jones v Krok4 to claim the
enforcement of the Court of Ravenna's order in this country. But not all
judgments by foreign courts are enforceable in South Africa solely on the
grounds set out in that case. Judgments that determine a party's rights or
status5 are capable of giving rise to a cause of action in South Africa and
Jones v Krok was concerned with that type of case. It was not concerned
with the enforcement in this country of the statutes of other countries
governing matters such as company law or insolvency. There the
4 Jones v Krok 1995 (1) SA 677 (A) at 685B-E; Purser v Sales; Purser and Another v Sales and
Another 2001 (3) SA 445 (SCA) para 11, cited with approval in Government of the Republic of
Zimbabwe v Fick and Others 2013 (5) SA 325 (CC) para 38.
5 LAWSA, Vol 7(1) 3ed (2019) para 369. The most usual cases involve monetary judgments and
claims to specific property. Questions of status such as the grant of a decree of divorce will be more
readily recognized than an order for the custody of a minor child where the interests of the child are
paramount. Righetti v Pinchen and Another 1955 (3) SA 338 (D).
principle that foreign statutes have no extra-territorial effect comes into
play. Absent recognition by our courts in appropriate proceedings the
foreign trustee or liquidator has no authority to deal with assets in this
country and any moratorium operating elsewhere will not bind South
African creditors. 6
[32] In dealing with issues involving foreign liquidators and similar
persons acting in terms of the legislation governing insolvency or
bankruptcy or the winding-up of companies, the established principle is
for the foreign liquidator to apply for recognition in this country. Without
recognition in this country they are not entitled to bring proceedings in a
court in South Africa.7 The court granting recognition will then make an
appropriate order including that they furnish security and will distribute
the assets in this country in accordance with the law of this country.8
Such recognition is granted on terms that protect the position of local
creditors holding security for their claims under domestic law and the
powers to be exercised by the foreign liquidator will be dealt with in the
recognition order.9
[33] If anyone were to seek recognition in this country of the order of
the Court of Ravenna it would have to be the Judicial Commissioners,
who appear from the sparse information in the founding affidavit to play
some kind of oversight role in relation to the process of arriving at and
securing the approval of a composition. But they do not appear to hold a
position similar to a trustee or liquidator who is charged with the
6 Ward and Another v Smit and Others: In re Gurr v Zambia Airways Corporation Ltd 1998 (3) SA 175
(SCA) at 179D-J.
7 Moolman v Builders & Developers (Pty) Ltd (in provisional liquidation) 1990 (1) SA 954 (A) at
959E-960 C.
8 Donaldson v British South Africa Asphalt and Manufacturing Co Ltd 1905 TS 753 at 756-757,
9 Re African Farms Ltd 1906 TS 373.
possession of the assets of the company and owes a duty to creditors to
deal with their claims. Judging by the judgment of 29 May 2020, which is
the only source available to us, their role is to report to the court on the
fairness of the composition. Nevertheless, if anyone was to apply for
recognition in this country it would be them and they have brought no
such application. On the face of it the claim that the order of the Court of
Ravenna be recognised in this country is brought by a party (CMC) that
has no right to seek such an order.
[34] For those further reasons the application for the alternative order
was as misconceived as the application for the main order.
Result
[35] Both the application to lead further evidence and the appeal must
be dismissed. To show the court's disapproval of the manner in which the
application to lead further evidence was brought, its dismissal will be
accompanied by an order that it pay the costs on an attorney and client
scale. The following order is made;
The application to lead evidence on appeal is dismissed with costs
on the scale as between attorney and client, including the costs of two
counsel.
The appeal is dismissed with costs, including the costs of two
counsel.
____________________
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
JJ Brett SC (with him D Mahon)
Instructed by:
Terry Mahon Attorneys, Sandton;
Webbers, Bloemfontein
For second respondent: WG La Grange SC (with him AC Russell)
Instructed by:
Tiefenthaler Attorneys Inc, Rivonia;
Honey Attorneys Inc, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
FROM The Registrar, Supreme Court of Appeal
DATE 20 November 2020
STATUS Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment.
CMC v CIPC and Others (1325/2019) [2020] ZASCA 151
(20 November 2020)
The SCA today dismissed an appeal by Cooperativa Muratori & Cementisi-
CMC Di Ravenna Societá Cooperativa a Responsibilita Limitata (CMC), a long-
established company incorporated in Italy and active in the construction
industry internationally and registered as an external company in terms of the
Companies Act 71 of 2008. In 2018 it experienced financial difficulties and
approached the Court of Ravenna (Bankruptcy Section) for relief in terms of the
Italian Bankruptcy Law. The relief it sought was for it to be given time to prepare
a plan for the conclusion of a composition with its creditors. An order was made
on 7 December 2018 granting it sixty days within which to file a proposal and
imposing certain reporting obligations. Three judicial commissioners were also
appointed.
On 14 December 2018 the board of directors of CMC passed a resolution
placing it under business rescue in South Africa. Business rescue practitioners
were appointed, but in February 2019 they were informed by the CIPC that a
foreign company, even if registered as an external company, was not entitled
to enter business rescue in South Africa. An application for urgent relief that
CMC was validly under business rescue was dismissed by the Gauteng
Division of the High Court, Pretoria. The appeal against that order was
dismissed by the SCA on the basis that the definition of 'company' in the
Companies Act excluded a foreign company, even if registered as an external
company under the Act. It followed that it was not capable of being placed under
business rescue in South Africa.
The high court had also dismissed an application in the alternative for the
recognition of the order of the Court of Ravenna. The appeal against that order
was likewise dismissed. The SCA held that the order was moot and the basis
for seeking it misconceived. All the events contemplated in the order of
7 December 2018 had occurred and been overtaken by subsequent events
including subsequent decisions by the Court of Ravenna. The order had been
given by an Italian court under Italian legislation and had no extra-territorial
effect. Unless recognition was given by a South African court to a foreign
liquidator or trustee or similar person, they would have no standing in South
Africa to act in terms of their appointment in another country. The application
was not brought by the judicial commissioners appointed in Italy and could not
be brought by CMC.
|
3270
|
non-electoral
|
2007
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
REPORTABLE
CASE NO 690/06
In the matter between
THE DIRECTOR OF PUBLIC PROSECUTIONS,
WESTERN CAPE
Appellant
and
PAUL KILLIAN
Respondent
________________________________________________________________________
CORAM:
HOWIE P, FARLAM, MTHIYANE, HEHER et PONNAN
JJA
________________________________________________________________________
Date Heard:
6 November 2007
Delivered:
30 November 2007
Summary: A criminal trial is not unfair, fundamentally or at all, simply because
the prosecutor also interrogated the accused at an earlier statutory inquiry at which
the latter was denied the right to silence and the right against self-incrimination
Neutral Citation: This judgment may be referred to as DPP, Western Cape v Killian
[2007] SCA 169 (RSA)
________________________________________________________________________
HOWIE P
HOWIE P
[1] The issue in this appeal is whether a criminal trial is unfair, to the
extent of being entirely vitiated, because the person who officiated as
prosecutor also interrogated the accused in an earlier statutory inquiry, the
provisions regulating which denied the interrogatee the right to silence and
the right against self-incrimination.
[2] The first respondent, whom, for convenience, I shall call the
respondent, was convicted and sentenced in a regional court in respect of
one count of fraud and 23 counts of theft. Apart from appealing against his
convictions and the various sentences imposed he also instituted review
proceedings. The appeal has yet to be heard.
[3] The review application came before Motala and Bozalek JJ in the
Cape High Court. The learned Judges allowed the application but granted
leave for this appeal. (Also cited as respondents were the trial magistrate and
the Minister of Justice and Constitutional Development but they did not
participate in the proceedings in either court.)
[4] The interrogation was conducted in terms of the Investigation of
Serious Economic Offences Act 117 of 1991 (the Act) which was
subsequently repealed.1 Section 5(6) empowered the Director of the Office
for Serious Economic Offences to summon to an inquiry anyone believed to
be able to furnish information on the subject of the inquiry. The provision
denying the right against self-incrimination was contained in s 5(8)(a) and
the right to silence was effectively denied by s 5(10)(b) and (c) which, on
pain of prosecution, compelled the interrogatee to be sworn (or to affirm)
and ‘to answer fully and to the best of his ability’ any question lawfully put.
Section 5(8)(b) provided that no evidence regarding any questions and
answers at such an inquiry was admissible in criminal proceedings (save, of
course, if the charge were one of statutory perjury or of contravening s
5(10)).
[5] In the court below and in the respondent’s heads of argument the
constitutionality of those provisions was challenged. That challenge was
abandoned on appeal. Also advanced in the respondent’s heads of argument
but not pursued in oral argument on appeal were, firstly, submissions
purporting to assess the impact of the aforementioned provisions of the Act
on the fairness of the interrogatee’s subsequent trial and, secondly,
submissions based on a line of American cases beginning with Kastigar v
1 The repeal was effected by the National Prosecuting Authority Act 32 of 1998 which replaced the Act,
enacting similar provisions to those involved here.
United States2 which constitute authority for the proposition that neither
direct nor derivative use may be made of evidence obtained at an inquiry
such as that which was involved here. It is consequently unnecessary to
evaluate those submissions for present purposes. Obviously the implications
of compulsory testimony at the inquiry are the same even if the prosecutor is
entirely unconnected with the interrogation and the Constitutional Court, in
Ferreira v Levin NO3, declined to follow the Kastigar line of authority in so
far as derivative use is concerned.
[6] At the inquiry the respondent was represented by counsel, Mr R
Goodman. The person who conducted the inquiry was Mr T Estié, a
member of the office for Serious Economic Offences.
[7] Mr Estié compiled a report concerning the inquiry. It concluded with a
recommendation that the respondent be prosecuted on a multiplicity of
charges including those on which he was eventually convicted. The
recommendation was accepted.
[8] Pursuant to the recommendation the respondent was criminally
charged. The prosecutor at the trial, Mr P Snyman, was briefed with a copy
2 406 US 441 (1972).
3 1996 (1) SA 984 (CC) paras 104, 106-9, 133-140, 141-5 and 146-153.
of the report and a transcript of the inquiry evidence, including that of the
respondent. The respondent was represented throughout the trial by Mr R
McDougall, SC. During the trial Mr Snyman fell ill. Because a substitute
other than Mr Estié would have required considerable time to become
sufficiently acquainted with the case, the prosecuting authority decided, in
order to avoid prejudicial delay to the respondent, to assign the continuation
of the prosecution to Mr Estié. The latter completed the State case and
cross-examined the respondent when he testified in his defence.
[9] In his founding affidavit in support of the review the respondent
claimed that the trial was unfair for the following reasons:
‘19.1 I had no right to refuse to answer any question at the interrogation. If I had
refused, the person who had to decide if I must furnish an answer to such question was
the person asking the question, Advocate Estié. He was both “the judge and jury”. No
independent arbitrator was appointed to whom I could have appealed to stop Advocate
Estié eliciting answers from me unfairly.
19.2
I was the target of the inquiry conducted by Advocate Estié. I was called upon to
answer the questions of Advocate Estié after the matter had been fully investigated by
him. As can be seen from the record of such interrogation, the questions put to me were
not aimed at investigating the facts but were aimed at eliciting in detail, and did elicit in
detail, my defence to the charges. Such information extracted from me guided the
prosecution in the presentation of its case and in the cross-examination of myself during
the criminal trial.
19.3
I had to answer the questions posed to me without having knowledge or sight of
the evidence against me and without having had legal advice on such evidence.
Numerous admissions were extracted from me during the interrogation, which
admissions were made without full knowledge of the facts and which then carried a
criminal sanction if I later wanted to amend or change such admissions.
19.4
During my cross-examination at the trial, evidence obtained during Advocate
Estié’s inquiry and not presented during the State case was put to me by Advocate Estié,
unfairly I submit. I refer in this regard to the cross-examination relating to what Mr
Hewat is purported to have said to Advocate Estié.
19.5
When Advocate Estié cross-examined me during the criminal trial, I understood
that he was questioning me with the full knowledge of what had transpired during the
inquiry and with the knowledge of the answers he had extracted from me. His
understanding of my defence case was unique as he knew in advance what the answer to
his question would be. Furthermore, because I had given answers at the inquiry without
knowing the full ambit of the evidence, such answers were also not full and complete. I
was faced however with the dilemma during cross-examination at my trial that if I
changed my evidence at all I would be faced with criminal sanctions and my credibility
would suffer. I believe that the Regional Magistrate’s findings on my credibility resulted
from my dilemma.
19.6
I submit that my interrogation by Advocate Estié was geared towards a
prosecution and as I was the pioneer of the scheme that was the subject of his inquiry I
was therefore more than a suspect; I was the person against whom the State was building
a case. The search and seizure of all my documents, the fact I was called in for
questioning right at the end of the investigation and the type of questions posed to me,
prove this.’
He went on to say in the next paragraph:
‘20.
The issue of Advocate Estié becoming a prosecutor in the matter was never raised
or discussed with me during the trial by my then counsel or attorney.’
[10] Counsel for the respondent at the inquiry raised no objection or
complaint during the interrogation that the questions, or the manner in which
they were put, were unfair.
[11] When Mr Estié took over the prosecution no objection was raised
against his doing so. Nor was any objection made at the start, or even at any
time during, the respondent’s cross-examination, either with regard to
Mr Estié’s role as prosecutor or in relation to the content or manner of his
questioning.
[12] When, during the trial, Mr Estié sought to cross-examine the
respondent on evidence at the inquiry given by someone not called as a
witness in the trial, Mr McDougall successfully objected to that line of
questioning. The respondent was accordingly protected from any potential
unfairness inherent in what was sought to be put.
[13] The trial magistrate made credibility findings adverse to the
respondent but despite the latter’s assertions in para 19.5 of his founding
affidavit4 it has not been demonstrated, or alleged (other than the belief
referred to in the last sentence of para 19.5), that any of such findings were
the product of cross-examination based on the respondent’s inquiry evidence
or attributable to Mr Estié’s knowledge of such evidence.
[14] In observance of the prohibition in s 5(8)(b) of the Act against direct
use of the inquiry evidence in the trial, there was indeed no such use. Nor,
bearing in mind the dicta in Ferreira v Levin NO5 concerning derivative use
subject to the trial court’s role in determining the fairness of such use, was
there any derivative use made, or even sought to be made. That is to say, no
evidentiary derivative use. What the defined issue may well be said to
encompass (and I shall revert to this) is whether there was what one might
call non-evidentiary derivative use, in so far as Mr Estié was able, with
knowledge of the inquiry evidence, to shape his cross-examination as far as
4 See para 9 above.
5 1996 (1) SA 984 (CC) para 153.
possible to attack the respondent’s credibility and thereby to defeat his
defence.
[15] The court below found in the respondent’s favour that it was grossly
irregular for the prosecution to have had a transcript of the respondent’s
inquiry evidence and for Mr Estié to have conducted part of the prosecution
case. In the court’s view those features vitiated the trial and the respondent’s
failure to object relevantly during the criminal proceedings was clearly due
to his ignorance that they were irregularities. The reasoning of the court a
quo is illustrated by the following passage in its judgment:
‘In my view, those two factors, cumulatively at least constituted irregularities which
rendered the trial unfair. It does not require much imagination or experience to appreciate
the immense advantage gained by a prosecutor who has in his or her possession the
sworn statement or testimony of an accused or who has previously interrogated that
person in relation to the same subject matter. My conclusion is reinforced by the fact that
the prosecuting authority, despite its opposition to this application, appears to share my
view. Annexed to applicant’s replying affidavit is an affidavit by Mr W Hofmeyer the
Deputy Director of Public Prosecutions in charge of the Asset Forfeiture Unit. In
countering a challenge to the constitutionality of section 26(6) and 27 of the Prevention
of Organised Crime Act , No 121 of 1998, which Act provides for a process similar to
that created by the impugned provisions of ISEO and the NPAA, he said the following:
“Firstly, the purpose is not to use information acquired from these affidavits as evidence
against the deponent in a criminal case, except in cases of perjury. For this reason, the
Unit has a policy in terms of which disclosures obtain pursuant to chapter 5 proceedings
are strictly withheld from the criminal investigation and prosecution teams. This is
demonstrated by the inclusion of paragraph 1.20 in the Order of 13 July 2001 and
generally in all other restraint orders. I repeat that undertaking herein.”’ (Underlining by
the court below)
[16] An accused person has a constitutional right to a fair trial.6 The word
‘includes’ in the first line of s 35(3) of the Constitution indicates that
fairness extends beyond the specific matters listed in the subsection. Fairness
6 Section 35(3) of the Constitution reads:
Every accused person has a right to a fair trial, which includes the right -
(a) to be informed of the charge with sufficient detail to answer it;
(b) to have adequate time and facilities to prepare a defence;
(c) to a public trial before an ordinary court;
(d) to have their trial begin and conclude without unreasonable delay;
(e) to be present when being tried;
(f) to choose, and be represented by, a legal practitioner, and to be informed to this right promptly;
(g) to have a legal practitioner assigned to the accused person by the state and at state expense, if
substantial injustice would otherwise result, and to be informed of this right promptly;
(h) to be presumed innocent, to remain silent, and not to testify during the proceedings;
(i) to adduce and challenge evidence;
(j) not to be compelled to give self-incriminating evidence;
(k) to be tried in a language that the accused person understands or, if that is not practicable, to have
the proceedings interpreted in that language;
(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) not to be tried for an offence in respect of an act or omission for which that person has preciously
been either acquitted or convicted;
(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; and
(o) of appeal to, or review by, a higher court
Subsection (5) adds:
Evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if the
admission of that evidence would render the trial unfair or otherwise be detrimental to the administration of
justice.
must be substantive, not just procedural.7 It therefore entails more than the
‘formalities, rules and principles of procedure according to which our law
requires a criminal trial to be initiated or conducted’.8 It was the breach of
those formalities, rules and procedures which the legislature had in mind in
enacting the provision in s 309(3) of the Criminal Procedure Act 51 of 19779
(and its precursors) and in referring in the proviso to an ‘irregularity’. Long-
established case law based on the proviso has distinguished between an
irregularity which vitiates the whole trial and one which may yet leave proof
of guilt sufficiently established. In the present case what we are concerned
with is not, strictly, whether there was an irregularity within the meaning of
the Criminal Procedure Act but whether there was, constitutionally speaking,
unfairness to the respondent in the fact that Mr Estié acted as prosecutor and,
if so, whether such unfairness was so fundamental that the trial verdict
cannot be allowed to stand. This is the issue I have endeavoured to
formulate in para [1] above.
7 Schabir Shaik v The State (unreported) Constitutional Court case 86/06 para 45; [200] JOL 20751(CC)
8 S v Zuma 1995 (2) SA 642 (CC) para 16, citing S v Rudman 1992 (1) SA 343 (A).
9 Section 309(3) reads:
‘The provincial or local division concerned shall thereupon have the powers referred to in section 304(2),
and, unless the appeal is based solely upon a question of law, the provincial of local division shall, in
addition to such powers, have the power to increase any sentence imposed upon the appellant or to impose
any other form of sentence in lieu of or in addition to such sentence: Provided that, notwithstanding that
the provincial or local division is of the opinion that any point raised might be decided in favour of the
appellant, no conviction or sentence shall be reversed or altered by reason of any irregularity or defect in
the record or proceedings, unless it appears to such division that a failure of justice has in fact resulted from
such irregularity or defect.’
[17] Turning to that issue, and beginning with the findings and reasons of
the Court below, counsel for the respondent did not rely in this court on the
prosecution’s possession of the inquiry record, or the suggested ignorance on
the part of the respondent or on the Asset Forfeiture Unit’s alleged policy.
Counsel’s approach was understandable.
[18] As to the prosecution’s possession of the inquiry record, the Act’s
primary objective was the investigation and prosecution of serious economic
crimes. It would have been illogical and self-defeating, to say the least,
having obtained an inquiry report recommending criminal proceedings, to
have withheld the report and the inquiry record from the prosecutor. The
latter would surely have required to be fully briefed so as to make the
optimum permissible use of available evidence and to determine where to
look for further evidence. Presentation of the prosecution case was
inevitably (and sufficiently) subject to the bar against direct use of the
inquiry evidence and, further, subject to the trial court’s control of the use of
derivative evidence in general and derivative use of the accused’s inquiry
evidence in particular. By those measures fairness in the ensuing trial was
adequately capable of achievement. The prosecution’s mere possession of
the inquiry record has not been shown to have prejudiced the fairness of the
trial in fact.
[19] In so far as the suggested ignorance of the respondent is concerned
regarding the alleged irregularities which the court below found to have
occurred, this was not something which the respondent alleged in his
founding or replying affidavits. What he said was that Mr Estié’s taking over
the prosecution was not raised or discussed with him by his legal advisors.
He did not say it was a matter which never occurred to him to raise with
them or, more specifically, that it was a matter the implications of which he
was unaware.
[20] Then, as regards the alleged policy of the Asset Forfeiture Unit, this
was a subject which was raised for the first time in the respondent’s replying
affidavit. It was therefore not canvassed as an issue in the review
proceedings. What motivated the alleged policy one does not know. As far
as one can judge the alleged policy might have been influenced by the
intention to avoid a prosecutor’s potential direct or derivative use of an
accused’s evidence obtained under statutory, pre-trial, measures which could
have had the effect of applying pressures affecting, or possibly affecting, its
trial admissibility. If so, the considerations influencing the policy would
have been the same as those potentially relevant to fairness in the instant
case. In that event they add nothing to the issue. If they were based on other
considerations, they cannot assist.
[21] Of the reasons of the court below there remains the matter of Mr
Estie’s dual role of initial interrogator and subsequent prosecutor. As I have
indicated, it is that that has given rise to the issue for decision in this court.
[22] The court below referred to the ‘immense advantage’ to the prosecutor
of, inter alia, having personally conducted the prior interrogation. It is not
clear, on the facts of this case, how Mr Estié was in a better position (an
unfairly superior position, one has to say) than Mr Snyman, in having
conducted the inquiry. The only possible advantage one can envisage is that,
although not apparent from the transcript, Mr Estié would have been aware
(if they existed) of instances when the respondent appeared plainly
uncomfortable or at a loss when specific issues were canvassed, so that those
could be concentrated upon in cross-examination. However, it is not readily
conceivable that the respondent would not himself have remembered such
occasions and therefore have been in a position to brief counsel to object
accordingly. In all other respects Mr Estié would not have been able to make
any better non-evidential derivative use of the inquiry proceedings than Mr
Snyman.
[23] It is true that cases might occur in which the accused is unable to
afford legal representation at either the inquiry10 or the trial but that is no
argument in favour of an absolute ban on a dual role. The case of Ferreira v
Levin NO makes it clear that derivative use is not absolutely excluded but is
subject to the trial court’s rulings according to what is fair. What applies to
evidential derivative use must, in my view, apply equally to non-evidential
derivative use. It follows that in the case of the envisaged impecunious
accused a trial court would be obliged to exercise extra vigilance to ensure
the maintenance of the required fairness.
[24] Counsel for the respondent called in aid certain passages in the recent
Constitutional Court judgment in the case of Schabir Shaik v The State11
more particularly in paras 51 to 68. In my view they do not assist the
respondent. The prosecutor in that case did not interrogate the accused at a
prior statutory inquiry (under the National Prosecuting Authority Act). The
court was therefore not called on to decide whether fulfilment of the
particular dual role in issue here would per se have involved a trial
unfairness to the accused. If anything, the judgment seems to indicate that
10 Now in terms of the National Prosecution Authority Act – see footnote 1.
11 See footnote 7.
the determination of unfairness would depend on other, factual,
considerations, not simply on the fact of the dual role.
[25] As counsel for the respondent developed his argument before us, the
thrust of it appeared to be that Mr Estié’s earlier role as interrogator robbed
him of the impartiality or lack of bias required of a prosecutor. That seems to
me also to raise an ad hoc issue of fact and not to compel a universal
conclusion of procedural law. In paras 65 to 68 of the Constitutional Court
judgment in the Shaik case12 it is explained that additional knowledge and
understanding which a prosecutor obtains in an investigatory position cannot
amount to bias or prejudice. Rather, having regard to case law, what one
would look for to establish a prosecutor’s lack of impartiality would be, for
example, the waging of a personal vendetta, impairing the conduct of the
proceedings and the dignity of the court, or using the same office as the trial
judge’s assessors.
[26] Counsel for the respondent also referred us to an unreported High
Court review case13 involving a series of prosecutions under prison
regulations, where the same person gave prosecution evidence in one case
and prosecuted in another. The caveat was understandably expressed in the
12 See para 24 above.
13 GR Els v FS Gericke and others, Cape Provincial Division, judgement delivered on 23 December 1963.
judgment that care should be taken to avoid the impression that a prosecutor
is biased towards the accused. One would readily agree. However bias is not
per se to be inferred from Mr Estié’s dual role in this case.
[27] To the extent that the determination of what is fair or unfair in a
particular case may depend on the accused’s subjective view of the
proceedings or their surrounding circumstances, one cannot expect a court in
the absence of objection by the accused to guess what that view is if there
are no facts or circumstances which should reasonably prompt the court to
inquire and investigate. Of course there is no onus on an accused in this
regard and there can be no waiver of the right to a fair trial. At the same time
the absence of a defended accused’s objection to the prosecutor’s
involvement or the prosecutor’s cross-examination is a factor which can
reasonably induce the court to infer that the accused has no intention to
allege prosecutorial unfairness. No such intention was evinced in the present
case. This is no doubt why counsel for the respondent was driven to submit
that fulfilment of the dual role of interrogator and prosecutor was
axiomatically unfair.
[28] Counsel sought to base that submission on cases such as S v Moodie14
and S v Mushimba.15 The former involved the deputy sheriff of the court
concerned being secluded with the jury, and the latter involved an illegal
breach of the accused’s attorney and client privilege. Both cases constitute
very obvious examples of circumstances which rendered the respective trials
fundamentally unfair procedurally at the times at which they were decided
and which would render them substantively unfair now. The question
remains whether the prosecutor’s dual role in this case created a substantive
unfairness per se. Neither precedent nor principle persuades me that it did.
Whether fulfilment of that dual role does involve or bring about substantive
unfairness in an ensuing criminal trial will be a matter to be decided on the
facts of each case by the trial court. Unfairness does not flow axiomatically
from a prosecutor’s having had that dual role.
[29] The appeal must consequently succeed and the order of the court
below ought to have been one dismissing the application. Counsel for the
appellant asked for cost in both courts. Because the respondent sought to
enforce his constitutional right to a fair trial, and the issue in both courts was
whether that right had been infringed, I think that he should not be made to
14 1961 (4) SA 752 (A).
15 1977 (2) SA 829 (A).
pay the costs. It seems to me that this approach is consonant with
constitutional litigation and jurisprudence.
[30] The appeal is accordingly dismissed. The order of the court below is
set aside and substituted by the following:
‘The application is dismissed.’
______________________
CT HOWIE
PRESIDENT
SUPREME COURT OF APPEAL
CONCUR:
FARLAM JA
MTHIYANE JA
HEHER JA
PONNAN JA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
DPP, WESTERN CAPE V KILLIAN
FROM:
The Registrar, Supreme Court of Appeal
Date:
30 November 2007
Status:
Immediate
Today the Supreme Court of Appeal upheld the appeal of the Director of
Public Prosecutions against an order of the Cape High Court which set
aside the convictions and sentences of Paul Lawrence Killian of Cape
Town on various regional court charges arising out of a failed property
acquisition scheme in the Paarl area. Killian lodged an appeal which is
yet to be heard. He also brought a review application, alleging that his
trial was fundamentally unfair, amongst other reasons because the same
person who prosecuted him, had interrogated him at an earlier inquiry
under the now repealed Serious Economic Offences Act. By law he was
compelled to testify at the inquiry and also could not rely on the right
against self-incrimination. The High Court decided the review in his
favour, holding that it was unfair for the prosecution to posses the inquiry
record and for the prosecutor to have been the interrogator at the inquiry.
The Supreme Court of Appeal decided that the trial was not unfair in
either respect. Firstly, the statute governing the inquiry forbade direct use
of the inquiry evidence in a subsequent criminal trial and Constitutional
Court jurisprudence laid down that derivative use of the inquiry evidence
was subject to the control of the criminal court which would itself decide
on the fairness of such use. In Killian’s case there was neither direct nor
derivative use of the inquiry record.
As to the dual role of the prosecutor, the court of appeal held that this was
not an unfairness in itself and had not been objected to at any time in the
trial. It had also not been shown that the prosecutor had any specific
advantage which another prosecutor would not have had.
The High Court should therefore have dismissed the review.
|
1552
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case Nos: 237/08 and 467/08
J H JANSE VAN RENSBURG NO
1st Appellant
P FOURIE NO
2nd Appellant
J L LUBISI NO
3rd Appellant
L M MALATSI-TEFFO NO
4th Appellant
E M MOTALA NO
5th Appellant
RM KGOSANA NO
6th Appellant
and
A J STEENKAMP
1st Respondent
N J JANSE VAN RENSBURG
2nd Respondent
AND
J H JANSE VAN RENSBURG NO
1st Appellant
P FOURIE NO
2nd Appellant
J L LUBISI NO
3rd Appellant
L M MALATSI-TEFFO NO
4th Appellant
E M MOTALA NO
5th Appellant
RM KGOSANA NO
6th Appellant
and
J J MYBURGH
1st Respondent
D M VAN DER MERWE
2nd Respondent
J P VAN DER WESTHUIZEN
3rd Respondent
Neutral citation: Janse van Rensburg NO v Steenkamp (237/08 and 467/08) [2008] ZASCA 154
(27 November 2008)
Coram:
FARLAM, CAMERON, MTHIYANE, HEHER JJA and KGOMO AJA
Heard:
14 NOVEMBER 2008
Delivered:
27 NOVEMBER 2008
Corrected:
Summary:
Practice – res judicata – liquidators’ reliance on different sections of Insolvency Act
24 of 1936 in consecutive proceedings to set aside dispositions – not giving rise to
issue estoppel – reliance on ‘once and for all’ rule – not justified.
____________________________________________________________________
_
ORDER
__________________________________________________________________
On appeal from: High Court, Pretoria (Basson, Mavundla JJ and Sithole AJ
sitting as court of first instance, in appeal 237/2008; Murphy J similarly, in appeal
467/2008).
1.
The appeals succeed in Appeal Nos 467/2008 and 237/2008.
2.
The orders of the courts a quo are set aside.
3.
For the order made in case no 18109/2005 there is substituted the following
order:
‘
1. An order is made in terms of paragraphs 1 and 2 of the notice of motion.
2. The respondents are ordered to pay the costs jointly and severally, the one
paying the other to be absolved, including the costs of two counsel where employed.’
4.
The respective orders made in case nos 14010/2005, 14428/2005 and
18764/2005 are substituted by the following orders:
‘
1. The special pleas of res judicata and lis alibi pendens are dismissed.
2. The defendants are ordered to pay the costs jointly and severally the one
paying the others to be absolved, including the costs of two counsel where
employed.’
5.
The costs of the respondents Steenkamp, Myburgh and Van der Merwe in
their respective appeals are to be costs in the estate in liquidation. The respondent
Van der Westhuizen is to pay the costs of the liquidators in respect of his appeal.
No order is made in respect of the respondent Janse van Rensburg.
6.
Any party aggrieved by the orders for costs may, within fifteen days after
this judgment is delivered, on notice to all other parties, apply to be heard on the
question of such costs.
____________________________________________________________________
_
JUDGMENT
__________________________________________________________________
HEHER JA (Farlam, Cameron, Mthiyane JJA and Kgomo AJA concurring):
[1] There are two appeals before us. In both the appellants are the liquidators of
those entities through which the notorious Krion scheme was operated.1
[2] The common question is whether the liquidators should be permitted to
proceed with actions against the respondents in reliance upon s 26 or s 29 of the
Insolvency Act 24 of 1936 or whether they are barred from so doing by reason of
their failed reliance on s 30 of that Act in the Fourie case and the order made on
appeal there pursuant to s 26.
[3] There are five respondents, Messrs Steenkamp and Janse van Rensburg (in
Appeal no 237/2008) and Messrs Myburgh, Van der Merwe and Van der Westhuizen
(in Appeal no 467/2008).
[4] After judgment was delivered by this Court in the Fourie case all the
respondents were served with civil summonses issued on behalf of the liquidators.
The grounds of each action were substantially the same: the liquidators claimed an
order in terms of s 26 setting aside dispositions made without value prior to six
months before date of liquidation and an order in terms of s 29 setting aside
dispositions made within six months of that date which had the effect of preferring
the respondent above other creditors and payment of the amounts of the said
dispositions.
[5] All the respondents pleaded to the claims. They placed in issue the right of the
1 For particulars of which see Fourie and others v Edeling and others [2004] ZASCA 28 (1 April 2004); [2005] 1
All SA 393 (SCA).
liquidators to rely on either s 26 or 29 because of the judgment in the Fourie case
and raised defences of res judicata, issue estoppel and lis pendens and ‘election’ (ie a
combination of a decision taken prior to or during the Fourie litigation to found their
claims on ss 26 and 30 to the exclusion of s 29 and an
averment that the plaintiffs were bound to invoke all their remedies in one action).
[6] The present respondents were by no means the only objects of the liquidators’
attention since the numbers of summonses issued exceeded 6000. Anticipating similar
wide-spread resistance to their claims the liquidators were naturally disinclined to
proceed further without testing the strength of the defences. After negotiation with
attorneys representing Steenkamp they launched motion proceedings in the Pretoria
High Court (under Case No 18109/2005) against him in which they claimed
substantive relief in the following terms:
‘1.
It be declared that the Applicants (namely the liquidators of MP Finance Group CC (in
liquidation)) are entitled to institute a claim against the defendant in terms of Section 29 of the
Insolvency Act, 24 of 1936 (as amended) and are not precluded from doing so by the judgment of
the Supreme Court of Appeal under SCA case number 522/2003.
2.
It be declared that the fact that the Respondent may have been a party to proceedings under
Transvaal Provincial Division case number 1288/03 does not preclude the Applicants from
instituting a claim against the Respondent in terms of Section 29 of the Insolvency Act, 24 of 1936
(as amended), in this matter.’
[7] During the course of the proceedings Janse van Rensburg was joined as a
respondent at his request. He traversed a number of additional defences in his
answering affidavit which had no bearing on the scope of the intended test case. In its
judgment the court a quo did not deal with the merits of those defences, a number of
which were patently at odds with aspects of the judgment in Fourie’s case.
[8] The application was argued on the basis of a statement of common-cause facts:
‘1.
The Applicants are the liquidators of the Krion scheme – the consolidated entity referred to
as MP Finance Group CC.
2.
The Krion scheme was at all relevant times insolvent in that its liabilities exceeded its assets.
3.
The scheme made certain dispositions to the Respondent and the relevant dispositions by the
scheme were made within the period of six months before the date of winding-up.
4.
The winding-up occurred on 4 June 2002.
5.
The scheme was unlawful.
6.
The dispositions made by the scheme were not made in the ordinary course of business.
7.
The deposits by and payments to the Respondent are as set out in paragraph 14.2 of the
founding affidavit.
8.
Some depositors (also participants in the scheme) received payments during the six-month
period, while others did not.
9.
Case number 1288/03 did not deal with Section 29 claims and neither the Transvaal
Provincial Division judgment nor the judgment of the Supreme Court of Appeal dealt with or
referred to section 29.
10.
A portion of the Applicants’ claim against Respondent is made in terms of Section 29.’
[9] The court a quo made the following order:
‘46.1 The applicants [the liquidators] are not entitled to institute a claim against the respondents in
terms of Section 29 of the Insolvency Act and are precluded from doing so by the judgment of the
Supreme Court of Appeal in Fourie N.O. and others v Edeling N.O. and others [2005] All SA 393
(SCA) per Conradie JA.
46.2
The fact that the respondents may have been party to proceedings in the Transvaal
Provincial Division case number 1288/2003 precludes the applicants from instituting a claim
against the respondents in terms of Section 29 of the Insolvency Act.
46.3
The application for a declarator is dismissed.
46.4
The applicants are to pay the respondents’ costs, including the costs of two counsel.’
[10] The actions instituted by the liquidators against Myburgh, Van der Merwe and
Van der Westhuizen proceeded to trial in the Pretoria High Court. The parties agreed
that all three should be decided together according to the issues raised in the
(identical) special pleas without the assistance of evidence. In a carefully considered
judgment Murphy J upheld the special plea of res judicata and dismissed the
liquidators’ actions with costs including those of two counsel.
[11] Both courts granted the liquidators leave to appeal to this Court. Before us the
respondents Steenkamp, Myburgh and Van der Merwe were represented by Mr
Strydom and Mr Van Tonder while Mr Van der Merwe appeared for Van der
Westhuizen. There was no appearance for Janse van Rensburg. There was a
substantial over-lapping of arguments for the respondents but it will not be necessary
to distinguish between them for the purpose of reaching a decision.
[12] Because the judgments of the lower courts and the submissions on appeal
proceeded on the basis of what this Court decided in the Fourie appeal, it will be
appropriate to summarise briefly the main aspects of that judgment.
[13] Fourie was an appeal from a judgment of Hartzenberg J. The order made by the
learned judge (in its final form) directed as follows:
‘1.
It is declared that the investment scheme [concluded] by Marietjie Prinsloo (formerly Pelser)
during the period 1998 to June 2002 under various names including M P Finance Consultants CC,
Madikor Twintig (Pty) Ltd, Martburt Financial Services Limited, M & B Ko-operasie Beperk and
Krion Financial Services Limited (“the investment scheme”) was at all material times from and after
1 March 1999, insolvent in that its liabilities exceeded its assets.
2.
All contracts concluded between the investment scheme and investors in the scheme were
illegal and null and void.
3.
All actual payments from and after March 1999 by the aforesaid investment scheme to
investors including the second and further respondents in so far as they exceed the investment of
each particular investor are set aside as dispositions by the scheme to investors at times when its
liabilities exceeded its assets with the intention of preferring the particular investor above other
investors in terms of section 30 of the Insolvency Act, provided that a reinvestment is not to be
regarded as a payment and that the right of investors to rely on the provisions of section 33 of the
Insolvency Act is in no way affected by this order; what is to be regarded as a re-investment is to be
determined objectively in each case.
4.
An inquiry is ordered into the details of the amounts of the aforesaid payments and the
examination and investigation provisions of paragraph 38 of the scheme of arrangement2,
sanctioned on 22 November 2002 under case number 27035/2002, shall apply mutatis mutandis for
the purposes of this inquiry.
5.
The applicants may set the matter down for judgment against any investor, at any time, on
the same papers, duly supplemented by evidence, as to the quantum of the claim.’
[14] The appeal in Fourie by the liquidators and the investor representative was
limited to the order as I have quoted it. The investor respondents were in effect
granted leave to cross-appeal against the order before the amendment of para 3
thereof. This Court held (per Conradie JA) that:
1.
Service of the application in the court a quo on the overwhelming majority of
investors ‘fell gravely short of what would have been required to ensure that the
investors receive a fair trial’ (at para 21).
2.
The investors’ representative had not been competent to represent the investors
or make admissions on their behalf (at para 11).
3.
The appeal should be decided only on such factual material as was common
cause between the parties to it (at para 13).
4.
The gains derived by the investors from the Krion scheme were illegal and the
investors could not retain them (at para 16).
5.
The evidence did not establish that the gains made by the investors were paid to
them with an intention to prefer one creditor above another any more than the
investments were repaid with that intention and reliance by the liquidators (and the
court a quo) on s 30 of the Act had therefore been misplaced (at para 16).
2 Para 38 of the scheme provided as follows:
‘In order to limit the issues in dispute in the action, the liquidators and investor representative and their respective
attorneys shall at the cost of the estate examine the books and records of M P Finance and conduct such further
investigations as may reasonably be necessary with a view to verifying and reaching agreement on the particulars of the
various transactions between M P Finance and investors. The liquidators are authorised to grant the investor
representative unrestricted access to the books and records of M P Finance.’
6.
Repayment of an investor’s capital was not a disposition without value since
the
investor had the right to recover such payment by condiction (paras 13, 19).
7.
The court a quo could and should have made an order under s 26 in respect of
profits, ie amounts paid to investors over and above repayment of capital
contributions, because such payments had been made in pursuance of an illegal
scheme, were themselves illegal and, therefore, not made for value (para 17 and Order
3).
8.
Impliedly, the declaratory order issued would be binding on those respondents
who defended the proceedings but not upon the general body of investors upon whom
service was effected by publication of a rule nisi3 (para 21).
[15] At para 22 of the Fourie judgment this Court said:
‘Section 32(3) of the Insolvency Act is in these terms-
“When the court sets aside any disposition of property under any of the said sections [which include
s 26], it shall declare the trustee entitled to recover any property alienated under the said disposition
or in default of such property the value thereof at the date of the disposition or at the date on which
the disposition is set aside, whichever is the higher”.
Para 5 of the order confirming the rule envisages recovery proceedings. Any investor against whom
such recovery proceedings are brought would be free to maintain that he or she is, for lack of
notification or by reason of having been misled by the terms of the publication, not bound by the
order of Hartzenberg J. It may be that fresh setting aside proceedings against such an investor would
then have to be combined with the recovery proceedings. It seems unlikely that it will come to this
since an investor would have to deny that the gains paid out by the scheme were dispositions
without value, a proposition that has not been challenged by any of the parties and one that I
consider to be correct.’
[16] The order (in so far as is now relevant) that this Court made in the Fourie
appeal was the following:
‘
A. The appellants’ and the first respondent’s appeals are dismissed with costs that include
the costs of two counsel.
B. The cross-appeals of the third, fourth and fifth respondents succeed with costs that
include
the costs of two counsel. Paragraph 3 of the order is set aside and replaced by the following
paragraph:
“3.
All actual payments, whether as profit or interest, from and after 1 March 1999 by the
aforesaid investment scheme to the second, third, fourth, fifth and further respondents, in so far as
they exceed the investment of each particular investor are set aside, under s 26 of the Insolvency
Act as dispositions without value by the scheme to investors at times when its liabilities exceeded
its assets, provided that the right of investors to rely on the provisions of s 33 of the Insolvency Act
is in no way affected by this order.”’
[17] Murphy J interpreted the judgment and order in Fourie as embodying a final
judgment binding upon the general body of investors until set aside. I am by no
means sure that that is the right construction to place on it4. In addition each of the
respondents in the present appeal initially denied that he had received notice of the
proceedings in Fourie or was bound by the judgment. Thereafter, almost certainly for
reasons of expediency, all ‘elected’ to be bound. I doubt that such an ex post facto
submission can render a judgment not otherwise binding res judicata as against them
or the other parties involved. But as these issues were not fully argued before us I am
content to leave them open and to decide the appeal on the basis argued by the
respondents, viz that each of the parties to the present appeals was also a party to
Fourie.
[18] Murphy J held that the action before him related to the same subject matter
(eadem res) and the same cause of action (eadem petendi causa) as those determined
in Fourie. He upheld the plea of res judicata but limited the liquidators’ exercise of
the recovery process under s 32(3) of the Act to the recovery of actual payments of
profits in the relevant period according to the procedure mandated in para 4 of the
3 Which included the respondents in the present appeal.
order of Hartzenberg J. He also found that the ‘once and for all’ rule (about which
more below) applied to the institution of the liquidators’ actions under s 29 and barred
such actions. Counsel for the respondents adopted his reasoning. By contrast counsel
for the liquidators submitted that a cause of action arising from s 29 was not the same
as one derived from either s 26 or 30, that the Court in Fourie was not called upon to
pronounce on s 29 and did not do so and, further, that there was no issue common to
the proceedings which would justify an application of the principles of issue estoppel.
They contested the appropriateness of the ‘once and for all rule’ in the context of the
present appeals.
[19] As I understood the respondents’ counsel (and as I interpret the judgment of
Murphy J) they concede that res judicata in its classic formulation does not apply.
That concession is obviously justified because a simple comparison of the elements of
each section shows no commonality of cause of action. The legislation was clearly
designed to provide remedies sufficient to meet the different circumstances envisaged
in each of the sections. But, so they argue, eadem petendi causa bears a more flexible
meaning which embraces issue estoppel; and the common issue between secs 29 and
30 is an intention to prefer, a matter that was resolved, finally, against the liquidators
in the Fourie judgment. (The last leg of the contention is, as I have noted, correct.)
But even if the flexibility of the doctrine proves inadequate, a proper application of
the once and for all rule will, they submit, bring their clients home.
[20] The application of the principles of res judicata in the form of issue estoppel
was discussed in Kommissaris van Binnelandse Inkomste v Absa Bank Bpk 1995 (1)
SA 653 (A) at 666D-670C. This Court affirmed that the source of the finding by
Greenberg J in Boshoff v Union Government 1932 TPD 345 (that in order to uphold a
defence of res judicata the cause of action need not be precisely the same in both
actions) lay in our own common law authorities rather than English law and that
4 I particularly have in mind such cases as Dada v Dada 1977 (2) SA 287 (T) and the authorities cited there (at 288C-F).
‘Voet’s example’ [concerning reliance on the actio redhibitoria and the actio quanti
minoris as the same causes] ‘and the acceptance by Greenberg J of a broader meaning
of petendi causa both carry the necessary implication that for a defence of res
judicata it is not an immutable requirement that the same thing must be claimed.’ (My
translation.)
[21] Botha JA nevertheless added the following cautionary remarks in opposition to
the suggestion that South African courts have taken over the English doctrine of
‘issue estoppel’ lock, stock and barrel (at 669F-670C):
‘Consequently it is inappropriate to posit that this Court should decide whether the doctrine of issue
estoppel has become part of our law. The question simply does not arise. The true meaning of
Boshoff v Union Government is that the judgment has the effect that the strict requirements of the
common law for a defence of res judicata (in particular, eadem res and eadem petendi causa)
should not be understood literally in all circumstances and applied as inflexible rules, but there is
room for adaptation and extension, according to the basic requirement of eadem quaestio and the
ratio of the defence. Seen in this light, there can, I think, be no reason in principle to fault the
approach of the court in Boshoff v Union Government. The unacceptable alternative would be to
cling with literal formalism to propositions in the old authorities, which would be at odds with the
vigorous development of the law to provide for the demands of novel factual situations. It is
however inappropriate to express an opinion on the question as to whether the actual outcome was
satisfactory on the facts of that case, because the facts of the present matter, are, as will presently
appear, wholly different. Each case must be decided according to its own facts. It is not practical to
try to formulate guidelines in abstract terms which can be made applicable to all situations. For
example, one of the facts in Boshoff v Union Government was that default judgment was taken in
the previous case. From a passing remark of Greenberg J at 351 it appears that that fact was not
raised by the plaintiff in answer to the defence of res judicata. In a future case it may well be
necessary to consider whether it is advisable to recognise an extended application of the defence in
such circumstances. But it is not for this Court to reflect on that question in the present case because
it does not arise here. We have to deal with a particular set of facts to which the court a quo applied
the line which was taken in Boshoff v Union Government and which was followed in a series of
cases afterwards. That direction, as I have tried to show, is not of itself objectionable in principle.
Our task is merely to determine whether its application to the present facts is justified.’ (My
translation.) ’
[22] Finally, in rejecting the submission that the parties were bound by a general
practice in respect of something not in issue in earlier proceedings and about which it
had been unnecessary to make a finding, Botha JA said (at 676B):
‘To allow the defence of res judicata in the form of issue estoppel in these circumstances, would be
to go further than has previously happened, whether in cases at provincial level or in England. It
would be unfair to the Commissioner and run counter to the considerations of fairness which
underpin such a defence. The common law requirements of the defence of res judicata were strictly
circumscribed, precisely to avoid injustice (see eg Bertram v Wood [(1893) 10 SC 177 at 180)].
Considerations of fairness are also of decisive importance in the application of issue estoppel in the
English case-law (see eg Re State of Norway’s Application (No 2) [[1989] 1 All ER 701 (CA) at
714j]. Consequently the possibility of extending the principles of res judicata to any particular case
of issue estoppel must be approached with great circumspection..’ (My translation.)
[23] The question arose once more in National Sorghum Breweries Ltd (t/a Vivo
African Breweries v International Liquor Distributors (Pty) Ltd 2001 (2) SA 232
(SCA). Olivier JA (writing for the majority) referred to the previous authorities but
limited his formulation of the question before the court to the following statement (at
239H-I):
‘[3]
The fundamental question in the appeal is whether the same issue is involved in the two
actions: in other words, is the same thing demanded on the same ground, or, which comes to the
same, is the same relief claimed on the same cause, or, to put it more succinctly, has the same issue
now before the Court been finally disposed of in the first action?’
[24] In Smith v Porritt 2008 (6) SA 303 (SCA) at 307J Scott JA summarised the
law:
‘[10] Following the decision in Boshoff v Union Government 1932 TPD 345 the ambit of the
exceptio rei judicata 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 judicata 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, 670J-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 judicata. 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 Bank Bpk (supra) at 670E-F.) Relevant considerations will include questions of
equity and fairness not only to the parties themselves but also to others. As pointed out by De
Villiers CJ as long ago as 1893 in Bertram v Wood (1893) 10 SC 177 at 180, “unless carefully
circumscribed, [the defence of res judicata] is capable of producing great hardship and even
positive injustice to individuals”.’
[25] It is apparent that the first duty of the Court is to compare the relevant facts of
the two cases upon which reliance is placed for the contention that the cause of action
(in the extended sense of an essential element) is the same in both.
[26] As I have noted, counsel for the respondents submitted that the essential
element common to both ss 29 and 30 is the intention of the insolvent to prefer; in
order for the liquidators to rely on s 29 they would now have to deny the finding in
Fourie that no such intention existed. I disagree. Such a denial is not necessary to
found an action based on s 29 and indeed, the liquidators have not contradicted that
finding in the actions instituted against the respondents. They needed only to allege
and prove a disposition which ‘had the effect of preferring one creditor above
another’. It is true that the defendants were entitled to and did plead that the insolvent
had no such intention. That, however, was of itself insufficient to meet the
liquidators’ case in full. The defendants had also to plead and prove that the assailed
disposition was made in the ordinary course of business. So, although the finding of
absence of intention in Fourie created an issue estoppel to that limited extent and
the liquidators would not be permitted to counter the respondents’ averment that such
intention was absent, that minor triumph will not avail the respondents, because a plea
of res judicata (whether in its classical or extended form) cannot succeed unless it
nullifies the legal force of the cause of action (put otherwise, it cannot be raised
successfully if it leaves the plaintiff with a viable cause of action). That being the
result here, the respondents did not, on the first ground, set up a sustainable answer to
the relief claimed by the liquidators.
[27] The scope of the ‘once and for all’ rule was said in the National Sorghum case
at 241D-E to require that all claims generated by the same cause of action be
instituted in one action. As I have already found that the respective sections do not
create the same cause of action, even in the extended sense, it is difficult to justify the
applicability of the rule to the facts of these appeals. Murphy J was however
persuaded by a dictum from Henderson v Henderson (1843) 3 Hare 100 at 114-115,
[1843-1860] All ER Rep 378 at 381-2 (and the Full Court in Case No 18109/2005
agreed with him), as follows:
‘In trying this question, I believe I state the rule of the Court correctly, when I say, that where a
given matter becomes the subject of litigation in, and of adjudication by, a court of competent
jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and
will not (except under special circumstances) permit the same parties to open the same subject of
litigation in respect of matter which might have been brought forward as part of the subject in
contest, but which was not brought forward, only because they have, from negligence, inadvertence,
or even accident, omitted part of their case. The plea of res judicata applies, except in special cases,
not only to points upon which the Court was actually required by the parties to form an opinion and
pronounce a judgment, but to every point which properly belonged to the subject of litigation, and
which the parties, exercising reasonable dilgence, might have brought forward at the time.’
[28] Murphy J expressed the view (in concurrence with that of Blignaut J in Consol
Glass v Twee Jonge Gezellen (2) 2005 (6) SA 23 (C) at 46H) that ‘the Henderson
principle’ is not in conflict with the approach of Botha JA in Kommissaris van
Binnelandse Inkomste v Absa Bank Bpk (supra) and that ‘logic and equity will justify
its application in appropriate cases’. While that may be so, I think that any such
application must depend on an understanding of its true foundations.
[29] In Arnold v National Westminster Bank plc [1991] 3 All ER 41 (HL) at 48j
Lord Keith pointed out that, although Henderson’s was a case of action estoppel, the
statement of the law has been held to be applicable also to issue estoppel. The learned
law lord had earlier referred (at 48e) to Brisbane City Council v A-G for Queensland
[1978] 3 All ER 30 (PC) at 35-36; [1979] AC 411 at 425, where Lord Wilberforce
said
‘The second defence is one of res judicata. There has, of course, been no actual decision in
litigation between these parties as to the issue involved in the present case, but the appellants invoke
this defence in its wider sense, according to which a party may be shut out from raising in a
subsequent action an issue which he could, and should, have raised in earlier proceedings. The
classic statement of this doctrine is contained in the judgment of Wigram V-C in Henderson v
Henderson (1843) 3 Hare 100, [1843-60] All ER Rep 378 and its existence has been reaffirmed by
this Board in Hoystead v Taxation Comr [1926] AC 155, [1925] All ER Rep 56. A recent
application of it is to be found in the decision of the Board in Yat Tung Co v Dao Heng Bank [1975]
AC 581. It was, in the judgment of the Board, there described in these words (at 590): “. . . there is a
wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to
raise in subsequent proceedings matters which could and therefore should have been litigated in
earlier proceedings.” This reference to “abuse of process” had previously been made in Greenhalgh
v Mallard [1947] 2 All ER 255 at 257 per Somervell LJ, and their Lordships endorse it. This is the
true basis of the doctrine and it ought only to be applied when the facts are such as to amount to an
abuse, otherwise there is a danger of a party being shut out from bringing forward a genuine subject
of litigation.’
[30] I respectfully agree. The identification with abuse of the process accords with
the policy expressed in the maxim nemo debet bis vexari pro una et eadem causa
which underlies the principle of res judicata. As was said in the National Sorghum
case (at 241D-E) the abuse arises when the same cause of action is raised against a
defendant a second time. But what is to be noted from both the Henderson and
Brisbane City Council cases is the additional emphasis on the facts of each matter, for
how else should a court determine whether the conduct of a party has reached the
level of being an abuse? That being so it is for the party who relies on the application
of the rule pertinently to plead such reliance and lay a foundation in fact which would
enable the opposing parties to deal with such reliance. In the context of the present
appeal that required that the respondent had to lay a basis for barring the liquidators
from carrying out what was prima facie their right and duty to employ the remedy
created by s 29 of the Act. But I find no such evidence in the record of either appeal.
On the contrary, the equities clearly favoured the liquidators in two important
respects (which, being matters of common sense, arise from the proven facts). These
are─
1.
To uphold the plea would be to defeat an equitable redistribution among
creditors of the estate because the liquidators were unduly cautious (or even
mistaken) in enforcing their remedies consecutively rather than in a single action, and
even though the defendants made no attempt to show that they would suffer any
prejudice beyond the normal incidence of litigation.
2.
The defendants were debtors of the estate who were unaware of the
proceedings against them in Fourie and took no part in defending those proceedings.
That they should now receive the benefit of the judgment on the highly artificial basis
that they choose to be bound by it would be absurd. Therefore, even if, as Murphy J
found, all the elements of s 29 were ‘points that properly belonged to the subject of
the earlier litigation’, that would not have been enough to justify invocation of the
rule.
[31] The final matter which requires consideration is lis alibi pendens. In this regard
Murphy J (whose approach was espoused by the respondents’ counsel) said the
following:
’48.
In the light of that conclusion there is strictly speaking no need to determine the merits of
the special plea of lis pendens. There may be some advantage though in making one or two
observations about it in the hope of assisting the liquidators and the investors in bringing the
process to finality. In paragraph 4 and 5 of his order Hartzenberg J established a recovery procedure
that clearly met with the approval of the Supreme Court of Appeal, subject of course to the
reservations just discussed. The plea of lis pendens is to the effect that the attempt to recover the
gains from the investors by means of the present action duplicates unnecessarily that procedure. It
would seem that in the earlier proceedings the plaintiffs were the ones who proposed the recovery
procedure. The claims made in the reply that the freshly instituted actions are pursued as a matter of
convenience and as a less costly process, frankly ring hollow. The appropriate course of conduct
will be for the liquidators to proceed by the special recovery procedure.’
[32] While this approach possesses a superficial attraction it ignores a consideration
which the liquidators have said, in the motion proceedings, played an important role
in the decision to institute the actions, viz the serious reservations (to put the matter at
its lowest) expressed by Conradie JA as to whether the general body of investors was
truly involved in the Fourie case (as opposed only to their ‘representative’)and the
offer his judgment extended to them to distance themselves from its consequences.
The liquidators were accordingly faced with the real problem that should they follow
the recovery procedure ordered by Hartzenberg J (in itself derived from an agreement
by the investors’ representative which Conradie JA said the investors could not be
held to) there was no certainty that that procedure would be effective against any of
the investors or that any of them would recognise any of the findings by this Court in
Fourie. For that reason alone the liquidators’ decision to initiate actions under ss 26
and 29, making all necessary averments as if for the first time, was sensible and
reasonable.
[33] There is a further respect which bears upon the reasonableness of the
liquidators’ conduct. The recovery procedure was inextricably bound up with the
appointment and functions of the investors’ representative, Mr Edeling. Following the
Fourie judgment’s expressions of doubt concerning the competence of any
appointment of that nature and the adverse remarks relating to decisions taken by
him, so we were informed by counsel, Edeling resigned. He purported to cede the
investors’ right to another umbrella body. He has not been replaced. Whether or not
the special recovery procedure was capable of practical implementation without the
role of the investors’ representative was a matter of obvious concern to the
liquidators. In the circumstances they could fairly believe that the interests of
creditors would best be served by taking action afresh against individual debtors of
the estate.
[34] Finally, in relation to lis alibi pendens, there are considerations of convenience
and cost which favour the institution of the actions against individual debtors.
Murphy J thought that the liquidators’ argument ‘rings hollow’ but I do not agree
with him. I quote from the heads of argument of their counsel before us:
‘Case 1288/2003,in its entirety encompasses some 1 400 to 1 500 pages. If the procedure envisaged
in paragraph 5 of the Hartzenberg J order were followed, it would mean that each one of these pages
would have to be copied and served on each of the defendants in each of the Krion matters. As
appears from the papers some 6 000 claims have been instituted. That amounts to some 9 million
pages. In terms of rule 70, an attorney can charge R1.25 (see rule 70 section D, item 1) per copy.
That amounts to some R11 million. . . .”. Furthermore, it could reasonably be expected that there
would be a number of default judgments in the 6 000 matters instituted. In those circumstances the
registrar of the High Court and/or a Judge of the High Court would be required to read 1 500 pages
all of which however have been summarized in the 7 page particulars of claim. This waste of
judicial time would hardly have been approved by the Courts. . . . [T]he institution of an action
comprising some 7 page particulars of claim is the very contrary of vexatiousness. . . . It is aimed at
saving costs.’
[35] Lis alibi pendens is a discretionary remedy. It requires a balance of the interests
of the affected parties to achieve a fair result: cf Van As v Apollus 1993 (1) SA 606
(C) at 610D-G. Because of the failure of the lower courts to take the material
considerations that I have identified in the preceding paragraphs into account, we
may properly exercise the discretion ourselves. Since I can discern no particular
inconvenience or disadvantage to an affected investor in having to face the liquidators
in a trial action designed to recover assets for the benefit of creditors, the liquidators’
decision should prevail. I therefore conclude that the plea of lis alibi pendens should
not be sustained.
[36] The respondent Janse van Rensburg brought a counter-application for a
declaration in Case No 18109/2005. The court a quo did not consider it or make a
costs order relating to it. The liquidators’ notice of appeal was not directed to either
aspect. It is accordingly inappropriate for this Court to do so either, despite
submissions made in the heads of argument for the liquidators seeking dismissal of
the counter-application on grounds of non-joinder of the general body of investors in
the scheme.
[37] The costs order which follows is derived from my understanding of the
substance of an agreement between certain of the parties (as it was communicated to
the Court by appellants’ counsel during the appeal hearing). Ex abundante I have
added a rider based on dicta in Estate Garlick v Commissioner for Inland Revenue
1934 AD 499 at 505.
[38] In the result the following order is made:
1.
The appeals succeed in Appeal Nos 467/2008 and 237/2008.
2.
The orders of the courts a quo are set aside.
3.
For the order made in case no 18109/2005 there is substituted the following
order:
‘1. An order is made in terms of paragraphs 1 and 2 of the notice of motion.
2. The respondents are ordered to pay the costs jointly and severally, the one
paying the other to be absolved, including the costs of two counsel where employed.’
4.
The respective orders made in case nos 14010/2005, 14428/2005 and
18764/2005 are substituted by the following orders:
‘1. The special pleas of res judicata and lis alibi pendens are dismissed.
2. The defendants are ordered to pay the costs jointly and severally the one
paying the others to be absolved, including the costs of two counsel where
employed.’
5.
The costs of the respondents Steenkamp, Myburgh and Van der Merwe in their
respective appeals are to be costs in the estate in liquidation. The respondent Van der
Westhuizen is to pay the costs of the liquidators in respect of his appeal. No order is
made in respect of the respondent Janse van Rensburg.
6.
Any party aggrieved by the orders for costs may, within fifteen days after this
judgment is delivered, on notice to all other parties, apply to be heard on the question
of such costs.
__________________
J A HEHER
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANTS (both cases):
S du Toit SC
R Jonker
ATTORNEYS:
Thys Cronjé Incorporated
PRETORIA
C/o Van der Merwe & Sorour
BLOEMFONTEIN
FOR RESPONDENTS: Steenkamp (in appeal 237/08), Myburgh and Van der
Merwe (in appeal 467/08: T Strydom (with him T van
Tonder)
Van der Westhuizen (in appeal 467/08): M P van der
Merwe
No representation for Janse van Rensburg (in appeal
237/08).
ATTORNEYS:
GP van der Merwe Attorneys
PRETORIA
C/o JG Botha 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:
27 NOVEMBER 2008-11-27
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 liquidators of the Krion pyramid scheme have a duty to recover the
property of the companies for the benefit of the creditors. The Insolvency
Act provides them with various remedies. In 2004 they relied on s 30
(dispositions made with an intention to prefer one creditor above
another) and s 26 (dispositions not made for value). The SCA at that
stage determined that they were entitled to reclaim payment under the
last-mentioned section but had not proved as section 30 demanded that
Ms Prinsloo, the guiding mind of Krion, had paid out moneys to investors
(by return of capital or interest) with an intention to prefer. The
liquidators then instituted actions against more than 6000 debtors of the
companies (that is Krion ‘investors’ who received some payments from
the Krion group) on the grounds that the insolvent had made
dispositions to them that were struck by s 26 and in addition, or
alternatively, that the dispositions, when made, had the effect of
preferring the recipient above other creditors and, therefore, fell to be
recovered under s 29.
Several defendants contested the liquidators’ right to rely on the two
sections, 26 and 29: they contended that the liquidators had not
completed the process of recovering dispositions set aside in 2004 and
were bound to do so before making equivalent claims under the same
section of the Act. As far as s 29 was concerned they alleged that the
intention to prefer was an element common to both ss 30 and 29 and
since the liquidators had failed to prove that intention in 2004 they were
barred from attempting to do so again.
The SCA has now held (in Van Rensburg and Others NNO v Steenkamp
and Others, Appeal Nos 237/08 and 467/08) that the liquidators are
entitled to proceed with their actions against individual creditors in
reliance on both ss 26 and 29 and that fairness did not oblige them to
raise all their grounds of action ‘once and for all’ in the course of the
2004 litigation.
The SCA upheld the liquidators’ appeals against orders of the High
Court which barred them from so proceeding.
|
3518
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 889/2019
In the matter between:
CATHERINE MAY CHURCHILL
APPELLANT
and
THE PREMIER OF MPUMALANGA
FIRST RESPONDENT
DIRECTOR-GENERAL: OFFICE OF THE
PREMIER OF MPUMALANGA
SECOND RESPONDENT
Neutral citation: Churchill v Premier, Mpumalanga (889/2019) [2021]
ZASCA 16 (4 March 2021)
Coram:
PONNAN, WALLIS and SALDULKER JJA and CARELSE
and KGOELE AJJA
Heard:
19 February 2021
Delivered: This judgment was handed down electronically by
circulation to the parties’ representatives by email, publication on the
Supreme Court of Appeal website and release to SAFLII. The date and
time for hand-down is deemed to be 09h45 on 4 March 2021
Summary: Compensation for Occupational Injuries and Diseases Act
130 of 1993 (COIDA) – plaintiff mistreated and injured in the course of a
protest by trade union members on premises where she was employed –
whether her injuries an accident as defined in s 1 of COIDA – whether
accident arising out of and in the course of her employment – whether
liability of employer excluded by s 35 of COIDA.
ORDER
On appeal from: Mpumalanga Division of the High Court, Mbombela
(Roelofse AJ, sitting as court of first instance):
Judgment reported sub nom Churchill v Premier Mpumalanga and
Another 2020 (2) SA 309 (MN):
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the high court is set aside and replaced with the
following order:
'(a)
The special plea is dismissed.
(b)
It is declared that the First Defendant is liable to compensate the
Plaintiff for such damages as may be agreed or proved arising out of the
injuries suffered by her in the course of the protest at the offices of the
First Defendant on 5 April 2017.
(c)
The matter is remitted to the high court for the determination of the
nature and extent of any and all such injuries and the quantum of
damages to which she is entitled in consequence thereof.
(d)
The First Defendant is to pay the costs of the action up to
23 May 2019, being the date of judgment in the high court.'
JUDGMENT
Wallis JA (Ponnan and Saldulker JJA and Carelse and Kgoele AJJA
concurring)
[1] On 5 April 2017 the appellant, Ms Catherine Churchill, went to
work as usual at the offices of the first respondent, the Premier of
Mpumalanga (the Premier), where she was employed as the Chief
Director: Policy and Research. During the morning, protest action over
labour issues, organised by a trade union, the National Education, Health
and Allied Workers' Union (NEHAWU), occurred at the premises and in
the building where she worked. She became caught up with the
protestors, was assaulted and mistreated by them and eventually evicted
from the premises in a manner that was humiliating and degrading. An
agreed medical report reflects that she suffered some physical injuries, in
the form of bruises, scratches and a swollen foot. More importantly, she
was shocked and humiliated and suffered psychiatric injury1 that has left
her with PTSD (Post Traumatic Stress Disorder) of significant intensity.
She tried to return to work, but alleges that she found the situation
intolerable and was compelled to resign at the end of June 2017.
[2] Ms Churchill sued the Premier and the Director-General in the
office of the premier (the D-G), the first and second respondents
respectively, alleging that her treatment by the protestors, including the
assaults, was occasioned by their negligence. She contended that they
took no steps, or alternatively inadequate steps, to ensure the safety of
their employees in the workplace. Had they taken reasonable or adequate
steps to do so she claimed that the assault on her would have been
avoided. Her claim amounts to nearly R7.5 million for past and future
medical treatment, general damages and past and future loss of income.
The bulk of this is compensation for loss of income calculated up to her
date of retirement on the basis that she will be unable to work again.
1 A psychiatric injury is no different from a physical injury having outward manifestations in the body
of the claimant. Bester v Commercial Union Versekeringsmaatskappy van SA Beperk Bpk 1973 (1) SA
769 (A); Barnard v Santam Beperk 1999 (1) SA 202 (SCA); Road Accident Fund v Sauls 2002 (2) SA
55 (SCA); Komape and Others v Minister of Basic Education [2019] ZASCA 192; 2020 (2) SA 347
(SCA) paras 25-32.
[3] The Premier and the DG raised a special plea, contending that her
claim constituted an occupational injury for which she was entitled to
compensation in terms of the Compensation for Occupational Injuries and
Diseases Act 130 or 1993 (COIDA) and was therefore excluded by
s 35(1) of COIDA. On the merits they denied the existence of any legal
duty and the fact of negligence. They denied that they were vicariously
liable for the behaviour of the protestors. At the trial the parties agreed
that the judge (Roelofse AJ) should determine the merits of her claim,
leaving the quantum to be dealt with separately. He upheld the special
plea and concluded that there was no need to consider the remaining
defences on the merits, whilst saying that he would have rejected them.
The appeal is with his leave.
The ambit of the appeal
[4] The heads of argument before this court dealt only with the special
plea and not negligence or vicarious liability. We asked appellant's
counsel at the outset what order should be made if the appeal succeeded.
It emerged from the discussion that there was confusion about the ambit
of the appeal. Appellant's counsel took the view that the high court's
judgment disposed of all issues of liability other than the special plea and
therefore, if the appeal succeeded, a suitable declaratory order should be
made in regard to liability. Respondents' counsel contended that the
appeal was limited to the special plea and indicated that if it was upheld
the case should be remitted to the high court to determine the issues of
negligence and vicarious liability.
[5] An examination of the record showed the respondents' approach to
be incorrect. Before the trial started the judge noted that the parties had
agreed to separate the merits from issues of quantum and enquired
whether the special plea could be determined on the basis of the agreed
facts. Counsel for the respondents, who was counsel before us, said this
was not possible, because if the court rejected the special plea the
remainder of the merits would need to be determined. He added that
whether the plaintiff's injuries arose out of her employment could best be
determined in the context of all the happenings on the day in question.
The judge then made an order that the case would proceed on the merits,
with the issue of damages and quantum to stand over until there had been
a final resolution of the merits.
[6] The confusion over the ambit of the appeal appears to have arisen
because the judgment does not deal in any detail with the issues of
negligence and vicarious liability arising if the special plea was
dismissed. After upholding the special plea, the judge said:
'There is accordingly no need to consider the defendants’ other defences. However, I
need to say this and no more. Having regard to the evidential material before me as
set out earlier in this judgment, the defendants’ delictual defence would have come to
naught.'
This was an undesirable way in which to dispose of these matters given
the distinct possibility that the decision on the special plea would prompt
an appeal to this court. But it is clear that, had he taken a different view of
the special plea, the plaintiff's claim would have succeeded. He should
have given his reasons for that conclusion, notwithstanding his view on
the merits of the special plea.
[7] Thus all the issues in respect of the merits were resolved. The
parties had closed their cases on the merits and the trial on those issues
was finished. No further evidence could be led on the merits unless the
trial was reopened. The plaintiff's claim was dismissed without
qualification. Leave to appeal was sought and granted against the whole
order. The notice of appeal asked not only that the special plea be
dismissed, but that judgment on the merits be granted in favour of the
plaintiff. The judge had expressed his view on the remaining issues, albeit
without reasons. The respondents were entitled to resist the appeal by
arguing that whatever the fate of the special plea, neither negligence nor
vicarious liability for the actions of the protestors had been established.
They did not do so and counsel did not seek an opportunity to supplement
his argument in this regard.
[8] In the circumstances the appeal proceeded on the basis that, if the
appeal in relation to the special plea succeeded, a suitable declaration
should be made in regard to the liability of the Premier to compensate Ms
Churchill for her damages and remitting the matter to the high court for
the determination of the quantum of such damages if the amount thereof
cannot be settled by agreement.
The law on the application of COIDA
[9] There is little point in yet again traversing the background and
history of workmen's compensation statutes leading up to COIDA.
Statutes, pre-dating the Union of South Africa in 1910, derived from
English statutes, provided for workers to be compensated for injuries or
illness suffered in the course of their work. The history was traced by the
Constitutional Court in Mankayi.2 The language of the relevant sections
has remained largely unaltered over time and there are numerous cases
dealing with whether particular injuries or illnesses fell within or outside
the scope of the statute. Where an employee is entitled to compensation
2 Mankayi v AngloGold Ashanti Ltd [2011] ZACC 3; 2011 (3) SA 237 (CC) paras 41-58.
under COIDA any right of action against their employer is excluded by s
35(1). The constitutionality of that provision has been upheld.3
[10] The right to compensation is established under s 22(1) of the Act,
which provides that:
‘If an employee meets with an accident resulting in his disablement or death such
employee or the dependants of such employee shall, subject to the provisions of this
Act, be entitled to the benefits provided for and prescribed in this Act.’
The key word is ‘accident’, which is defined as meaning:
‘. . . 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’.
The exclusionary provision in s 35(1), which is headed ‘Substitution of
compensation for other legal remedies’ reads as follows:
‘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.’
[11] The fact that there are separate definitions of 'occupational disease'
and 'occupational injury' shows that the word 'occupational' qualifies both
injury and disease in s 35. Occupational illnesses are specified in some
detail in Schedule 3 of COIDA.4 An occupational injury is defined as:
'A personal injury sustained as a result of an accident.'
An occupational injury is therefore directly connected to the accident in
which it was sustained. Presumably it was thought that 'disease' and
'illness' were equivalent, so that in the case of an occupational illness the
3 Jooste v Score Supermarket Trading (Pty) Ltd (Minister of Labour Intervening) [1998] ZACC 18;
1999 (2) SA 1 (CC).
4 Some of the illnesses described in Schedule 3, for example, those in items 1.2 and 2.3, might in the
past have been regarded as injuries.
requirement that it arise from an accident is maintained. Fortunately, that
is not a drafting puzzle that needs to be solved in this case.
[12] Were Ms Churchill's injuries sustained in an accident as defined in
COIDA? There are three elements to the definition of an accident, namely
(a) an accident; (b) arising out of and in the course of an employee’s
employment; and (c) resulting in a personal injury, illness or the death of
the employee. The duplication of the word 'accident' derives from historic
usage in earlier statutes, both here and overseas. Longstanding authority
shows that in the context of COIDA it bears a broader meaning than ‘an
unexpected or usual event or happening that is external to the
[employee]’.5
[13] In Nicosia v WCC6 Roper J traced the developments in English law
from the time when the equivalent English statute provided that
‘accident’ was an accident resulting in personal injury. The cases
originally said7 that it was used in:
‘The popular and ordinary sense of the word as denoting an unlooked-for mishap or an
untoward event which is not expected or designed’.
However, no doubt moved by a desire to assist workers to secure
compensation, even where there was no negligence on the part of their
employer, or where any claim they might have would have been defeated
by the operation of the 'last opportunity' rule:
'… courts have strained to come to the rescue of particularly impecunious individuals
and held them entitled to claim compensation from a fund established for that
purpose.'8
5 Air France v Saks 470 US 392 (1985) a decision on the meaning of ‘accident’ in the Montreal
Convention of 1999.
6 Nicosia v Workmens’ Compensation Commission 1954 (3) SA 897 (T) at 900D-902C.
7 Fenton v J Thorley & Co Limited 1903 AC 443 at 448.
8 MEC for Health, Free State v DN (MEC v DN)[2014] ZASCA 167; 2015 (1) SA 182 (SCA) para 33.
This benevolent approach to the meaning of an accident and personal
injury led courts in England to extend the concept of an accident to
include illness derived from an accident.9 In addition they held that while
an accident is frequently something external to the employee – such as an
explosion or a fall from a ladder – it included internal injuries occasioned
by performing the work of the employee, for example, a slipped disc
when lifting something at work. Roper J cited the following passage from
the speech of Lord Lindley in Fenton v Thorley:
‘Speaking generally, but with reference to legal liabilities, an accident means any
unintended and unexpected occurrence which produces hurt or loss. But it is often
used to denote any unintended and unexpected loss or hurt apart from its cause; and if
the cause is not known the loss or hurt itself would certainly be called an accident.
The word ‘accident’ is also often used to denote both the cause and the effect, no
attempt being made to discriminate between them.’
[14] The resulting position is that almost anything which unexpectedly
causes an injury to, or illness or death of, an employee falls within the
concept of an accident. The result is that the focus of the cases is less on
the first element of an accident, because almost anything unexpected can
be an accident, but on whether the accident arose out of and in the course
of the employee’s employment. The two expressions are not coterminous
so that an accident may arise in the course of, but not out of, the
employee's employment. It is not necessary to consider whether the
reverse is also true. Two judgments of this court set out the broad
approach to be adopted to these expressions.
9 Brintons Limited v Turvey 1905 AC 230 (Anthrax); Innes v Kynoch 1919 AC 765 (Streptococcus).
COIDA deals with this separately.
[15] The first, Khoza,10 arose when a 19 year old police constable,
playing with his service revolver in the back of a police van, in the
presence of another constable and five arrestees, fired a shot and hit his
colleague.11 An action similar to the present one was met with a similar
plea.12 The court held that the requirement that the accident occurred 'in
the course of' the employee's duties was satisfied if it occurred while the
employee was engaged in their basic duties and responsibilities. That
element was satisfied because both policemen were on duty and
responsible for arresting and holding in safe custody the other people in
the van.
[16] The more problematic element was whether Constable Khoza's
injuries arose out of his employment. In the following passage,13 the
majority judgment by Rumpff JA emphasised that this required a causal
connection between the employee’s service and the accident
'When this undefined connection is viewed in the light of the purpose and inclusive
scope of Act 30 of 1941, it must in my view be found that the causal connection
between accident and service in general is fully satisfied when the accident occurs at
the place where the workman is executing his duties.' (My translation and emphasis.)
10 Minister of Justice v Khoza 1966 (1) SA 410 (A).
11 The judgment treated this as an accident arising from a show of bravado on the young man's part.
The facts as set out in Khoza v Minister of Police 1965 (4) SA 286 (W) at 287A-E suggest that it was
more than that and they provide an insight into the pervasive racism within the police force at the time.
12 Under s 7 of the Workmen's Compensation Act 30 of 1941, which was in terms the same as s 35(1)
of COIDA. Constable Khoza was faced with a dilemma in that he had not given notice of his claim as
required by s 32 of the Police Act 32 of 1958. He was required to do so if the claim arose from
anything done in terms of that Act. His claim against the Minister depended on his being able to show
that the constable who shot him was acting in the course and scope of his employment, but not under
the Police Act. Additionally, he had to show that his own injuries did not arise out of his employment.
This meant that he had to thread an almost indiscernible path between these apparently mutually
inconsistent contentions.
13 Khoza at 417D-F, where Rumpff JA said:
'Wanneer hierdie onomskrewe verband gesien word in die lig van die doel en ingrypende omvang van
Wet 30 van 1941, moet dit m.i. bevind word dat die kousale verband tussen ongeval en diens in die
algemeen voldoende geskep word wanneer die ongeval plaasvind op die plek waar die werksman by
die uitvoering van sy diens is.'
The nature and extent of the causal connection is not defined in the Act.
Rumpff JA held that, given the statutory purpose, there would in general
be a causal connection between the accident and the person's employment
if the accident occurred at the place where the employee was performing
their duties. On that basis the court held that constable Khoza was shot in
an accident arising out of his employment and his claim was dismissed.
[17] The judgment was careful to point out that it was no more than a
generalisation to say that a causal connection would ordinarily be
established if the accident occurred at the employee's place of work.
Whilst it was unnecessary to attempt to identify the exceptions,
nonetheless the following was said:14
'It is in any event clear that this causal connection for the purposes of the Act would
among other things disappear if the accident was of such a nature that the workman
would have suffered the injuries even though he was at a place other than the one his
work demanded, or if the workman by his own act severed the existing connection
between his service and the accident, or where the workman was deliberately injured
by another person and the motive for the assault had no connection with the working
duties of the workman.' (My translation and emphasis.)
[18] Formulating a single test to determine whether an injury arose out
of the injured party's employment is neither feasible nor desirable. The
majority judgment in Khoza made it clear that mere presence at the
workplace would not suffice, although in general the fact that the accident
occurred at the injured person's place of employment pointed to it having
arisen out of their employment. Nor is foreseeability of the risk definitive.
14 At 417F-I: 'Dis in elk geval duidelik dat hierdie kousale verband vir doeleindes van die Wet sou
verdwyn, onder andere, indien die ongeval van so 'n aard is dat die werksman die beserings sou
opgedoen het al was hy op 'n ander plek as wat sy diens sou vereis het of wanneer die werksman deur
sy eie handeling die plaaslike verband tussen diens en ongeval uitskakel of wanneer die werksman
opsetlik beseer word deur 'n ander persoon en die motief van die aanranding geen verband hou met die
werksaamhede van die werksman nie.'
Even an entirely unforeseen and unforeseeable event may arise out of
employment.15 Williamson JA made this point in his concurring judgment
saying that:16
‘The decision is in essence in each case one of fact related only to the particular facts
in issue. The enquiry on the particular issue is whether it was the actual fact that he
was in the course of his employment that brought the workman within the range or
zone of the hazard giving rise to the action causing injury. If it was, the action arose
‘out of the employment’ …’
The fact that the course of employment brought the worker into the zone
of the hazard may be a necessary condition of the injury arising out of the
employment but, as the subsequent decision of this court demonstrated, it
is not a sufficient condition.17
[19] In MEC v DN,18 a doctor on night duty, walking along a passage
between two wards, was assaulted by an intruder, who hit her with a brick
and raped her. Her claim for damages against the MEC, on the basis that,
through negligence, inadequate security precautions had been taken, was
met with a plea based on s 35(1) of COIDA. The plea was dismissed and
Navsa ADP said:19
'. . . the question that might rightly be asked is whether the act causing the injury was
a risk incidental to the employment. There is of course, as pointed out in numerous
authorities, no bright-line test. Each case must be dealt with on its own facts.
I am unable to see how a rape perpetrated by an outsider on a doctor – a paediatrician
in training – on duty at a hospital arises out of the doctor’s employment. I cannot
conceive of the risk of rape being incidental to such employment.'
15 Instances drawn from the English cases are the wall of an adjacent building collapsing on to the
building in which the claimant was working and causing her injuries (Thom (or Simpson) v Sinclair
[1917] AC 127) and the fireman standing at the entrance to his engine who was struck by a pellet fired
not at him, but at the engine (Powell v Great Western Railway Co [1940] 1 All ER 87 (CA)).
16 Khoza op cit fn 10 at 419H-I.
17 The problem in treating it as such is illustrated by the decision in Ex parte Workmen's Compensation
Commissioner: In re Manthe 1979 (4) SA 812 (E) at 817E-818F.
18 Op cit fn 8.
19 Ibid, paras 31-32.
[20] The plaintiff in that case was at her place of employment and about
her duties at the time of the assault. Her employment had brought her
within the zone of the hazard giving rise to her injuries. That pointed to
her injury arising out of her employment. But when the question was
asked whether the risk was incidental to her employment, the answer was
an emphatic 'No'. The only safe approach is to examine closely the facts
of each case in order to decide whether the person's injuries arose out of
their employment. The closer the link between the injury sustained and
the performance of the ordinary duties of the employee, the more likely it
will be that they were sustained out of their employment. The further
removed from those duties, and the less the likelihood that those duties
will bring the employee into a situation where such injuries might be
sustained, the less likely that they arose out of their employment. In the
case of Ms Churchill, it is common cause that her injuries were sustained
in the course of her employment. The only issue is whether they arose out
of her employment.
The facts
[21] These were fully canvassed in the judgment of the high court and
again in the heads of argument. There is no dispute of any significance
regarding them. Ms Churchill went to work that day and was attending to
her duties. NEHAWU had called upon its members to demonstrate over
certain labour-related issues. The demonstration should have taken place
at a point outside the complex where the offices of the Premier were
situated. However, some of the participants in the demonstration were
employed in the building where Ms Churchill worked and by using their
access cards about twenty or thirty of them obtained access to the foyer,
which is on the upper ground floor. Ms Churchill encountered them when
she was returning with a colleague to her office on the lower ground floor
from a meeting on the upper ground floor.
[22] After Ms Churchill returned to her office, her assistant, Ms
Ngwambe, indicated that she was afraid of the protest. She was told that
she would be able to lock up and go home after Ms Churchill had taken a
document across the passage to Ms Mabaso's office. While Ms Churchill
was in Ms Mabaso's office, three demonstrators, including the branch
secretary of NEHAWU, entered the office, asked who was there, and left
without an answer. Ms Churchill followed them to return to her office
and discovered that it was locked. In frustration she swore and a man in
the passage asked her what she had said. She apologised and tried to
explain, but this individual regarded the expletive as being directed at the
demonstrators and shouted at her demanding to know on what basis she
had sworn at them. He repeatedly shouted at her saying: 'Who are you to
call us an ****?' and 'How dare you swear at us?' This caused
Ms Churchill to retreat to Ms Mabaso's office. The man followed and
shouted at her: 'We're coming for you!'
[23] Ms Mabaso and Ms Mahlalela were also in the office when another
official, Mr Bellim, came there and said that they should leave and work
from home. He left to go back to his own office, but returned almost
immediately as he saw fifteen or twenty protestors marching along the
lower ground floor towards Ms Mabaso's office. He entered the office
and tried to hold the door closed against the protestors, but to no avail.
Ms Churchill tried to hide behind the door and telephoned her husband
telling him she was not safe and asking him to come and fetch her. The
protestors found her behind the door and one of them tried to take her cell
phone. He also tried to pick her up with his arms around her. In the
confusion Ms Mahlalela managed to slip out of the office and phone both
the D-G's office and the security office for help, but no assistance was
forthcoming.
[24] Two other men joined the man trying to lift Ms Churchill. Together
they lifted her above their heads, carried her out of the office and up two
flights of stairs to the upper ground floor. Mr Bellim shouted at the men
to put her down, but they disregarded him and three other men blocked
him from going to her aid. She was carried up the stairs pleading to be put
down, but there was no response and she heard someone calling her 'a
piece of white s**t'. Mr Bellim heard one of the protestors say: 'This
mlungu is not with us.'
[25] Once the men had carried Ms Churchill to the foyer she was put
down in the middle of the crowd of protestors and her shoes removed.
People in the crowd pushed, shoved and punched her, while jeering and
shouting 'Voetsek' and 'Get out'. One of her shoes was thrown at her and
she was chased out of the building and left to make her way to the
entrance where her husband had arrived to collect her. He had heard
everything, because she had kept her cellphone on throughout the
incident. From the time she first encountered the protestors as she was
making her way back to her office until she was collected by her husband
about three quarters of an hour had passed.
Discussion
[26] Did this incident arise out of Ms Churchill's employment so that
her injuries, both physical and psychiatric, were sustained in an accident
for the purposes of COIDA? It was accepted that because it happened at
her place of employment and while she was going about her duties it
arose in the course of her employment. Did it arise out of her
employment? In other words, was it sufficiently closely connected to her
employment to have arisen from it? The fact that it occurred in her
workplace when she was going about her duties is undoubtedly a factor
that connected it to her employment. In that sense her employment
brought her within the zone of risk, but that is merely where the enquiry
commences. Was the risk also incidental to her employment?
[27] The respondents argued that the risk was foreseeable, because it is
a regrettable reality that protest action and industrial action can
sometimes lead to incidents where people are pushed, shoved or attacked
in a more aggressive fashion. They referred to a previous protest in 2016,
where women members of the bargaining group who had remained at
their posts were forcibly removed from their work stations. It was agreed
that the employees not engaged in the protest were wary of intimidation
by the protestors and realised that because feelings were running strong
the protest might turn 'unpeaceful', that is, violent, with a risk of physical
injury to those employees.
[28] It is not apparent to me why the possibility of protests or industrial
action turning violent and resulting in assaults on non-participating
employees, means that the assaults are risks incidental to the employment
of those assaulted. The wider implications of this were explored with
counsel. They appear to be far-reaching. Take the case of a non-striking
employee who crossed a picket line to work and was condemned as a
scab by the strikers. Would an aggravated assault aimed at persuading
them to desist arise from their employment? Would it make a difference
if the assault was an act of revenge after the strike ended? Neither
situation seems to me to be closely connected to the performance of their
duties as an employee. To adopt the language used in Khoza in describing
an instance where the assault would not arise out of the employee's
employment, such an assault has no connection with the working duties
of the employee. It is connected to their employment, but not to their
duties in that employment.
[29] Another example debated in argument was the conduct of
disgruntled participants in a service delivery protest, who broke into the
Premier's office building demanding to present a petition to the Premier
in person and, on being rebuffed, took out their anger on the most senior
employee present. That would be similar to the situation in this case, save
that the perpetrators would not be employees engaged in protest action. It
is hard to accept that such a situation would arise out of the injured
person's employment. The only causal connection would be that the
employee had the misfortune to be attending at their place of work when
the incident occurred. The assault and the resultant injuries would have
no connection, direct or indirect, with their duties in terms of their
contract of employment. Yet there appears to be no basis for
distinguishing it from the same events in the course of a protest by
workers.
[30] The statutory compensation scheme was established, and
employers granted immunity from claims by their employees, to provide
compensation for workplace injuries and illnesses, whether due to
misfortune, the fault of a co-employee, or the employer's or employee's
fault. Compensation is payable irrespective of whether direct or vicarious
liability would otherwise rest on the employer. The requirements that the
accident occur in the course of and arise out of the injured party's
employment circumscribe the liability of the compensation fund
established in terms of s 15 of COIDA. The purpose of the fund is to
compensate for occupational injuries and disease. While long-standing
authority dictates that social legislation of this type is given a generous
construction, it is not directed at providing compensation and exempting
employers from liability for injuries and diseases that are only tenuously
and tangentially connected to the duties of the employee. Had that been
the purpose the legislation could simply provide for compensation for all
and any injuries or illnesses sustained when at work, or when working.
[31] The respondents also relied on the agreed fact that non-participants
in the protest, including the plaintiff, 'formed part of the staff that were
responsible for either formulating or implementing labour related issues
of employment against which NEHAWU was opposed'. However, there
was no evidence that Ms Churchill had any direct involvement in labour
issues in her position as Chief Director Policy and Research in the office
of the Premier. Beyond a speculative suggestion that she was possibly a
member of staff involved in efforts by the office of the Premier to
reconfigure regional services in the province that might possibly lead to
job losses, no link was suggested between her duties as an employee and
the issue in regard to which the protest action had been called. She was
not responsible for the formulation of employment policy. Given that the
respondents must have been fully aware of Ms Churchill's duties and
would have been in a position to deal in detail with her involvement in
these labour issues, if in truth her work was closely connected to them, it
is safe to say that any connection must have been entirely peripheral.
[32] What is more, the incident was unrelated to the subject matter of
the protest, much less to Ms Churchill's work. After her meeting, she had
walked through, or past, the group of protestors in the foyer without
incident. When she was initially in Ms Mabaso's office and three of the
protestors, including the branch secretary of the union, came in and asked
who was there, they did not say or do anything in respect of
Ms Churchill. The incident arose because of the unfortunate fact that,
when she returned to her office and found it locked, she swore and this
was taken amiss by one individual who thought it was directed at him and
the protestors. Everything that happened after that was triggered by that
incident, which had no connection at all with either the protest or Ms
Churchill's employment.
[33] There are of course jobs the nature of which gives rise to a risk of
assault by co-workers, outsiders or criminals arising from the
performance of the worker's ordinary duties. Security personnel come to
mind in that regard. Assaults sometimes occur in the context of
employment and may arise from it, as in the case of the trammer in
McQueen20 assaulted by a miner after he tried to pull him to work at a
different point in the mine. But assault on a co-worker is treated in many,
if not most, workplaces as a serious disciplinary offence that may lead to
dismissal. It is not something that ordinarily arises from a person's
employment. Where the assault occurs in the workplace, but as a result of
something external to the workplace and the duties of the person
assaulted, it is difficult to see on what basis it can be said to arise out of
their employment. That is why, when a policeman was shot and killed at
the police station by another policeman, whom he had taunted about a
relationship he was conducting with the latter's wife, it was held that this
did not arise from his employment.21
20 McQueen v Village Deep GM Co Ltd 1914 TPD 344.
21 Twalo v Minister of Safety and Security [2009] 2 All SA 491 (E).
[34] Cases where employees have been assaulted by criminals while on
duty stand on a different footing.22 But being assaulted as a consequence
of something one says being misconstrued and offence being taken, is not
ordinarily incidental to employment.23 The fact that the place where that
occurred was the workplace, and the perpetrator or perpetrators of the
assault were co-employees, does not alter that. In the present case the
assault took on racial and gendered overtones. The respondents' counsel
was asked whether it would have made a difference to the argument if the
assault on Ms Churchill had become overtly sexual. Other than saying
that every case depends on its own facts, there was no answer, but the
nature and severity of the assault and the extent of the incursion upon the
dignity and bodily integrity of the victim, cannot be the factors that
determine whether it arose out of their employment. As held in MEC v
DN it is difficult to see on what basis, as a general proposition, attacks on
a person's dignity and bodily integrity are incidental to their employment.
In simple language they are not things that 'go with the job'.
[35] Emphasis was also placed on the fact that the protestors were
protesting about workplace issues in support of colleagues in the social
development area. But this falls into the very error identified in MEC v
DN24 of using the motive of the perpetrator to establish the requisite
connection between the incident and the duties of the injured party.
[36] It is necessary to repeat what has oft been said before in these
cases, namely that there is no bright line test and the enquiry is always
22 The injuries of a cashier or messenger carrying money or valuables for deposit at a bank, or carrying
the weekly wages to a payment point on a building site, who is assaulted and injured by robbers arise
out of their employment. Nisbet v Rayne and Burn [1910] 2 KB 689 cited in MEC v DN para 29.
23 The position in the case of an immediate physical response to an insult in the workplace, especially if
the insult had arisen out of a work-related incident, might be different.
24 Op cit, fn 8, para 31.
whether the statutory requirement that the accident arose out of the
person's employment, as well as in the course of that employment, is
satisfied. The court must analyse the facts closely to determine whether
on balance the accident arose out of the person's employment. And in the
last resort an employer seeking to rely on s 35 to avoid liability bears the
onus of satisfying the court that the accident arose out of the claimant's
employment. In this case the only connection between the incident and
Ms Churchill's employment was that she was at work at the time. The
incident bore no relation to her duties and was the result of misplaced
anger directed at her because of a misunderstanding. She was not
assaulted because of the position she held, or because of anything she had
done in carrying out her duties, or for any reason related to the protest
action that took place that day. She was assaulted because one individual
mistakenly thought she had sworn at him and he, together with others,
responded by assaulting and humiliating her. In my opinion her injuries
did not arise out of her employment.
[37] The appeal must therefore succeed. I have adapted the following
order slightly from that suggested by counsel for the plaintiff.
The appeal is upheld with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the high court is set aside and replaced with the
following order:
'(a)
The special plea is dismissed.
(b)
It is declared that the First Defendant is liable to compensate the
Plaintiff for such damages as may be agreed or proved arising out of the
injuries suffered by her in the course of the protest at the offices of the
First Defendant on 5 April 2017.
(c)
The matter is remitted to the high court for the determination of the
nature and extent of any and all such injuries and the quantum of
damages to which she is entitled in consequence thereof.
(d)
The First Defendant is to pay the costs of the action up to
23 May 2019, being the date of judgment in the high court.'
_________________
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
T J Bruinders SC (with him J L Basson)
Instructed by:
Du Toit-Smuts & Partners, Mbombela;
Phatshoane Henney Attorneys, Bloemfontein
For respondent:
H van Eeden SC (with him T Mathopo and B
Manning)
Instructed by:
Adendorff Theron Inc, Mbombela;
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 4 March 2021
STATUS Immediate
Please note that the media summary is for the benefit of the media and
does not form part of the judgment.
Churchill v Premier, Mpumalanga (889/2019) [2021] ZASCA 16 (4 March
2021)
The SCA today upheld an appeal by Ms Catherine Churchill against the
dismissal by the Mpumalanga Division of the High Court of her claim for
damages against the Premier, Mpumalanga.
The claim arose from an incident occurring on 5 April 2017 during a protest by
members of NEHAWU at the offices of the Premier. Ms Churchill, then the
Chief Director: Policy and Research in the Premier's office, was at work on
the day of the protest. The protest was supposed to take place outside the
gates of the complex, but some protestors obtained access to it and to the
building containing the office of the Premier.
Ms Churchill encountered the protestors on two occasions during the morning
without incident. What triggered the events that led to her being assaulted,
was that she found herself locked out of her office, when she and other
employees were preparing to leave the premises. A protestor reacted in a
hostile fashion to her uttering an expletive. Shortly afterwards a group of
twenty or so protestors came to find her in the office of a colleague. They
forcibly removed her from the office and, despite her protestations, carried her
above their heads, upstairs to where the body of protestors was gathered.
There she was surrounded by protestors, pushed, shoved and punched,
whilst being jeered at and abused. She was eventually chased out of the
building.
Ms Churchill suffered some physical injuries as a result and PTSD. Eventually
she felt compelled to leave her job. Her claim against the Premier was based
on a negligent failure to provide proper protection to staff in that situation.
The Premier defence was that the injuries sustained by Ms Churchill
constituted an 'occupational injury' arising from an 'accident' as those
expressions are defined in the Compensation for Occupational Injuries and
Diseases Act 130 of 1993 (COIDA) and accordingly that she was precluded
from suing for damages by the provisions of s 35 of COIDA. This defence was
upheld by the high court. The essential question was whether her injuries
arose out of her employment, it being agreed that they arose in the course of
her employment.
Whether injuries are suffered in the course of a person's employment
depends on whether they arose from the performance of their duties and were
incidental to those duties. Ms Churchill's duties were not concerned with
labour matters or the issues giving rise to the protest. In the ordinary course
an assault, even by a co-worker, is not incidental to the performance of one's
duties in the workplace.
In this case the incident was unrelated to the issues giving rise to the protest.
It was sparked by a protestor taking offence at her swearing when she found
herself locked out of her office. His reaction escalated into an incident where
she was assaulted and humiliated. The assault took on racial and gendered
overtones. The SCA accordingly held that it did not occur in the course of Ms
Churchill's employment. The appeal was upheld and an order declaring the
Premier liable to compensate Ms Churchill for her proved or agreed damages
was made.
|
3700
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case nos: 353/2020 and 354/2020
In the matter between:
THE NATIONAL PROSECUTING AUTHORITY
APPELLANT
and
PUBLIC SERVANTS ASSOCIATION obo
MEINTJIES & 55 OTHERS
FIRST RESPONDENT
MINISTER OF JUSTICE AND CORRECTIONAL
SERVCES
SECOND RESPONDENT
DIRECTOR-GENERAL: DEPARTMENT OF JUSTICE
AND CONSTITUTIONAL DEVELOPMENT
THIRD RESPONDENT
MINISTER OF PUBLIC SERVICE
AND ADMINISTRATION
FOURTH RESPONDENT
MINISTER OF FINANCE
FIFTH RESPONDENT
GOVERNMENT EMPLOYEES PENSION FUND
SIXTH RESPONDENT
AND
THE MINISTER OF JUSTICE AND CORRECTIONAL
SERVICES
FIRST APPELLANT
DIRECTOR-GENERAL: DEPARTMENT OF JUSTICE
AND CONSTITUTIONAL DEVELOPMENT SECOND APPELLANT
and
PUBLIC SERVANTS ASSOCIATION obo
MEINTJIES & 55 OTHERS
FIRST RESPONDENT
MINISTER OF PUBLIC SERVICE
AND ADMINISTRATION
SECOND RESPONDENT
NATIONAL PROSECUTING AUTHORITY
THIRD RESPONDENT
MINISTER OF FINANCE
FOURTH RESPONDENT
GOVERNMENT EMPLOYEES PENSION FUND
FIFTH RESPONDENT
Neutral citation:
The National Prosecuting Authority v PSA obo Meintjies and 55
others and Others (Case no: 353/2020) and The Minister of
Justice and Correctional Services and Director-General: DoJCD
v PSA obo Meintjies and 55 others and Others (Case no:
354/2020) [2021] ZASCA 160 (SCA) (17 November 2021)
Coram:
SALDULKER, VAN DER MERWE, MOLEMELA, MOKGOHLOA
and HUGHES JJA
Heard:
23 August 2021
Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court
of Appeal website and release to SAFLII. The date and time for hand-
down is deemed to be 14h30 on 17 November 2021.
Summary: Court – jurisdiction of High Court in employment-related matter – proper
analysis of applicant’s pleadings (notice of motion and founding affidavit) required to
ascertain legal basis of claim – legal basis of applicant’s claim unfair labour practice –
not justiciable in High Court – it should have struck matter from roll for want of
jurisdiction.
___________________________________________________________________
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 where so
employed.
The order of the high court is set aside and replaced with the following:
‘The application is struck from the roll with costs, including the costs of two
counsel where so employed.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Molemela JA
Introduction
[1] Central to this appeal is whether the Occupational Specific Dispensation (OSD)
structure of remuneration was, as contended for by the first respondent, introduced to
the National Prosecuting Authority (NPA) and made applicable to the posts held by
the Deputy Directors of Public Prosecution (DDPPs) and Chief Prosecutors (CPs).1
A dispute regarding this aspect resulted in the Public Servants Association (PSA), a
trade union, launching an application on behalf of 56 DDPPs and CPs at the Gauteng
Division of the High Court, Pretoria (the high court). The NPA was cited as the first
respondent; the Minister of Justice and Correctional Services as the second
respondent; the Minister of Public Service and Administration as the third respondent;
the Minister of Finance as the fourth respondent; the Government Employees Pension
Fund, a pension fund scheme for government employees, as the fifth respondent; and
the Director-General of the Department of Justice and Constitutional Development
(Director-General) as the sixth respondent. Only the NPA, the Minister of Justice and
1 It appears that three members represented by the PSA were CPs. The rest of the members were
DDPPs. The appellants contended that neither the DDPPs nor the CPs were covered by 2010
Determination.
Correctional Services (the Minister) and the Director-General opposed the application.
The application served before van der Westhuizen J.
Background facts
[2] It is common cause that negotiations on wage and other collective bargaining
issues had taken place at the Public Service Co-ordinating Bargaining Council
(PSCBC) in 2007. These negotiations culminated in several collective agreements
being concluded. Since the PSA alleges that those collective agreements are the
genesis of this dispute and that the erstwhile National Director of Public Prosecutions,
Mr Nxasana, (NDPP) approved the translation of the OSD salary structure to the
DDPPs and CPs. It is therefore necessary to give a brief overview of what those
collective agreements entailed.
[3] In terms of PSCBC Resolution 1 of 2007, the OSD salary structure was to be
implemented to employees in the legal profession within the justice cluster with effect
from 1 July 2007. In terms of that Resolution, the translation measures for the
movement to the new structure would be dealt with at the relevant sectoral bargaining
council.
[4] In compliance with PSCBC Resolution 1 of 2007, during or about
7 February 2008, the General Public Service Sector Bargaining Council (GPSSBC)
negotiated and concluded a collective agreement between the State as employer and
various
trade
unions
representing
government
employees,
regarding
the
implementation of the OSD for legally qualified categories of employees.
This agreement is commonly referred to as GPSSBC Resolution 1 of 2008. Its stated
objective was to introduce the OSD salary structure for legally qualified professionals
falling within the occupational categories of State Attorney, Family Advocate, State
Law Advisor, Legal Administration Officer, Master, Registrar, Maintenance Officer and
Estate Controller. According to the PSA, GPSSBC Resolution 1 of 2008 was meant
for civil servants of certain categories who were legally qualified and rendered in-
house legal services.
[5] The OSD provided for in GPSSBC Resolution 1 of 2008 not only created a
unique remuneration structure, but also introduced different career streams. In order
to enhance career pathing, it introduced the following work streams: training (LP1 to
LP2); entry level production (LP3 to LP8; EC1 to EC4 and MR1 to MR5); advanced
production level (LP5 to LP9); specialist level (LP10); and supervisory level (MR8).
It was made clear that in relation to the production specialist stream, the number of
posts created would be subject to norms to be determined by the Departments.
GPSSBC Resolution 1 of 2008 further stipulated that a dispute resolution mechanism
in terms of which any dispute about the interpretation or application of that collective
agreement was to be referred to the Bargaining Council2 for resolution.
[6] On 14 February 2008, the Minister, in contemplation of s 18(1) of the National
Prosecuting Authority Act 32 of 1998 (NPA Act), issued a determination pertaining to
the revised salaries for DDPPs, CPs and Chief Specialist Investigators.3 No mention
of the OSD was made in that determination. It is common cause that the DDPPs are
appointed in terms of s 15 of the NPA Act and that the NPA Act does not specifically
deal with the appointment of CPs and Chief Specialist Investigators. Section 18(1)
provides that the DDPPs and prosecutors shall be paid a salary in accordance with
the scale determined, from time to time by notice in the government gazette, by the
Minister, after consultation with the NDPP and the Minister for Public Service and
Administration, with the concurrence of the Minister of Finance. Section 18(2) of the
same Act stipulates that ‘different categories of salaries and salary scales may be
determined in respect of different categories of [DDPPs] and prosecutors’.
[7] On 7 October 2008, the Minister, acting in terms of s 18(1) of the NPA Act,
determined a first phase translation (on the same basis as provided for in the OSD for
legally qualified professionals as per GPSSBC Resolution 1 of 2008) and setting out
new salary ranges for prosecutors with effect from 1 July 2007.4 On 2 December 2010,
the Minister, within the contemplation of the same provision, published a determination
(the 2010 Determination) in terms of which he announced that a second stage
translation had been negotiated and that the determination of the OSD and second
2 The applicable Bargaining Council was the GPSSBC.
3 ‘GN R. 173, GG 30722, 14 February 2008.’ In Annexure A, it was stated that the determination dealt
with ‘inclusive flexible remuneration dispensation for senior management service (SMS) in the NPA’.
On 6 July 2012, the Minister published a further determination in ‘GN 521, GG 35494, 6 July 2012’, in
terms of which the inclusive flexible remuneration packages of DDPPs, CPs and Chief Special
Investigators were revised.
4 ‘GN 1088, GG 31486, 1 July 2007.’
phase translation for prosecutors was in line with the OSD determined in GPSSBC
Resolution 1 of 2008.5 The 2010 Determination, as published in the government
gazette, was couched as follows:
‘DETERMINATION OF SALARIES OF PROSECUTORS UNDER SECTION 18(1) OF THE
NATIONAL PROSECUTING ACT, 1998
WHEREAS the former Minister for Justice and Constitutional Development, as per
Government Notice No 1088 published in Government Gazette No 31486 of 7 October 2008,
determined as the first phase translation, on the same basis as provided for in the Occupation
Specific Determination for legally qualified professionals as per GPSSBC Resolution 1 of 2008
and pending a final determination, new salaries for prosecutors with effect from 1 July 2007;
AND WHEREAS a second phase translation and determination has been negotiated with the
Department of Public Service and Administration in line with abovementioned Occupation
Specific Dispensation;
NOW THEREFORE, I, Jeffrey Thamsanqa Radebe, Minister for Justice and Constitutional
Development, acting under section 18(1) of the National Prosecuting Authority Act, 1998 (Act
No. 32 of 1998), and after consultation with the National Director of Public Prosecutions and
the Minister for the Public Service and Administration, and with the concurrence of the Minister
of Finance, hereby determine an Occupation Specific Dispensation and second phase
translation for prosecutors as per Schedule, with effect from 1 July 2007.’ (My emphasis.)
[8] The Schedule attached to the 2010 Determination (the Schedule) stipulated
that the objective of that determination was to provide for a unique remuneration
structure and to introduce the OSD and career progression system for legally qualified
professionals ‘as defined in this determination’. It identified the desire to provide for
career-pathing opportunities based on competencies, experience and performance as
well as ‘the creation of a specialist dispensation’ as some of the objectives of that
determination. Under the caption ‘scope’, it was stated that ‘this determination applies
to qualified legal professionals in terms of section 166 of the NPA Act’.
[9] The PSA contended that its members were entitled to specific performance in
respect of the collective agreements concluded in the bargaining councils. It asserted
5 ‘GN 1146, GG 33826, 2 December 2010.’
6The NPA Act makes provision for various categories of appointments. The National Director is
appointed in terms of s 10; the Deputy National Directors in terms of s 11; the Directors and Acting
Directors in terms of s 13; DDPPs in terms of s 15; and prosecutors are appointed to the office of the
NDPP, at the seats of the High Courts as envisaged in s 6 of that Act, at the Investigative Directorate,
as well as at the lower courts, in terms of s 16 of the NPA Act.
that the failure by the NPA to implement the collective agreements and the 2010
Determination constituted an unfair labour practice. In addition to those assertions, the
PSA contended that, following the publication of the 2010 Determination, various
meetings were held and correspondence exchanged with a view to finalising the
translation of the DDPPs and CPs to the OSD remuneration structure. According to
the PSA, these engagements culminated in the NDPP, on 29 July 2014, approving the
recommendations made by the NPA’s Chief Director: Human Resources and
Development (Chief Director), in his memorandum dated 18 July 2014, regarding the
implementation of OSD structure in respect of NPA employees employed at salary
levels 13 and 14.
[10] The PSA averred that the NDPP’s approval evidenced an intention to bring the
56 DDPPs and CPs represented by the PSA within the ambit of Resolution 1 of 2008,
and that insofar as the individual employees consented to being translated, that
resolution became applicable to them. Having taken the stance that the NDPP’s
approval was binding on the NPA, the PSA inter alia, sought an order declaring the
NDPP’s approval lawful and enforceable. In addition to relying on the NDPP’s
approval, the PSA also placed reliance on a memorandum from the Chief Executive
Officer of the NPA, Ms Karen van Rensburg (the CEO) dated 24 November 2014, in
terms of which the DDPP’s were inter alia informed that the proposed implementation
date for migration to LP10 in the NPA was 1 April 2015.
[11] During the hearing of the application at the high court, the appellants contended
that the high court did not have the jurisdiction to adjudicate the matter because the
PSA’s application was a quintessential labour dispute which was to be processed
through the mandatory dispute resolution procedures set out in the Labour Relations
Act 66 of 1995 (LRA). The appellants also contended that the high court could not
exercise jurisdiction over the dispute within the contemplation of s 77(3) of the Basic
Conditions of Employment Act 75 of 1997 (BCEA) because the various collective
agreements relied upon by the PSA were inapplicable to them.
[12] In dealing with the point in limine raised in relation to jurisdiction, the high court
took into account that the PSA not only sought compliance with collective agreements
but, in addition, also sought compliance with the 2010 Determination issued by the
Minister, the NDPP’s approval (regarding the implementation of the OSD) and the
memorandum compiled by the CEO dated 24 November 2014.7 It accepted that the
PSA’s prayer for specific performance was premised on s 77(3) of the BCEA, which
grants concurrent jurisdiction to both the Labour Court and the High Court in relation
to any matter concerning a contract of employment. The high court therefore
considered itself to have the jurisdiction to adjudicate the application and dismissed
the point in limine. It also dismissed the points in limine raised in relation to lis pendens
and prescription. These are aspects that will be dealt with at the end of this judgment.
[13] The reasoning of the high court regarding the merits of the application, properly
construed, was that inasmuch as s 18(2) of the NPA Act recognises that different
categories of salaries and salary scales may be determined for different categories of
DDPPs and prosecutors, that provision does not make any distinction in relation to the
particular structure of remuneration. Thus, there was no bar precluding the translation
of the DDPPs and CPs to the OSD structure. The high court found that on a purposive
interpretation of the 2010 Determination, there was nothing unlawful about the NDPP
approving a recommendation that suggested that the DDPPs and CPs be translated
to the OSD salary structure. It also found that the DDPPs and CPs had, in line with the
NDPP’s approval, completed and signed the relevant documents, thus indicating their
consent to translate from the salary structure known as Senior Management Service
dispensation (SMS) to the OSD. It accordingly held that the PSA was entitled to the
relief of specific performance relating to the implementation of the 2010 Determination,
as approved by the NDPP on behalf of the NPA on 29 July 2014. The high court
declared that the NDPP’s approval regarding the implementation of OSD was ‘lawful
and enforceable’ and had to be complied with.
[14] Dissatisfied with the orders granted by the high court, the NPA, the Minister and
the Director-General sought the high court’s leave to appeal its judgment but were
unsuccessful. The same parties then lodged two separate applications (with the NPA
being an applicant in one application and the Minister and the Director-General being
the applicants in the other), petitioning this Court to grant them leave to appeal the
high court’s judgment. Having considered the two applications, this Court, for the sake
7 Paragraph 35 of the high court’s judgment.
of convenience, issued one order in terms of which all the applicants (hereafter jointly
referred to as the appellants) were granted leave to appeal to this Court against the
order of the high court. Although there are in essence two appeals before us, these
were dealt with simultaneously.
Did the high court have jurisdiction to adjudicate the application?
[15] It is trite that both the LRA and the BCEA grant the Labour Court exclusive
jurisdiction in respect of certain matters. Moreover, some disputes must be finally
resolved through arbitration.8 However, the High Court’s jurisdiction is not ousted by s
157(1) of the LRA merely because a dispute falls within the overall sphere of
employment relations. This is because in terms of s 157(2) of that Act, the High Court
and the Labour Court share concurrent jurisdiction in respect of employment-related
disputes over which the Labour Court does not have exclusive jurisdiction.9 Similarly,
s 77(3) of the BCEA, grants the Labour Court and High Court concurrent jurisdiction
in respect of any matter concerning a contract of employment irrespective of whether
any basic condition of employment constitutes a term of that contract.
[16] The fundamental question is whether the high court and the Labour Court
enjoyed concurrent jurisdiction over the causes of action relied upon by the PSA in its
application. A plethora of judgments have held that jurisdiction is determined on the
basis of the pleadings and not the substantive merits of the case.10 This Court in
Lewarne v Focem International (Pty) Ltd,11 held that when a court’s jurisdiction is
challenged, the court should base its conclusion on the applicant’s pleadings, as they
contain the legal basis of the claim under which the applicant had chosen to invoke
the court’s competence. In Boxer Superstores Mthatha and Another v MbenyaI,12 this
Court held that ‘the high court has jurisdiction even if the claim could also have been
formulated as an unfair labour practice’.
8 Section 157(1) of the Labour Relations Act 66 of 1995 provides: ‘Subject to the Constitution and
section 173, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction
in respect of all matters that elsewhere in terms of this Act or in terms of any other law are to be
determined by the Labour Court.’
9 See s 157(2)(a) of the LRA.
10 Gcaba v Minister for Safety and Security and Others [2009] ZACC 26; 2010 (1) SA 238 (CC) para
66; My Vote Counts NPC v Speaker of the National Assembly 2016 (1) SA 132 (CC) para 132–134.
11 Lewarne v Fochem International (Pty) Ltd [2019] ZASCA 114 para 7.
12 Boxer Superstores Mthatha and Another v Mbenya 2007 (5) SA 450 (SCA) para 5.
[17] The approach recently laid down by the Constitutional Court in Baloyi v Public
Protector13 (Baloyi) is instructive in relation to this appeal. That Court reaffirmed that
an assessment of jurisdiction must be based on an applicant’s pleadings, as opposed
to the substantive merits of the case.14 It also observed that ‘the same set of facts may
give rise to several different causes of action’.15 Where other potential causes of action
exist, the employee is not confined to only one.16 The Constitutional Court also
observed that the mere potential for a cause of action, like an unfair dismissal claim,
does not obligate a litigant to frame her claim as one of unfair dismissal and to
approach the Labour Court notwithstanding that other potential causes of action
exist.17 It also pointed out that the fact that a cause of action is limited to certain fora
must not be interpreted as obliging an applicant only to pursue that cause of action.18
[18] With all those principles in mind, I now consider whether the PSA’s pleaded
case elicited a cause of action that is justiciable in the high court. The question is
whether PSA’s pleadings as gleaned from the notice of motion and the founding
affidavit in its entirety, revealed a claim requiring the high court to determine a matter
concerning a contract of employment as envisaged in the BCEA. For a proper
perspective, it is necessary to preface a discussion on jurisdiction by sketching out the
relief which the PSA sought at the high court. The prayers were set out as follows in
the Notice of Motion:
‘1.
The [NPA] to comply with the collective agreement dated 5 July 2007 being PSCBC19
Resolution 1 of 2007;
2.
The [NPA] to comply with the collective agreement dated 7 February 2008 being
GPSSBC Resolution 1 of 2008;
3.
The [NPA] to comply with the government notice dated 2 December 2010 issued and
published by the Second Respondent acting in accordance with s 18(1) of the Act;
DECLARING
[4] That the NDPP’s approval regarding the implementation of the OSD dated 29 July
2014 was lawful and enforceable and must be complied with; and
13 Baloyi v Public Protector and Others [2020] ZACC 27; 2021 (2) BCLR 101 (CC); [2021] 4 BLLR 325
(CC); (2021) 42 ILJ 961.
14 Ibid para 33.
15 Ibid para 38.
16 Ibid para 40.
17 Ibid.
18 Ibid para 39.
19 Public Service Co-ordinating Bargaining Council established in terms of s 27 of the LRA.
[5] That the memorandum dated 24 November 2014 from the Chief Executive Officer of
the First Respondent, Ms Karen van Rensburg regarding the “proposal on the
implementation of the LP 1P in the NPA” is lawful, enforceable and created reasonable
legitimate expectation and must be complied with.
[6] Ordering the [NPA] to pay the costs of this application;
[7] Granting the Applicant further and/or alternative relief.’
[19] It is clear from the Notice of Motion that the PSA founded its case on a range
of causes of action. The first two prayers were for the enforcement of the 2007 and
2008 collective agreements. It is of significance that in terms of s 18 of the NPA Act,
the remuneration of DDPPs and prosecutors is to be determined only in terms of that
Act. In that sense, their remuneration is not collectively bargained. The PSA
emphasised that even though the genesis of the dispute was GPSSBC Resolution 1
of 2008, the dispute was not about the interpretation or application of that collective
agreement. Rather, its reliance on the 2008 resolution was premised on the NDPP
having approved that the new scheme (the OSD) mentioned in the 2008 resolution,
which was reaffirmed in the 2010 Determination, be made applicable to the DDPPs
and CPs. It is of significance that the high court did not grant prayers 1 and 2 (ie the
relief pertaining to the collective agreements). As there is no cross-appeal, there is no
need for those two prayers to detain us any further in this appeal.
[20] On the authority of Baloyi, it is permissible for a party to rely on more than one
cause of action.20 It is therefore noteworthy that in addition to seeking enforcement of
collective agreements, the PSA also located its dispute as a contractual claim within
the contemplation of s 77(3) of the BCEA. The PSA also sought an order declaring the
NDPP’s approval, lawful and enforceable. In order to determine whether any
averments were made to support the relief sought, it is important to consider the Notice
of Motion and the founding affidavit.
[21] As I understand the PSA’s founding affidavit, the contractual basis for the
specific performance relief it is seeking is hinged on the 2010 Determination as well
as the consultation that preceded it. The PSA avers that, pursuant to the Minister’s
20 Baloyi v Public Protector and Others [2020] ZACC 27; 2021 (2) BCLR 101 (CC); [2021] 4 BLLR 325
(CC); (2021) 42 ILJ 961 para 40.
2010 Determination, several engagements took place, culminating in the NDPP
approving the recommendation of the Chief Director, which essentially suggested the
steps that needed to be followed in order for the DDPPs and CPs to be translated to
OSD. According to the PSA, the NDPP agreed that the OSD would be implemented
to the DDPPs and CPs who consented to the migration from SMS to the OSD.
[22] The PSA averred that the translation of the DDPPs and CPs had in effect taken
place because the employees in question had, through their signature of performance
agreements which were premised on the translation to the OSD band level LP10,
indicated their acceptance to migrate from SMS to the OSD. This, it was contended,
is what brought the dispute within contractual claims as envisaged in s 77(3) of the
BCEA. As mentioned before, that provision grants the Labour Court concurrent
jurisdiction with the civil courts to hear and determine any matter concerning a contract
of employment, regardless of whether any basic condition of employment constitutes
a term of that contract. The prayers in the Notice of Motion speak for themselves. To
my mind, prayer F is not at odds with the assertion of a contractual obligation and thus
falls within the ambit of s 77(3). The contractual nature of the claim can also be gleaned
from various averments made by its deponent in the founding affidavit. In paragraph18
of the founding affidavit, which sets out the purpose of the application, it is inter alia
stated that ‘the principal purpose of this application is to seek specific performance
and to compel the [NPA] to comply with . . . the NDPP’s approval regarding the
implementation of OSD dated 29 July 2014 . . . and the memorandum dated 24
November 2014 from the Chief Executive Officer . . .’.
[23] At para 45 the deponent asserted that she had, on the instructions of the NPA,
by inter alia ‘completion of a choice to translate, which I did choose by signing a
performance agreement’. She also averred that her colleagues had also completed
documentation exercising the same choices as she did. I am satisfied that the
averments made in the pleadings in relation to the order of specific performance and
the declaratory order in relation to the NDPP’s approval sufficed to bring the matter
within the jurisdiction of the high court.
[24] The existence of the agreement to translate the DDPPs and CPs represented
by the PSA is an issue that speaks to prospects of success on the merits and not
jurisdiction. Similarly, a consideration as to whether the PSA had succeeded in proving
the existence of the agreement by attaching the relevant contracts in substantiation of
its allegations, is an aspect that speaks to the merits and not to jurisdiction. That this
is so is plain from the instructive approach set out in Baloyi, where the Constitutional
Court aptly stated as follows:
‘When assessing whether its jurisdiction is engaged, a court might be of the view that a litigant
should have pursued a different cause of action, or that she would have had a better chance
of success had she done so. However, these views are irrelevant to the courts’ competence
to hear the matter.’21
[25] Being mindful of the warning sounded by the Constitutional Court (in Baloyi)
against the conflation of the determination of a court’s jurisdiction with prospects of
success, I am of the view that the pleaded case as elicited in the PSA’s averments
mentioned in the foregoing paragraphs, sufficiently clothed the high court with
jurisdiction in relation to compliance with the 2010 Determination and the NDPP’s
approval dated 29 July 2014. The point in limine relating to jurisdiction was rightly
dismissed. I turn now to the merits of the pleaded causes of action.
Analysis of the merits
[26] As stated before, the PSA’s relief of specific performance inter alia sought to
compel compliance with the provisions of the NDPP’s approval of the OSD scheme
pursuant to the 2010 Determination. The 2010 Determination should therefore not be
considered in isolation; due regard must be paid to the NDPP’s approval and other
documents issued pursuant thereto. These include letters and minutes of meetings.
[27] The appellants contended that the NDPP did not have any say over the salaries
of DDPPs and CPs because the clear provisions of s 18(1) of the NPA Act clothe the
authority to determine the salaries of DDPPs and prosecutors only on the Minister.
They further contended that the ‘production specialist’ post was never created in the
NPA because of a lack of funding. The appellants stressed that the NDPP’s
endorsement of the LP10 translation in respect of the DDPPs and CPs could not have
granted him the right to exercise a power expressly granted by legislation to the
21 Baloyi v Public Protector and Others [2020] ZACC 27; 2021 (2) BCLR 101; [2021] 4 BLLR 325; (2021)
42 ILJ 961para 42.
Minister. At best, the NDPP’s approval and the CEO’s memorandum dated
24 November 2014 was the first level of a government procedure which requires the
approval of the NDPP to be placed before the Director-General and ultimately before
the Minister as part of the consultation process, so the contention went.
[28] I am mindful of the fact that s 18(2) of the NPA Act allows for different categories
of salaries and salary scales to be determined in respect of different categories of
DDPPs and prosecutors. While noting that the salary levels of the DDPPs and CPs
were not included among the various categories of salary-levels mentioned in
Annexure C of the 2010 Determination, I am unable to agree with any submission that
suggests, as a general proposition, that the OSD was not envisaged for DDPPs.
A purposive reading of the 2010 Determination in its entirety certainly does not support
that conclusion. It bears noting that in the preamble of the 2010 Determination, the
Minister acknowledged that the determination was preceded by consultations with the
NDPP and the Minister of Public Service and Administration. The occurrence of such
consultations is attested to by a memorandum issued by the Director-General, dated
13 August 2009, in terms of which it was stated that ‘all qualifying legally qualified
employees employed on salary levels 13 and 14 must translate to OSD’. It is common
cause that the DDPPs and CPs were at salary level 14.
[29] Although the DDPPs and CPs are not mentioned in the categories of
prosecutors listed in the translation key for the first and second phase translation
(Annexures B and C to the 2010 Determination), this does not detract from the fact
that the Schedule to the 2010 Determination introduced a work-stream referred to as
‘production specialist’. Moreover, in Annexure A to that Schedule, the job titles of
‘litigation specialist’ and ‘Deputy Director of Public Prosecutions (Production)’ are
listed under the LP10 band. Paragraph 4.2 of that Schedule spells out that the
production specialist stream was created to assist the NPA to recruit and retain
specialists in the legal profession whose posts require active involvement in court
work. The suggestion, in the NDPP’s approval, about DDPPs and CPs qualifying for
approval if they, inter alia, performed not less than 80% of court-related work must be
seen against that background.
[30] It is noteworthy that GPSSBC Resolution 1 of 2008 granted the Departments
the latitude to deal with the number of posts created in the litigation specialist stream
subject to their own norms. Similarly, the 2010 Determination granted the NPA the
latitude to establish its own norms regarding the litigation specialist stream. From my
point of view, the series of engagements with the DDPPs and CPs regarding the OSD
following the publishing of the 2010 Determination, the Chief Director’s
recommendations which were duly approved by the NDPP on 29 July 2014, are all
consistent with the exercise of determining how the litigation specialist stream could
be aligned to the NPA norms. The NDPP’s endorsement of the OSD must be seen in
that light. For that reason, I am unable to agree with the appellants’ contention that the
NDPP’s approval was unlawful.
[31] As regards the enforceability of the NDPP’s approval, I agree with the
appellants’ contention that the NDPP’s endorsement of the translation to the OSD
could not be elevated to a binding decision that could finally determine the salaries of
the DDPPs and CPs. That this is so is manifest from the clear provisions of s 18(1) of
the NPA Act, which not only requires the Minister’s determination to be in consultation
with the NDPP but also requires the concurrence of the Minister of Finance. Since the
NDPP was not authorised to determine the salaries of the DDPPs and CPs, it follows
that the PSA’s assertion that the NDPP’s approval created a legitimate expectation
that its aggrieved members were entitled to be translated to OSD, was misplaced.22
This finding, however, is not dispositive of the appeal.
[32] Another important consideration which was debated with counsel during the
hearing is as regards the assertion that the DDPPs and CPs evidenced their consent
to the implementation of the OSD by signing performance agreements. For the
reasons that follow, I am of the view that the PSA’s claim on the implementation of any
agreement premised on the NDPP’s approval fell to be dismissed.
[33] It is clear that the NDPP’s approval of the Chief Director’s recommendations
was not without conditions. It suggested that (i) the Deputy Directors of Public
22 See Duncan v Minister of Environmental Affairs and Tourism and Another [2010] 2 All SA 462 (SCA)
para 15.
Prosecution (DDPPs) on salary level 13 and 14 were to be regarded as production
specialist on the basis that they performed not less than 80 percent production work;
and, (ii) the qualifying DDPPs on level 13 and 14 were to be migrated out of the Senior
Management Service (SMS) salary dispensation to the OSD on salary level LP10,
should they consent. The NDPP clearly envisaged that the individual employees would
have to consent to the translation. Similarly, the CEO’s memorandum dated 24
November 2014, addressed to all Deputy National Directors and copied to the NDPP,
also made it clear that the DDPPs and CPs would be ‘required to relinquish their
positions as members of the SMS dispensation and be classified as production units
as opposed to management echelon’.
[34] As mentioned before, even on the PSA’s own account of events, the NDPP
envisaged that the respective DDPPs and CPs would have to consent to the
translation. It is of significance that the PSA in its replying affidavit stated: ‘consent to
translate to OSD was a prerequisite. Therefore, non-consenting [DDPPs and CPs]
were not translated to OSD’. The recommendations in the Chief Director’s letter clearly
stipulated that the dispensation be migrated to those DDPP’s who consented to the
translation. In that same letter (dated 18 July 2014) the Chief Director observed that
‘the implementation of OSD is not automatic and requires a formal process being
undertaken’.
[35] The Chief Director’s understanding can be accepted as correct because in
Annexure C to the 2010 Determination, which dealt with the second phase of the
translation process, the salary levels of the DDPPs and CPs were not included among
the various categories of salary-levels listed in that document. It is also worth noting
that in her memorandum dated 24 November 2014, the CEO remarked: ‘Since the
approval of the OSD, the NPA has been grappling with the implementation issues
around implementation of LP10. Various approaches and models have been
discussed and up to this point, no formal approval was granted for the implementation
of LP10’.
[36] The minutes of the meetings held after the issuance of the CEO’s memorandum
are also of significance. In the minutes dated 25 May 2015, it is recorded that ‘there
are requirements that have to be met at individual level. We cannot say that everyone
who is currently on level 13 and 14 automatically [qualifies] because that will include
people that do not necessarily do the work and don’t want to do the work of a specialist
litigator’. The importance of the consent of the respective DDPPs and CPs is
recognisable from this statement. Similarly, the minutes of the meeting held with the
CPs on 4 June 2015 recorded that ‘our commitment is such that all people who are
currently on salary levels 13 & 14, which includes you (Chief Prosecutors) who meet
the requirements can translate to LP10 if they exercise that option, having looked at
the implication as individuals’.
[37] Although the PSA averred in various paragraphs of the founding affidavit that
the DDPPs and CPs had consented to be translated from SMS level to LP10 and that
their consent is self-evident from the performance agreements, the difficulty for the
PSA is that no performance agreement attests to this. The specimen performance
agreement handed in during oral submissions at the high court makes no allusion to
a consent to translation. Insofar as the specimen performance contract does not reflect
consent as envisaged in the NDPP’s approval, the upshot of this is that the consent of
the DDPPs and CPs remains an unsubstantiated term of the very agreement the PSA
is seeking to enforce. On that basis alone, the PSA has not shown an entitlement
which the high court could enforce as a contractual obligation.
[38] With specific reference to the deponent to the founding affidavit (Ms Meintjies),
it is noteworthy that, having averred that she had consented to the translation in
accordance with the NDPP’s approval, in Annexure A1 dated 3 March 2015, which
was attached to her performance agreement for the 1 April 2016-31 March 2016 cycle,
she stated the following:
‘My signing of this document is not to be understood as acceptance of the manner or date of
the translation as proposed by the CEO in a letter dated 24 November 2014 addressed to
Deputy National Directors. It is categorically stated that the contents of this letter only came to
my attention on 2 March 2015 per an email forwarded by the DPP, Mr Mzinyathi. Attached to
the email of 2 March 2015 was a letter by the CEO dated 27 February 2015 addressed to all
NDPP, DPP, RH and Special Directors in which reference is made to the letter of 24 November
2014 with the said letter attached thereto. The manner and date of the translation should be
in line with the relevant instruments and prescripts governing OSD and LP10 translations.’
(My emphasis.)
The passage quoted above is a clear indication that her mere signature of the
performance agreement could not, without more, have evidenced a consent to be
translated, as contended for by the PSA. In my view, there is insufficient information
to substantiate her alleged compliance with the requirements set out in the NDPP’s
approval, which were subsequently elucidated in the CEO’s letter.
[39] Quite apart from the fact that some of the correspondence from the NPA shows
that certain requirements had to be met prior to the LP10 band being applicable to
DDPPs and CPs, it is clear from various documents annexed to the PSA’s papers,
including the minutes of the meetings alluded to earlier in the judgment, that there was
also no unanimity on the implementation date. The following assertion by Ms Meintjies
is striking:
‘It is important to note that the implementation date communicated in the meeting of 25 May
2015 and on the memorandum dated 24 November 2014 is not the same date that was agreed
upon at the bargaining council. It is neither the date the [Minister of Justice] endorsed nor the
date communicated by the [Minister of Public Service and Administration] in their respective
determinations. The common implementation date agreed upon and duly communicated by
the bargaining councils, [the Minister of Justice] and [the Minister of Public Service and
Administration] for the purposes of OSD is 7 July 2007 and not 1 April 2015.’ (My emphasis.)
[40] It is clear from the afore-mentioned passage that even after the NDPP’s
approval of the Chief Director’s recommendation in July 2014, there was still no finality
regarding the agreed upon date for the implementation of the OSD to the DDPPs and
CPs. The CEO stated that ‘the implementation date cannot be earlier than the 1st of
September 2014 as the approval was obtained on the 29th of July 2014’. Ms Meintjies’
disavowal of the dates mentioned in the CEO’s memorandum does not assist the PSA
in any way, seeing that she, in para 18.1.5 of her founding affidavit, also sought
compliance with that specific memorandum. On the papers as they currently stand,
the PSA’s averment that ‘the common implementation date agreed upon’ was 7 July
2007, cannot be correct.
[41] As stated before, the appellants contended that the production specialist post
was never created in the NPA because of a lack of funding. It is quite telling that in
their Request for Arbitration, the PSA described the dispute as being about ‘whether
an agreement was reached to the effect that DDPP on salary level 13 & 14 would be
regarded as being production specialists and that qualifying DDPPs at level 13 & 14
will be migrated out of SMS dispensation to OSD on salary level LP10’. Clearly, there
had been no consensus on this aspect.
[42] I am therefore of the view that even on the PSA’s own version of events, none
of the documents furnished in the application point to a consensus on the manner of
implementation of the OSD for the DDPPs and CPs. This means that the PSA failed
to prove the existence of the agreement it sought to rely on. Its claim on the
implementation of any agreement premised on the NDPP’s approval therefore fell to
be dismissed.
[43] With the benefit of the analysis in the foregoing paragraphs, it is now opportune
to deal with the points in limine raised in relation to lis pendens and prescription. It is
trite that a party wishing to raise lis pendens bears the onus of proving that there is a
pending litigation between the same parties or their proxies, in circumstances where
the causes of action are substantially the same.
[44] In the referral form submitted by Ms Meintjies to the Bargaining Council, under
the heading “Nature of the Dispute”, her dispute was described as an unfair labour
practice pertaining to promotion. Given the fact that a litigant is not obliged to rely
exclusively on the cause of action it has pursued at its chosen forum, nothing barred
the PSA from pursuing other causes of action that are justiciable in the civil courts.
It follows that the fact that there is a pending litigation pertaining to a dispute of
promotion before the Bargaining Council did not preclude the PSA from seeking
specific performance as it did before the high court. This is more so the case in
circumstances where the appellants have not denied having raised a point in limine of
jurisdiction in terms of which they contended that the Bargaining Council does not have
jurisdiction to adjudicate the unfair labour practice dispute referred to it by the PSA, on
the basis that it does not qualify as a promotion dispute. In any event, the PSA averred
in the founding affidavit that the proceedings at the Bargaining Council have been
stayed pending the finalisation of this matter.
[45] As regards the litigation pending at the Labour Court, it is evident from the
Notice of Motion issued at the Labour Court that the cause of action in that matter
relates only to the appellants’ entitlement to cost-of-living adjustments not
remuneration; the cause of action pursued in the high court was therefore different
from the one relating to the review application that is pending at the Labour Court.23
It follows that the point in limine of lis pendens had no merit and were correctly
dismissed by the high court. The point in limine in relation to prescription was not
persisted with before us and need not detain us any further. Suffice it to merely
mention that given the fact that the dispute at the Bargaining Council is still pending,
there can be no question of the application at the high court having been barred by
prescription.
[46] As regards costs, it has been stated in a plethora of cases that labour disputes
are constitutional issues. I am of the view that the proceedings in the high court and
this Court activated the well-established principle enunciated in Biowatch Trust v
Registrar: Genetic Resources and Others.24 Given the circumstances I have already
explained, I am not persuaded that the PSA’s conduct in launching its application at
the high court warrants censure in the form of an adverse order of costs. In the result,
I would uphold the appeal, set aside the order of the high court and replace it with an
order dismissing the application with no order as to costs.
____________________
M B MOLEMELA
JUDGE OF APPEAL
23 Section 16 of the NPA Act deals with the appointment of DDPPs and prosecutors. Section 16(4)
provides that insofar as any law governing the public service pertaining to DDPPs and prosecutors may
be inconsistent with the NPA Act, the provisions of the NPA Act shall apply. The remuneration of DDPPs
and prosecutors is provided for in s 18(1) of the NPA Act. In terms of s 18(1)(b) of that Act, the cost-of-
living adjustments are effected in accordance with the cost-of-living adjustments determined for legally
qualified personnel in the Public Service. In terms of s 19 of the NPA Act, conditions of service of DDPPs
and prosecutors and prosecutors are determined in terms of the provisions of the Public Service Act.
24 Biowatch Trust v Registrar, Genetic Resources Others [2009] ZACC 14; 2009 (6) SA 232 (CC). The
principle laid down in that case, which is commonly referred to as the Biowatch principle, laid down that
an unsuccessful party in proceedings against the State should be spared from paying the State’s costs
in constitutional matters.
Hughes JA
Costs
[47] I have had the benefit of reading the judgment of my colleague, Molemela JA.
I concur with the reasoning and conclusions reached in respect of the point in limine
of jurisdiction ‘. . . it is permissible for a party to rely on more than one cause of action.
It is therefore noteworthy that in addition to seeking enforcement of [the] collective
agreements, the PSA also located its dispute as a contractual claim within the
contemplation of s 77(3) of the BCEA’. It is on this basis that I concur that the high court
was competent to hear the application before it.
[48] I take no issue with the reasoning on the merits. I however, respectfully
disagree with the costs order granted. It is trite that the issue of awarding costs lies
within the discretion of the court alone and generally the successful party is entitled to
their costs. My disagreement lies with the conduct of the PSA in pursuing the
application for specific performance. I am of the view that the application by the PSA
in the high court was ill-conceived and manifestly inappropriate. Thus, the PSA falls to
be penalised with an adverse costs order. I am mindful of the applicability of Biowatch
in inherently constitutional matters, however, I am still convinced that a costs order is
appropriate against the PSA for the reasons which follow hereafter.
[49] The PSA pursued this application in the high court having referred two disputes
on the facts of the OSD issue to the Bargaining Council. The first on 10 February 2016
which remains unresolved in respect of ‘an unfair labour practice relating to promotion
. . . respondent [NPA] having failed to translate the . . . applicants from SMS salary
dispensation to the OSD, and specifically LP10’. Second, on 13 June 2016 a second
dispute was launched with the Bargaining Council requesting an arbitration. In this
dispute the PSA sought a determination ‘whether an agreement was reached to the
effect that DDPP on salary level 13 and 14 would be regarded as being production
specialist and that qualifying DDPPs on level 13 and 14 will be migrated out of SMS
dispensation to OSD on LP10’. This dispute has been stayed pending the outcome of
the high court application. Notably, the high court application for specific performance
was filed on 4 December 2017.
[50] In the analysis of the merits above and on the PSA’s version alone it was well
established that there were a host of shortcomings with the conclusion of the
agreement which the PSA sought to be enforced. I do not propose to repeat what is
set out above on the merits. However, of significance is the fact that the PSA was not
even certain whether an agreement had been concluded. Yet, here they were seeking
specific performance of an agreement that they were not sure existed.
[51] The proper approach to establish whether an application was manifestly
inappropriate was settled in Lawyers for Human Rights v Minister in the Presidency
and Others: 25
‘Whether an application is manifestly inappropriate depends on whether the application was
so unreasonable or out of line that it constitutes an abuse of the process of court. In Beinash,
Mahomed CJ stated there could not be an all encompassing definition of “abuse of process”
but that it could be said in general terms “that an abuse of process takes place where the
procedures permitted by the rules of the Court to facilitate the pursuit of the truth are used for
a purpose extraneous to that objective”. The Court held:
“There can be no doubt that every Court is entitled to protect itself and others against an abuse
of its processes. Where it is satisfied that the issue of a subpoena in a particular case indeed
constitutes an abuse it is quite entitled to set it aside. As was said by De Villiers JA in Hudson
v Hudson and Another 1927 AD 259 at 268:
“When . . . the Court finds an attempt made to use for ulterior purposes machinery devised for
the better administration of justice, it is the duty of the Court to prevent such abuse.”
What does constitute an abuse of the process of the Court is a matter which needs to be
determined by the circumstances of each case. There can be no all-encompassing definition
of the concept of “abuse of process”. It can be said in general terms, however, that an abuse
of process takes place where the procedures permitted by the Rules of the Court to facilitate
the pursuit of the truth are used for a purpose extraneous to that objective.”’
[52] Applying the above approach to the circumstances, that being the pending
disputes before the Bargaining Council, despite the inherent constitutional element
present, in my view the high court application was fundamentally misdirected,
unreasonable and inappropriate. Especially so, regard being had that the PSA was
not even certain whether there was an agreement or not to enforce. The PSA’s
25 Lawyers for Human Rights v Minister in the Presidency and Others [2016] ZACC 45; 2017 (1) SA
645; 2017 (4) BCLR 445 (CC) para 20.
conduct clearly amounts to an abuse of court process and as such warrants an
adverse costs order against them.
[53] It is for the reasons above that I disagree with the costs order of Molemela JA.
However, I concur with the judgment of Molemela JA upholding the appeal and
dismissing the application. As regards the costs, I would order the PSA to pay the
costs, such costs to include the costs of two counsel where so employed.
___________________
W HUGHES
JUDGE OF APPEAL
Saldulker and Van der Merwe JJA (Mokgohloa JA concurring) (Majority
judgment)
[54] We have had the benefit of reading the judgment of our Sister, Molemela JA.
We respectfully disagree with the finding that the high court had jurisdiction to entertain
the matter. For the reasons that follow, we are of the view that the high court should
have struck the matter from its roll for want of jurisdiction. We adopt the nomenclature
used by our Colleague. We do not regard it necessary to repeat the facts of the matter
and refer only to those facts that are necessary for a proper understanding of this
judgment.
[55] In Chirwa v Transnet Limited and Others [2007] ZACC 23; 2008 (4) SA 367
(CC); 2008 (3) BCLR 251 (CC), the Constitutional Court explained that the Labour
Court and other tribunals created under the LRA are uniquely qualified to handle
labour-related disputes. At para 47 it said:
‘. . . The purpose of labour law as embodied in the LRA is to provide a comprehensive system
of dispute resolution mechanisms, forums and remedies that are tailored to deal with all
aspects of employment. It was envisaged as a one-stop shop for all labour-related disputes.
The LRA provides for matters such as discrimination in the workplace as well as procedural
fairness; with the view that even if a labour dispute implicates other rights, a litigant will be
able to approach the LRA structures to resolve the disputes.’
[56] This does not mean, of course, that no employment-related claim is justiciable
in the high court. Section 157 of the Labour Relations Act 66 of 1995 (LRA) provides:
‘157. Jurisdiction of Labour Court
(1)
Subject to the Constitution and section 173, and except where this Act provides
otherwise, the Labour Court has exclusive jurisdiction in respect of all matters that elsewhere
in terms of this Act or in terms of any other law are to be determined by the Labour Court.
(2)
The Labour Court has concurrent jurisdiction with the High Court in respect of any
alleged or threatened violation of any fundamental right entrenched in Chapter 2 of the
Constitution of the Republic of South Africa, 1996, and arising from -
(a)
employment and from labour relations.
. . . .’
[57] The relevant sections of the Basic Conditions of Employment Act 75 of 1997
(BCEA) provide as follows:
‘77(1) Subject to the Constitution and the jurisdiction of the Labour Appeal Court, and except
where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all
matters in terms of this Act.
. . .
77(3) The Labour Court has concurrent jurisdiction with the civil courts to hear and determine
any matter concerning a contract of employment, irrespective of whether any basic condition
of employment constitutes a term of that contract.’
[58] In Gcaba v Minister of Safety and Security [2009] ZACC 26; 2010 (1) SA 238
(CC); 2010 (1) BCLR 35 (CC), the Constitutional Court made it clear that an
assessment of jurisdiction must be based on an applicant’s pleadings. At para 75, the
following was said:
‘. . . In the event of the Court’s jurisdiction being challenged . . . the applicant’s pleadings are
the determining factor. They contain the legal basis of the claim under which the applicant
seeks to invoke the court’s competence. While the pleadings – including in motion
proceedings, not only the formal terminology of the notice of motion, but also the contents of
the supporting affidavits – must be interpreted to establish what the legal basis of the
applicant’s claim is, it is not for the court to say that the facts asserted by the applicant would
also sustain another claim, cognisable only in another court. If however the pleadings, properly
interpreted, establish that the applicant is asserting a claim under the LRA, one that is to be
determined exclusively by the Labour Court, the High Court would lack jurisdiction. . . .’
[59] The recent judgment of the Constitutional Court in Baloyi v Public Protector and
Others [2020] ZACC 27; 2021 (2) BCLR 101 (CC); [2021] 4 BLLR 325 (CC) , provides
an example of the application of these well-known principles. There Ms Baloyi was
employed by the office of the Public Protector on a five-year contract, with a six-month
probation period, which could be extended. After the expiry of the probation period,
she was invited to make representations as to the confirmation of her employment
contract. Sometime thereafter she received a letter terminating her contract. Ms Baloyi
launched an application on the basis that the termination of her employment contract
had been unlawful.
[60] The high court dismissed Ms Baloyi’s application on the ground that it did not
have jurisdiction over the dispute and that it should have been brought before the
Labour Court. However, the Constitutional Court held that the high court had erred in
dismissing Ms Baloyi’s application on the basis that it essentially entailed a labour
dispute and that its jurisdiction was not engaged. It held that on an analysis of her
pleaded case, Ms Baloyi claimed relief on three grounds, none of which had to be
determined in terms of the LRA or fell within the exclusive jurisdiction of the
Labour Court. These grounds were that the termination of her employment contract
constituted a breach of contract, that the official who had purported to terminate it had
no power to do so and that the decision to terminate the contract had been made in
bad faith and for an ulterior purpose. Each case must, of course, be decided on its
own facts and, as we shall show, the facts of this case differed markedly from those
of Baloyi.
[61] A perusal of the application of the PSA makes it quite clear that the PSA sought
the implementation of the 2010 Determination by the ‘translation’ of the DDPPs and
CPs to the OSD specialist work stream on the LP-10 OSD band. On the facts of this
case, however, the high court could only have been clothed with jurisdiction if this
outcome had been claimed on the ground that the terms of the individual employment
contracts between the DDDPs and CPs and the NPA obliged the NPA to act
accordingly. Thus, the notice of motion and founding affidavit has to be analysed to
ascertain whether the enforcement of employment contract terms was relied upon. In
performing this exercise, substance must prevail over form and proper regard must be
had to context.
[62] The first indicator in this regard is that the PSA was the applicant in its own
name. As a trade union it was not a party to any of the employment contracts in
question. This strongly points to the absence of an intention to enforce the terms of
individual contracts of employment. The material relief claimed in the notice of motion
is quoted in the judgment of Molemela JA. It suffices to say that the notice of motion
in no way conveyed a reliance on employment contracts. In the founding affidavit the
deponent said ‘I am advised that this is a contractual dispute (applicants seek specific
performance) . . .’ and proceeded to reproduce the provisions of s 77(3) of the BCEA.
This vague and unsubstantiated averment constituted the founding affidavit’s only
reference to a contractual dispute.
[63] In the circumstances it is necessary to set out what the PSA said in the founding
affidavit under the rubric ‘PURPOSE OF THIS APPLICATION’:
‘18.
The principal purpose of this application is to seek specific performance and also to
compel the first respondent to comply with the following:
18.1.1 the collective agreement dated 5 July 2007 being PSCBC Resolution 1 of 2007;
18.1.2 the collective agreement dated 7 February 2008 being GPSSBC Resolution 1
of 2008;
18.1.3 government notice dated 2 December 2010 issued and published by the
second respondent acting in accordance with s 18(1) of the Act;
18.1.4 the NDPP’s approval regarding the implementation of the OSD dated
29 July 2014; and
18.1.5 the memorandum dated 24 November 2014 from the Chief Executive Officer
of the first respondent, Adv Karen van Rensburg regarding the “proposal on
the implementation of the LP 10 in the NPA”.
19.
In addition, this application seeks declaratory orders declaring that the conduct of the
first respondent in not complying with its obligations as detailed in subparagraphs
18.1.1-18.1.5 is unlawful.
20.
Lastly, to declare that the first respondent created a legitimate expectation to the 2nd to
55th applicants that they are entitled to and would receive all the benefits extended to
legal professionals within the justice cluster.
21.
To advance the applicants’ case, I propose to deal with its pertinent aspects in the
following terms:
21.1
First, salient background facts of this dispute;
21.2
Second, the remuneration of DDPP and Chief Prosecutors in terms of the Act;
21.3
Third, applicability of the collective agreements to the NPA;
21.4
Fourth, whether the applicant’s members are entitled to the OSD benefits;
21.5
Fifth, first respondent’s internal circulars to employees regarding the OSD;
21.6
Sixth, whether the non-implementation of the OSD by the first respondent
constitutes an unfair labour practice;
21.7
Seventh, the legal framework proposed in the determination of this matter;
21.8
Eighth, whether the applicant has made out a case of unfair labour practice in
this matter; and
21.9
Lastly, conclusion.’
[64] Read with the notice of motion and in context, the PSA in our view clearly
claimed specific performance of obligations that had allegedly arisen from the
documents listed in paras 18.1.1 to 18.1.5 of the founding affidavit themselves, not
from employment contracts. All of these documents were of collective and/or general
nature.
[65] Under the heading ‘SALIENT BACKGROUND FACTS’, the deponent referred
to a grievance that she had lodged on 26 October 2015. She said:
‘Central to my grievance was the failure of the first respondent to implement the OSD and to
translate me to LP-10 as per the decision of the second respondent read with collective
agreements cited above including the approval by the NDPP of the implementation of the OSD
within the prosecuting authority . . . .’
[66] She proceeded to explain that her grievance set out the steps that the NPA had
taken ‘. . . to implement the OSD in respect of myself, before it became apparent that
the First Respondent was no longer going to implement the OSD’. The deponent thus
said that her grievance tabulated the steps that the NPA had taken as follows:
‘45.1
Individual work assessments, ensuring the 80/20 split between production work and
management/administrative tasks, which was approved by my supervisor, the Director
of Public Prosecutions;
45.2
Completion of a choice whether to translate, which I did choose by signing the
performance agreement;
45.3
Completion of individual experience audits, which I filed;
45.4
An exercise whereby I was informed of the estimated financial impact of the translation,
which I received (although I dispute the accuracy thereof);
45.5
the undertaking given that translation to LP10 will be effected both at meetings and in
writing, as referred to and expanded in my affidavit; and
45.6
The signing of an LP10 performance agreement for the 2015/2016 performance year,
which I did.’
[67] The deponent to the founding affidavit proceeded to say that all the other
DDPPs and CPs had followed suit in lodging grievances. She said that her grievance
had been referred to the GPSSPC as a dispute for resolution. She stated that the
matter was scheduled for arbitration on 10 August 2016. The GPSSPC determined
that it had jurisdiction in respect of the dispute and ordered the deponent to apply for
condonation. She proceeded to say that the condonation had subsequently been
granted and that the arbitration proceedings were not yet concluded.
[68] This part of the founding affidavit was immediately preceded by the following
passage:
‘It is important to note that the implementation date communicated in the meeting of
25 May 2015 and on the memorandum dated 24 November 2014 is not the same date that
was agreed upon at the bargaining Council. It is neither the date the second respondent
endorsed nor the date communicated by the third respondent in their respective
determinations. The common implementation date agreed upon and duly communicated by
the bargaining councils, second respondent and the third respondent for the purposes of the
OSD is 7 July 2007 and not 1 April 2015.’
[69] In their context and in terms of their plain language, these averments did not
purport to found relief on the terms of the employment contracts between the NPA and
the DDPPs and CPs (who, in any event, were not parties to the application). The
founding affidavit simply did not place reliance on employment contracts. That is why
the following was stated in the answering affidavit:
‘The Applicants correctly do not and cannot rely on any enforceable contractual right, because
there was no binding agreement between the NPA and the Applicants – which is the hallmark
of contractually enforceable obligations.’
And it came as no surprise that this averment had not been disputed in the replying
affidavit.
[70] What was in fact relied upon in the founding affidavit, at length, was that the
failure to implement the OSD in respect of the DDPPs and CPs had constituted an
unfair labour practice relating to promotion and benefits, as defined in s 186 of the
LRA. In this regard the founding affidavit concluded as follows:
‘In the circumstances, we submit that a proper case for unfair labour practice has been made
out by the applicant on behalf of its members. The applicant’s members remain financially
disadvantaged by the non-implementation of the OSD determined for their benefit by the
second respondent acting in terms of s 18(1) of the Act and as per collective agreements.’
In terms of s 191 of the LRA such unfair labour practice disputes must, of course, be
dealt with in terms of the LRA. It is clear from the papers that the PSA’s reference to
an alleged legitimate expectation formed part and parcel of its case for an unfair labour
practice.
[71] For these reasons we conclude that the high court did not have jurisdiction to
hear the matter. It had no power or authority to determine the disputes and should
have struck the matter from its roll. In the exercise of our discretion in respect of costs,
the PSA should be ordered to bear the costs of the abortive application in the
high court and of the appeal, inclusive of the costs of two counsel where so employed.
[72] In the result we make the following order:
The appeal is upheld with costs, including the costs of two counsel where so
employed.
The order of the high court is set aside and replaced with the following:
‘The application is struck from the roll with costs, including the costs of two
counsel where so employed.’
______________________
H K SALDULKER
JUDGE OF APPEAL
______________________
C H G VAN DER MERWE
JUDGE OF APPEAL
Appearances
Case No. 353/2020
For Appellant:
L Halgryn SC (with him P Mafisa)
Instructed by:
State Attorney, Pretoria
State Attorney, Bloemfontein
For 1st Respondent:
S Sethene
Instructed by:
Couzin & Hertzog, Pretoria
Symington De Kok, Bloemfontein
Case No. 354/2020
For Appellants:
F Boda SC (with him Z Ngwenya)
State Attorney, Pretoria
State Attorney, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
17 November 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this
case and does not form part of the judgments of the Supreme Court of Appeal
The National Prosecuting Authority v PSA obo Meintjies and 55 others and Others
(Case no: 353/2020) And The Minister of Justice and Correctional Services and
Director-General: DoJCD v PSA obo Meintjies and 55 others and Others (Case no:
354/2020) [2021] ZASCA 160 (SCA) (17 November 2021)
The Supreme Court of Appeal (SCA) today upheld appeals brought by the National
Prosecuting Authority (NPA) as well as the Minister of Justice and Correctional
Services and the Director-General: Department of Justice and Constitutional
Development (the appellants) against the decision of the Gauteng Division of the High
Court, Pretoria (the high court). The appeal was upheld with costs, including the costs
of two counsel where so employed. The decision of the high court was thereby set
aside and replaced with an order to strike the application from the roll with costs.
Central to the appeal was whether the Occupational Specific Dispensation (OSD)
structure of remuneration was, as contended for by the first respondent, introduced to
the National Prosecuting Authority (NPA) and made applicable to the posts held by
the Deputy Directors of Public Prosecution (DDPPs) and Chief Prosecutors (CPs). A
dispute regarding this aspect resulted in the Public Servants Association (PSA), a
trade union, launching an application on behalf of 56 DDPPs and CPs at the high
court. The NPA, the Minister of Justice and Correctional Services (the Minister) and
the Director-General: Department of Justice and Constitutional Development opposed
the application.
The PSA contended that its members were entitled to specific performance in respect
of collective agreements concluded in bargaining councils regarding the
implementation of the OSD for legally qualified categories of employees. It asserted
that the failure by the NPA to implement the collective agreements and the
Government Notice published by the Minister pertaining thereto (the 2010
Determination) constituted an unfair labour practice. In addition to those assertions,
the PSA contended that, following the publication of the 2010 Determination, various
meetings were held and correspondence exchanged with a view to finalising the
translation of the DDPPs and CPs to the OSD remuneration structure. According to
the PSA, these engagements culminated in the NDPP, on 29 July 2014, approving the
recommendations made by the NPA’s Chief Director: Human Resources and
Development (Chief Director), in his memorandum dated 18 July 2014, regarding the
implementation of OSD structure in respect of NPA employees employed at salary
levels 13 and 14. The PSA averred that the NDPP’s approval evidenced an intention
to bring the 56 DDPPs and CPs represented by the PSA within the ambit of GPSSBC
Resolution 1 of 2008, and that insofar as the individual employees consented to being
translated, that resolution became applicable to them. Having taken the stance that
the NDPP’s approval was binding on the NPA, the PSA inter alia sought an order
declaring the NDPP’s approval lawful and enforceable. In addition to relying on the
NDPP’s approval, the PSA also placed reliance on a memorandum from the Chief
Executive Officer of the NPA, Ms Karen van Rensburg (the CEO) dated 24 November
2014, in terms of which the DDPPs were inter alia informed that the proposed
implementation date for migration to LP10 in the NPA was 1 April 2015.
The appellants contended that the high court did not have the jurisdiction to adjudicate
the matter because the PSA’s application was a quintessential labour dispute which
was to be processed through the mandatory dispute resolution procedures set out in
the Labour Relations Act 66 of 1995 (the LRA). The appellants also contended that
the high court could not exercise jurisdiction over the dispute within the contemplation
of s 77(3) of the Basic Conditions of Employment Act 75 of 1997 (BCEA) because the
various collective agreements relied upon by the PSA were inapplicable to them.
The fundamental question to be determined was whether the high court and the
Labour Court enjoyed concurrent jurisdiction over the causes of action relied upon by
the PSA in its application.
Saldulker and Van der Merwe JJA (Mokgohloa JA concurring) (the majority judgment)
held that the high court did not have jurisdiction to hear the matter. It had no power or
authority to determine the disputes and should have struck the matter from its roll. The
majority judgment found that on the facts of this case, the high court could only have
been clothed with jurisdiction if the implementation of the 2010 Determination by the
‘translation’ of the DDPPs and CPs to the OSD had been claimed on the ground that
the terms of the individual employment contracts between the DDDPs and CPs and
the NPA obliged the NPA to act accordingly. The NPA’s notice of motion and founding
affidavit had to be analysed to ascertain whether the enforcement of employment
contract terms was relied upon. The majority judgment found that the notice of motion
and the averments in the founding affidavit in no way conveyed a reliance on
employment contracts. Rather, what was in fact relied upon in the founding affidavit,
at length, was that the failure to implement the OSD in respect of the DDPPs and CPs
had constituted an unfair labour practice relating to promotion and benefits, as defined
in s 186 of the LRA. In terms of s 191 of the LRA such unfair labour practice disputes
must be dealt with in terms of the LRA. Further, it was clear from the papers that the
PSA’s reference to an alleged legitimate expectation formed part and parcel of its case
for an unfair labour practice.
Molemela JA disagreed with the majority judgment and was of the view that the
pleaded case as elicited in the PSA’s averments sufficiently clothed the high court with
jurisdiction. Molemela JA found that the point in limine relating to jurisdiction was
rightly dismissed by the high court. This was because it was clear that the PSA
founded its case on a range of causes of action. Molemela JA was satisfied that the
averments made in the pleadings in relation to the order of specific performance and
the declaratory order in relation to the NDPP’s approval were not at odds with the
assertion of a contractual obligation and thus fell within the ambit of s 77(3) the BCEA.
This sufficed to bring the matter within the jurisdiction of the high court. Molemela JA
found further that the existence of the agreement to translate the DDPPs and CPs
represented by the PSA was an issue that spoke to prospects of success on the merits
and not jurisdiction. Similarly, a consideration as to whether the PSA had succeeded
in proving the existence of the agreement by attaching the relevant contracts in
substantiation of its allegations, was an aspect that spoke to the merits and not to
jurisdiction. In this regard, Molemela JA was of the view that even on the PSA’s own
version of events, none of the documents furnished in the application pointed to a
consensus on the manner of implementation of the OSD for the DDPPs and CPs. This
meant that the PSA failed to prove the existence of the agreement it sought to rely on.
Its claim on the implementation of any agreement premised on the NDPP’s approval
therefore fell to be dismissed. Accordingly, Molemela JA would have upheld the
appeal, set aside the order of the high court and replaced it with an order dismissing
the application with no order as to costs.
Hughes JA concurred with the reasoning and conclusions reached by Molemela JA in
respect of the point in limine of jurisdiction. This was on the basis that it was
permissible for a party to rely on more than one cause of action, and it was therefore
noteworthy that in addition to seeking enforcement of the collective agreements, the
PSA also located its dispute as a contractual claim within the contemplation of s 77(3)
of the BCEA. Hughes JA thus concurred that the high court was competent to hear the
application before it. Further, Hughes JA took no issue with the reasoning on the
merits. However, Hughes JA respectfully disagreed with the costs order that would
have been granted by Molemela JA. Hughes JA’s disagreement lay with the conduct
of the PSA in pursuing the application for specific performance. Hughes JA was of the
view that the application by the PSA in the high court was ill-conceived and manifestly
inappropriate. Thus, the PSA fell to be penalised with an adverse costs order.
Especially so, regard being had that the PSA was not even certain whether there was
an agreement or not to enforce. The PSA’s conduct clearly amounted to an abuse of
court process and as such warranted an adverse costs order against them.
~~~~ends~~~~
|
3491
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 851/2019
In the matter between:
LAMBERTUS VON WIELLIGH BESTER NO
FIRST APPELLANT
RYNETTE PIETERS NO
SECOND APPELLANT
BAREND PETERSON NO
THIRD APPELLANT
(In their capacities as joint trustees of the RVAF TRUST – RV IT 932/2004)
and
ANTON GOUWS
FIRST RESPONDENT
SCHALK W J STEENKAMP
SECOND RESPONDENT
JOHAN JOUBERT
THIRD RESPONDENT
SWARTLAND MAKELAARS CC
FOURTH RESPONDENT
MARK EISERMAN
FIFTH RESPONDENT
MARK ALEXANDER INVESTMENTS CC
SIXTH RESPONDENT
JANNIE AUGUSTYN
SEVENTH RESPONDENT
ANDREA FREDERICKA MOOLMAN
EIGHTH RESPONDENT
VAIDRO 172 CC
NINTH RESPONDENT
HENDRIK JANSE VAN VUUREN
TENTH RESPONDENT
HENDRIK VAN VUUREN MAKELAARS CC
ELEVENTH RESPONDENT
Neutral citation: Bester and Others NNO v Gouws and Others (851/2019) [2020]
ZASCA 174 (17 December 2020)
Coram:
PONNAN, WALLIS, ZONDI and DLODLO JJA and WEINER AJA
Heard:
4 November 2020
Delivered: This judgment was handed down electronically by circulation to the
parties' representatives via email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is deemed to be
10:00 am on 17 December 2020.
Summary: Prescription Act 68 of 1969 – sections 12(1) and 12(3) – knowledge
of identity of debtor and basis of cause of action – when knowledge acquired or
deemed to have been acquired through the exercise of reasonable care.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Meer
J, sitting as court of first instance):
The appeal is dismissed with costs, including the costs occasioned by the
employment of two counsel, save that the costs of the preparation, perusal and
copying of the record shall be limited to 60% of the costs incurred in those tasks.
________________________________________________________________
JUDGMENT
________________________________________________________________
Weiner AJA (Ponnan, Wallis, Zondi and Dlodlo JJA concurring)
[1] ‘If something sounds too good to be true, it probably is.’ This adage is
particularly apt in situations where once hopeful investors are suddenly left
with nothing, save for much remorse, notwithstanding the extravagant returns
promised. That is the unfortunate lesson that investors in the RVAF Trust (the
Trust) learned from its demise and insolvency. Investors were promised
irresistible (but unsustainable) returns on their investment. The Trust paid
such returns for a period but when the predictable collapse occurred, the total
amount due to investors vastly exceeded the total amount of money available.
[2] This judgment involves the more mundane question of whether claims,
brought by the trustees of the insolvent Trust to recover commissions paid to
brokers who solicited those investments, have prescribed. The Western Cape
Division of the High Court, Cape Town (Meer J) held that they had, and
refused leave to appeal. This appeal is with the leave of this court.
Background
[3] From the early 2000s, Mr Herman Pretorius began operating an investment
scheme (the scheme) through which he solicited investments from the public
on a large scale. As part of the operation of the scheme, he recruited a number
of investment brokers (the brokers). Together with the brokers, he succeeded
in enticing a considerable number of investors to invest huge amounts in his
scheme on the basis that it would yield returns far exceeding those achieved
by conventional established institutions. He promised returns of between 14%
and 25% per annum.
[4] These promises were fulfilled during the early years of the scheme, and both
old and new investors appeared to have the utmost faith in Mr Pretorius and
accepted the reported returns of the scheme at face value. The funds raised by
Mr Pretorius through his scheme soon escalated to approximately R200
million.
[5] In March 2004, Mr Pretorius created the Trust as part of an entity styled the
Abante Group (the Group). Mr Pretorius and Mr Eduard Brand were appointed
as trustees of the Trust. It is common cause that the Trust deed provided that
a minimum of three trustees were required and that they had to act jointly in
all events. It is also common cause that Mr Pretorius took control of the Trust,
did not consult Mr Brand on decisions, and operated the scheme on his own.
[6] The scheme was, however, a fraudulent and illegal pyramid style
investment scheme and the Trust was used as part of this fraudulent Ponzi
scheme. The scheme collapsed after its mastermind, Mr Pretorius, killed his
former business partner, Mr Williams and committed suicide on 26 July 2012.
This incident triggered action by investors against the Group, in particular the
Trust. Investors began clamouring for the return of their investments. These
were not forthcoming.
[7] On 30 July 2012, Mr Morné Strydom, an investor, applied to sequestrate
the Trust. The provisional sequestration order was granted on 1 August 2012.
The appellants were appointed as provisional trustees on 7 August 2012. On
the same day, the Master provided authority in terms of s 18(2) of the
Insolvency Act 24 of 19361 (the Act) for the provisional trustees to appoint
attorneys to provide them with legal advice. The Trust appointed Mostert &
Bosman Attorneys (MB). On 17 August 2012, the appellants also obtained an
order granting them the necessary power to institute legal proceedings in terms
of s 18(3) of the Act.2
[8] The Trust was finally sequestrated on 3 September 2012. The appellants
were appointed final trustees on 23 October 2012. Summonses were instituted
1 Section 18 of the Act provides:
‘Appointment of provisional trustee by Master
(1) …
(2) At any time before the meeting of the creditors of an insolvent estate in terms of section 40, the Master may,
subject to the provisions of subsection (3) of this section, give such directions to the provisional trustee as could
be given to a trustee by the creditors at a meeting of creditors.’
2 Section 18(3) provides:
A provisional trustee shall have the powers and the duties of a trustee, as provided in this Act, except that without
the authority of the court or for the purpose of obtaining such authority he shall not bring or defend any legal
proceedings and that without the authority of the court or Master he shall not sell any property belonging to the
estate in question. Such sale shall furthermore be after such notices and subject to such conditions as the Master
may direct.’
against the respondents on 9 November 2015, more than three years later. The
respondents are all brokers who introduced investors to the scheme conducted
by the Trust between October 2004 and June 2012. They received commission
payments from the Trust for such referrals.
[9] The appellants, as trustees, instituted action against the respondents on two
bases: under the common law (on the basis of unjust enrichment);
alternatively, under s 26 and s 32 of the Act. The appellants claimed that the
commissions that the respondents earned were repayable on the basis that:
(a)
at all material times there were fewer than the minimum number of trustees
as specified in the trust deed holding office. The Trust therefore lacked
capacity to make any payments to the respondents;3
(b)
Mr Pretorius acted unilaterally to the exclusion of his co-trustee, Mr Brand;
(c)
The trustees failed to exercise the powers in accordance with the trust deed
and the commission payments were made to the respondents pursuant to
the operation of an unlawful and fraudulent pyramid or Ponzi type scheme;
(d)
In the alternative, the payments were claimed on the basis that they were
impeachable transactions under s 32 of the Act (i.e. dispositions without
value).
[10] The respondents raised certain defences on the merits and two special pleas
of prescription. These pleas were heard separately by the high court in terms
of rule 33(4) of the Uniform Rules of Court. The separate actions against the
brokers were consolidated for the purposes of the hearing and the case
3 Land and Agricultural Bank of South Africa v Parker and others 2005 (2) SA 77 (SCA)
proceeded using the claim against the tenth and eleventh respondents as the
test case applicable to all.
[11] The first prescription plea was that the appellants had, or should have had
the requisite knowledge under s 12(3) of the Prescription Act 68 of 19694 (the
Prescription Act) on either 17 August 2012 (the date on which the appellants
obtained the order in terms of s 18(3) of the Act), or at the latest on 23 October
2012, the date on which the appellants were appointed as final trustees (the
first prescription plea).
[12] The second prescription plea, raised in the alternative, and only in respect
of the common law enrichment claims, was that all of the debts arising from
payments made to the respondents within three years prior to the date of the
Trust’s provisional sequestration (i.e. before 1 August 2009) had prescribed.
This plea relates to portions of the claims against each of the respondents (the
second prescription plea). The basis for the plea was that each payment made
sine causa gave rise to a separate claim and that the running of prescription
arose when each payment was made.
[13] The appellants replicated to the first prescription plea by alleging that:
(a)
they had obtained authority to institute proceedings against the respondents
only at the second meeting of creditors on 14 June 2013; and not in terms
of the s 18(3) order on 17 August 2012; and
4 Section 12 of the Prescription Act provides that:
(1) Subject to the provisions of subsections (2), (3), and (4), prescription shall commence to run as soon as the
debt is due.
(2) …
(3) A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the
facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could
have acquired it by exercising reasonable care.
(b)
they only acquired the requisite knowledge of the identities of the
respondents and the facts from which the individual claims against the
respondents arose, on conclusion of forensic investigations into the
reconciliation of the respondents’ transactions with the Trust, after August
2013.
[14] In regard to the second plea of prescription the appellants replicated that:
(a)
at all relevant times the Trust lacked capacity; and
(b)
the knowledge of the individual trustees could not be ascribed to the Trust
because of the fraudulent role played by the controlling trustee, Mr
Pretorius.
[15] The court a quo found that the appellants obtained the necessary power to
institute proceedings in terms of the s 18(3) court order on 17 August 2012.
The appellants have not appealed that finding. Secondly, it held that the
appellants had, or could reasonably have had, the requisite knowledge to
institute action against the respondents by 23 October 2012. The challenge to
this finding forms the basis of this appeal. Having found as it did on the first
prescription plea, the court a quo did not make any findings on the second
prescription plea.
[16] The appeal raises two issues: first, whether the appellants had actual or
deemed knowledge of all the facts necessary to institute action against the
respondents by 23 October 2012; and second, if they did not, whether the
claim based on payments made before 1 August 2009 has prescribed. If the
first prescription plea is upheld, the second prescription plea becomes
academic.
[17] It is common cause, or cannot reasonably be disputed, that the appellants
knew prior to 23 October 2012 that:
(a)
the trust deed required three trustees;
(b)
only two trustees had been issued with letters of authority;
(c)
Mr Pretorius was the controlling mind of the Trust and took all decisions
to the exclusion of his co-trustee, Mr Brand;
(d)
the trustees had not exercised their powers according to the trust deed;
(e)
the investment scheme was a fraudulent Ponzi scheme;
(f)
the Trust was insolvent from inception;
(g)
the scheme was dependant, in part, on the participation of various
brokers/intermediaries, who had introduced their clients to the scheme and
had been paid commissions therefor.
[18] This knowledge to a large extent comprised the requisite facts upon which
the enrichment claim was based. The payment of commissions to the brokers
was also the basis of the statutory claims.
[19] The appellants, however, claimed that, by 23 October 2012, they did not
have full knowledge of the following facts:
(a)
the full amount paid to the respondents;
(b)
that the sums were paid as commission;
(c)
that the payments were made after commission statements had been issued.
(d)
that the scheme was a Ponzi scheme and insolvent from the outset.
[20] This last contention was belied by the affidavits deposed to in the
sequestration application and various subsequent proceedings. The founding
affidavit in the sequestration proceedings was deposed to by a partner in MB
and he said unequivocally that the liabilities of the Trust by far exceeded the
assets. The receipt of claims from investors wishing to withdraw their funds
and the inability to satisfy their claims would have confirmed that. On no less
than three occasions Ms Pieters, the second appellant deposed to affidavits in
which she described the scheme as a pyramid scheme.5
[21] It was suggested that this did not satisfy the requirements for actual
knowledge of facts as discussed in Gore,6 but it clearly did. In Gore it was
held that for the purposes of prescription, knowledge extends to a conviction
or belief that is engendered by or inferred from attendant circumstances. The
appellants may not have been 100 percent certain, but they believed on the
basis of all the information in their possession, which was considerable, that
this was a pyramid scheme and that it had always been insolvent. That was
sufficient knowledge of these facts.
Chronology of events
[22] The chronology of events presented by the appellants at the trial was
accepted by the respondents. This chronology was also succinctly laid out by
the judge in the court a quo.
[23] The appellants had access to the Group premises from 8 August 2012. They
soon became aware that the files, relating to the brokers and the commissions
earned by them, were kept by Ms Monica Goodman in a cabinet behind her
desk in the reception area at the Group premises. There were some documents
5 In her affidavit of 22 August 2012, when applying for the appellants’ powers to be extended in terms of Rule
18(3), Ms Pieters stated: ‘By virtue of the nature of the business conducted by Pretorius it is clear that he conducted
what appears to be a “pyramid scheme”. Such a scheme pays interest and dividends to investors by the
consumption of their own capital. This practice renders the “scheme” insolvent from the outset’. There are various
other affidavits by one or more of the appellants confirming this view (dated 18 September 2012, 9 October 2012,
and 10 October 2012).
6 See Minister of Finance and Others v Gore NO [2006] ZASCA 98; 2007 (1) SA 111 (SCA).
relating to the brokers which had been archived in boxes which were kept in
a room behind the reception area.
[24] When the appellants began their investigations on 8 August 2012, they
were assisted by employees of the Trust and/or the Group. Mr Brand, as a co-
trustee, (although apparently not involved in the fraudulent conduct of the
scheme) was aware of the scheme and the parties who were involved in it,
including the brokers. On 12 August 2012, the services of majority of the staff
of the Trust were terminated save for Mr Brand, Ms Swart (who was Mr
Pretorius’s personal assistant), Ms Swanepoel, and Ms Goodman. Ms
Goodman remained at the Group’s premises until 17 August 2012.
[25] The appellants appointed MB as lawyers7 and BGR de Jager Accountants
(the auditors) to assist in the investigation of the affairs of the Trust and other
related entities. In mid-August 2012, they requested an analysis of payments
made from the Trust to other entities within the Abante group, and to other
accounts held by Mr Pretorius and/or his family members. Mr Bezuidenhout,
who was working with the auditors, was charged with a forensic investigation
on the financial affairs of the Trust with initial focus on the SECA trust
(SECA), the Trading Alpha trust (TAT), the Abante trust, Mr Pretorius, and
the companies related to him.
[26] The auditors were mandated to conduct investigations on the substantial
amounts paid out from the Trust and to determine the routes of the payments
via the financial institutions. Nedbank and Standard Bank were requested to
confirm and verify account details of approximately 39 entities/trusts and
7 The appellants also appointed two other firms of attorneys to assist them in winding-up the estate.
personal accounts of Mr Pretorius and his family, and to furnish the appellants
with such documents for the purposes of the investigation.
[27] From 8 August 2012 to December 2012, the appellants’ requested the
auditors to prioritise the myriad of inter-group transactions between the
entities within the Group. Over this period, several of these entities were
sequestrated or liquidated. An Anton Piller order was obtained on 27
September 2012 to obtain documents. An anti-dissipation interdict was
obtained against several of these entities on 9 October 2012.
[28] In claiming that they could not reasonably have acquired knowledge of the
identity of the brokers and the facts from which their claims against the
brokers arose, the appellants relied on the complexity of the insolvent estate
of the Trust. They stated that they were required to investigate more than fifty
entities, in which Mr Pretorius was involved, and the inter-group transfers of
monies both locally and internationally between these entities. Over R2 billion
had been paid into the Standard Bank and Nedbank accounts, which they were
obliged to reconcile through forensic investigations. To deal with the
complexity, the appellants obtained two forensic reports detailing the
fraudulent nature of the scheme, the state of solvency of the Trust, and the date
that each payment was made by the Trust for the purposes of claims under the
Act.
[29] The investors’ claims and the inter-group transfers were prioritised by the
appellants. There was no investigation into the claims against the brokers
during 2012. On 28 January 2013, the auditors requested a meeting with the
appellants to discuss the investigations of the brokers.
[30] On 25 February 2013, the appellants requested the auditors to prepare
schedules to reflect the commission payments that the brokers received from
the Trust and also the contracts concluded with the brokers in terms of which
the commissions were paid. The auditors confirmed on the following day that
they had perused the broker files. They could not find any contracts in the
files. However, the files contained statements and proof of payment of
commissions to each of the brokers. According to the auditors, the files
relating to the brokers were, in some instances, incomplete and they were not
in chronological order. They also stated that they only received the missing
bank statements from Nedbank on 18 March 2013.
[31] In December 2013, MB followed up on the previous correspondence of
February 2013 in relation to the schedules of the brokers’ commission, to
enable them to address letters of demand to the brokers for the repayment of
the commissions and to issue subpoenas for the insolvency enquiry. By 11
February 2014, the broker files were returned to MB with the requisite details
relating to the claim against each broker. From the contents of the brokers’
files, schedules were prepared by the auditors which contained a summary of
each claim against each broker. These were attached to subpoenas issued to
brokers to attend the insolvency enquiry in April 2014. Those schedules were
utilised by the appellants to compile the annexures to the particulars of claim
in the present action.
[32] The appellants contended that the findings by the court a quo failed to
recognise that the appellants’ actions fell to be examined against the duties
and obligations required of provisional trustees in the context of the
sequestration of an extensive and potentially fraudulent investment scheme.
They submitted that the court a quo’s conclusion implied that the appellants
should have isolated and prioritised the 37 broker files amongst the many
thousands of files, and targeted them first in the course of the administration
of the estate. This, according to the appellants, ignored the scale of the
investigations required in the affairs of an insolvent estate of this complexity
and nature. In order to evaluate these submissions, an analysis of the evidence
presented at the trial is necessary.
Evidence
[33] Mr Janse van Vuuren (the tenth respondent) and Ms Goodman testified for
the respondents. Mr van Vuuren’s evidence was that he would get commission
statements every month from the Trust. Ms Goodman dealt with all broker
related enquiries and Mr Brand dealt with the situation when claw-back
payments were deducted.8 From Mr van Vuuren’s evidence, it is clear that his
file contained a commission statement, a cheque and deposit slip for every
entry on Annexure “E” to the particulars of claim, save for one.
[34] Ms Goodman took over the responsibility of maintaining the brokers’ files
from November 2008. She testified that if anyone needed to know how much
commission any broker received, they only needed to look at the broker files
or the archive files containing historic information. The documents contained
in the files relating to each broker included one or more of the following: a
deposit slip, a cheque, and/or a commission statement to evidence each
payment made to the particular broker. She and/or Mr Brand and/or the other
employees of the Trust, could have assisted the appellants to find any
documentation required. The appellants did not seek Ms Goodman’s
8 If an investor withdrew their investment before it was repayable, the broker’s commission was adjusted.
assistance in this regard – either whilst she was at the Group’s premises in
August 2012, or when she returned to work for them in February 2013.
[35] Mr Bester (the first appellant), Mr Bezuidenhout (the auditor), Mr Brand,
and Mr du Toit (the attorney of MB, dealing with the estate) testified for the
appellants. Mr Bester stated that, as provisional trustees (as opposed to finally
appointed trustees) the immediate work required was to safeguard assets and
prevent the dissipation of funds. It was not possible to deal with the claims
against the brokers until early 2013, because they were concentrating on and
prioritising other claims. He confirmed that the investigation into the 37
brokers’ files was not an insurmountable task, and when undertaken, it took a
relatively short time to be completed. Mr Bester knew from the outset that the
Trust had used brokers to procure the investments. He conceded that whilst
examining the bank statements for inter-group transactions in August 2012,
the auditors could simultaneously have accessed the payments made to the
brokers.
[36] Mr Bezuidenhout, the auditor appointed by the appellants, consulted with
Mr Brand, Ms Swanepoel, Ms Swart and Ms Pieters at the Group’s premises.
Ms Goodman was also there. He did not enquire from any of them as to the
brokers’ files, which he conceded he could have done. He received bank
statements from Standard Bank and an incomplete set from Nedbank. They
showed all monies paid out by the Trust, including amounts paid to the
brokers. Mr Bezuidenhout was working with five clerks. They prioritised the
inter-group transfers. He conceded that, even without the full set of bank
statements, there were commission statements, cheques, and deposit slips in
the broker files, which could have been reconciled and utilised to make the
claims against the brokers. Mr Bezuidenhout conceded further that he could
have complied a schedule, similar to that attached to the particulars of claim
as Annexure “E”, from the documents in the broker files without a forensic
investigation. In the case of Mr van Vuuren, it would have taken him
approximately two hours to do his.
[37] Mr Brand was fully aware of where the brokers’ files were kept and that
they contained the details of the brokers and the commissions paid to them.
He knew many of the brokers personally and had their email addresses. If
asked, he could have pointed out the brokers’ files and the archived files. He
stated that he would have been able to trace all the brokers quite easily – if he
would have been asked.
[38] Mr du Toit, a partner of MB, who was the attorney charged with the
investigation into the Trust, testified that shortly after being appointed as the
appellants’ attorneys, he consulted with them and Mr Pieters from Duvenhage
and Cilliers attorneys, who were also assisting with the estate. The initial focus
was on the recovery of assets belonging to the Trust and not the brokers. Mr
du Toit conceded that all the questions which Mr Brand was asked at the
insolvency enquiry in February 2013, relating to the broker files could have
been asked of Mr Brand in August 2012. Had he enquired from Mr Brand or
Ms Goodman about the commission claims of the brokers, when first
appointed in August 2012, that information would have been forthcoming. Mr
du Toit stated quite frankly that the information was all there in the files and
had he, the trustees or the auditors opened the files and looked at their contents,
the information would have been available to them.
[39] As will appear from what had been stated above, the respondents did not
rely upon actual knowledge. They contended that, through the exercise of
reasonable care, the appellants could have established the requisite facts in
order to institute action.
The Law
[40] In terms of s 12(1) of the Prescription Act, prescription begins to run as
soon as the debt is due. A debt is due when it is immediately claimable or
recoverable. If the debtor has knowledge of the identity of the debtor and of
the facts from which the debt arises, the debt is deemed to be due, as by that
stage, the creditor acquires a complete cause of action for the recovery of the
debt. In terms of s 12(3) of the Prescription Act, the creditor is deemed to have
knowledge of the identity of the debtor and of the facts from which the debt
arises if it could have been acquired by the exercise of reasonable care.9
[41] The knowledge required relates to the factual ingredients giving rise to the
debt and not knowledge of the legal conclusions.10 The requisites of such
knowledge were described in Gore.11 Whilst mere ‘opinion and supposition’
is not sufficient,12 a belief that is inferred from the circumstances of the case,
as well as from information received from employees and/or agents, or those
assisting the trustees, can be imputed to the trustees.
9 Road Accident Fund and Another v Mdeyide (CCT 10/10) [2010] ZACC 18; 2011 (1) BCLR 1 (CC) ; 2011 (2)
SA 26 (CC) (30 September 2010) para 13 (citations omitted); Standard Bank of South Africa Ltd v Miracle Mile
Investments 67 (Pty) Ltd and Another [2016] ZASCA 91; 2017 (1) SA 185 (SCA) para 24, citing Truter and
Another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA) para 16.
10 Truter v Deysel (note 9 above). Van Staden v Fourie 1989 (3) SA 200 (A) at 216B-F.
11 Gore NO (note 6 above).
12 Gore NO (note 6 above) para 18.
[42] Prescription starts to run when the creditor has knowledge of the requisite
facts (whether actual or imputed) or when the creditor is deemed to have the
requisite knowledge of the facts underlying the action. As stated in Gore:
‘The running of prescription is not postponed until the creditor becomes aware of the full
extent of its legal rights, nor until the creditor has evidence that would enable it to prove
the case comfortably.’13
The creditor is also not permitted to postpone prescription through his own
inaction. As stated by Van den Heever J in Benson and Another v Walters and
Others14:
‘Our Courts have consistently held that a creditor is not able by his own conduct to
postpone the commencement of prescription.’ This approach was confirmed in The
Master v I L, Back & Co Ltd where Galgut AJA stated:
‘A creditor's right of action is not postponed until such time as he may, either in his wisdom
or when he thinks he ought to, bestir himself.’15
[43] In regard to the requirement of reasonable care, this court stated in Drennan
Maud & Partners v Pennington Town Board16:
‘…[T]he requirement “exercising reasonable care” requires diligence not only in the
ascertainment of the facts underlying the debt, but also in relation to the evaluation and
significance of those facts. This means that the creditor is deemed to have the requisite
knowledge if a reasonable person in his position would have deduced the identity of the
debtor and the facts from which the debt arises.’
[44] The principles relating to prescription are applicable to trustees and
liquidators. The respondents contended that the appellants should not be
13 See Gore NO (note 6 above) with reference to Van Staden v Fourie 1989 (3) SA 200 (A) at 216B-F and Nedcor
Bank Bpk v Regering van die Republiek van Suid-Afrika 2001 (1) SA 987 (SCA) paras 11 and 13.
14 Benson and Another v Walters and Others 1981 (4) SA 42 (C) at 49G-H, as quoted in Uitenhage Municipality
v Molloy 1998 (2) SA 735 (SCA) at 742A–C.
15 The Master v I L, Back & Co Ltd 1983 (1) SA 986 (A) at 1005G-H.
16 Drennan Maud & Partners v Pennington Town Board 1998 (3) SA 200 (SCA) at 209F–G.
treated any differently to any other creditor which, in terms of Prescription
Act, needs to institute the action within three years of the debt being due.17
The appellants did not suggest otherwise.
Discussion
[45] The appellants’ approach was not that the facts on which these claims were
based were inaccessible or hard to ascertain. It was that, given the size and
complexity of the insolvency process in regard to the Trust, their failure to
investigate the claims did not amount to a failure to exercise reasonable care
to acquire knowledge of the identity of the brokers and the facts giving rise to
the claims against them.
[46] The judge did not make any adverse credibility findings against Mr Bester
or Messrs Bezuidenhout and Du Toit concerning their actual state of
knowledge. All conceded that they focussed on other matters and did not come
to deal with the brokers and the payment of commissions until 2013. As a
result, it was only in 2013 that they acquired actual knowledge of the details
of these claims and the identity of the brokers. The question is whether by the
exercise of reasonable care this would have been ascertained at an earlier stage
prior to 23 October 2012.
17 Duet and Magnum Financial Services CC (in liquidation) v Koster (168/09) [2010] ZASCA 34 (29 March
2010); 2010 (4) SA 499 (SCA); Off-Beat Holiday Club and Another v Sanbonani Holiday Spa Shareblock Ltd
and Others 2017 (5) SA 9 (CC) para 10; Makate v Vodacom Ltd [2016] ZACC 13; 2016 (4) SA 121 (CC) para
196.
[47] In regard to knowledge which might have been obtained from Mr Brand,
Ms Goodman, Ms Swanepoel or Ms Swart, the appellants contended that, in
order for that knowledge to be imputed to them, the knowledge would have to
have been acquired by the agent in the course of their employment with the
principal, and a duty must rest upon the agent to communicate the information
to his principal.18 These persons undoubtedly had actual knowledge of the
existence and identity of the brokers and the whereabouts of detailed
information concerning the commissions paid to them. The question is
whether the appellants should, in the exercise of reasonable care have asked
them to provide that information in order to consider whether a claim for
recovery should be made. The question must be answered in the affirmative.
The fact is that they did not do so for the simple reason that they prioritised
other issues.
[48] The prioritisation of other issues cannot be a reason for not exercising
reasonable care to ascertain the facts giving rise to a debt. Trustees and
liquidators cannot select the issues on which to concentrate in their
administration, secure in the knowledge that a plea of prescription could be
defeated by a claim of ignorance accompanied by the excuse that they were
prioritising other more important matters. That would be contrary to the
principle that a creditor cannot by their own actions postpone the
commencement of the running of prescription.
[49] The appellants were well aware that the funds invested in the Trust had
been secured largely through the efforts of brokers who were paid
commissions. Given the amount of money involved those commissions would
on any basis be substantial. The claim chosen as the test case was for over
18 Wilkins v Potgieter NO and Another 1996 (4) SA 936 (T) at 939F-H.
R5 million. They were aware for the reasons already given that these funds
had been invested in a pyramid scheme and that the entire edifice had
collapsed when Mr Pretorius committed suicide and the Trust was almost
immediately sequestrated. They knew, because they had the trust deed, that
there were only two trustees, whereas three were required, and Mr Brand had
told them that effectively Mr Pretorius was the sole decision-maker. Ms
Pieters confirmed in an affidavit that the appellants were aware of the
provisions of the Act dealing with the dispositions and the potential to set these
aside. The commissions were manifestly dispositions by the Trust.
[50] These facts were all known to the appellants and constituted the facts from
which the debts arose, whether the legal basis was a condictio sine causa or
the dispositions under the Act. The appellants and those assisting them had
not opened the brokers' files; thus they did not know the names of the brokers
or how much had been paid to each of them. The moment the files were opened
and examined, this information was available.
[51] The appellants’ explanation that they prioritised other matters
demonstrates that they could not show that they exercised reasonable care in
ascertaining the information giving rise to the claims and the identity of the
debtors. It, in fact, shows a deliberate decision not to investigate and ascertain
the existence of relatively obvious claims. They chose to run a risk of not being
able to commence proceedings timeously. As it happens in two cases to which
we were referred they did sue timeously and succeeded. They simply did not
do that in relation to these claims.
[52] The appeal involves, in the main, a challenge to the factual findings made
by the court a quo, namely that the court erred in its assessment of the facts in
concluding that the appellants could reasonably have established, by 23
October 2012, that which was required in order to institute action against the
respondents. It has been held by this Court that:
‘The approach to be adopted by a court of appeal when it deals with the factual findings
of a trial court is trite. A court of appeal will not disturb the factual findings of a trial court
unless the latter had committed a material misdirection. Where there has been no
misdirection on fact by the trial Judge, the presumption is that his conclusion is correct.
The appeal court will only reverse it where it is convinced that it is wrong. In such a case,
if the appeal court is merely left in doubt as to the correctness of the conclusion, then it
will uphold it. This court in S v Naidoo & others reiterated this principle as follows:
“In the final analysis, a court of appeal does not overturn a trial Court’s findings of fact
unless they are shown to be vitiated by material misdirection or are shown by the record
to be wrong.”’19 (Footnotes omitted).
[53] The appellants did not point to any factual error in the judge's reasoning.
Instead they said that by not placing sufficient weight on their evidence
concerning the complexity of the process of winding up the Trust, the judge
imposed an unreasonable burden on them in relation to the ascertainment of
the facts giving rise to the claims against the brokers. The conclusion reached
by the court a quo and the findings of fact relied upon cannot be faulted. The
appeal must accordingly fail.
Costs relating to the record
[54] It is unfortunately necessary to make certain comments about the record in
this matter. The record ran to some 1870 pages, a fair portion of which, as
counsel conceded at the hearing of the matter, was irrelevant to the issues in
the appeal. In the appellant’s practice note, the Court was advised that it was
necessary to read the entire record. The respondents, in their practice note
19 Mkhize v S [2014] ZASCA 52 para 14 (Citations omitted).
stated that the parties had attempted to restrict the record to that which was
relevant to the appeal. Both these statements were inaccurate. This practice is
not confined to the present appeal. The rules of this Court, relating to the
preparation of records by attorneys and the practice directive relating to the
filing of a practice note by counsel, specifying the portions of the record that
counsel regards as necessary to be read, continue to be ignored.
[55] In Van Aardt v Galway20 this Court dealt with the persistent problem of
legal representatives failure to comply with the rules of this Court. Wallis JA
held:
‘[34]
Turning to the practice note, rule 10A(ix) enjoins counsel to provide a list
reflecting those parts of the record that in the opinion of counsel are necessary for the
determination of the appeal. The purpose of this provision was spelled out by Harms JA in
Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another21:
“The object of the note is essentially twofold. First, it enables the Chief Justice in settling
the roll to estimate how much reading matter is to be allocated to a particular Judge. Second,
it assists Judges in preparing the appeal without wasting time and energy in reading
irrelevant matter. Unless practitioners comply with the spirit of this requirement, the objects
are frustrated and this in turn leads to a longer waiting time for other matters.” …
[35] …
[36] The practice note requires a statement of counsel’s view, in the form of a list,
of those parts of the record that need to be considered in order to decide the case. The fact
that his or her opponent may disagree is neither here nor there. That will emerge from the
opponent’s practice note. In addition, the list is to be confined to those parts of the record
that are ‘necessary’ for that purpose. ... The list should include only those parts of the record
20 Van Aardt v Galway 2012 (2) SA 312 (SCA) paras 31-39.
21 Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd & another 1998 (3) SA 938 (SCA) para 36.
that counsel is likely to refer to either in support for the argument, or for rebuttal, or to
highlight flaws in the judgment appealed against…’
[56] In the present matter, it appears that it was unnecessary for this Court to
read approximately 40% of the record. In my view, 40% of the costs incurred
in the preparation, perusal and copying of the record should be disallowed.
Despite previous admonitions by this court, the rules continue to be ignored.
It is hoped that these remarks, may serve as a warning to practitioners in future
proceedings.
[57] The following order is made:
The appeal is dismissed with costs, including the costs occasioned by the
employment of two counsel, save that the costs of the preparation, perusal
and copying of the record shall be limited to 60% of the costs incurred in
those tasks.
______________________
WEINER AJA
ACTING JUDGE OF APPEAL
APPEARANCES
For appellant:
JA Van Der Merwe SC (with him BC Wharton)
Instructed by:
Mostert & Bosman Attorneys, Bellville
Phatshoane Henney Attorneys, Bloemfontein.
For Respondents:
RGL Stelzner SC (with him M Daling)
Instructed by:
Laas & Scholtz Incorporated, Durbanville
Webbers Attorneys, Bloemfontein.
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF THE JUDGMENT DELIVERED
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
17 December 2020
STATUS
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
Bester and Others NNO v Gouws and Others (851/2019) [2020] ZASCA 174
December 2020
________________________________________________________________
Today the Supreme Court of Appeal (SCA) dismissed the appeal by the
appellants against the judgment of the Western Cape Division of the High Court,
Cape Town.
Mr Herman Pretorius had operated a fraudulent Ponzi scheme, through the RVAF
Trust, which collapsed when he committed suicide. The Trust was sequestrated.
The appeal involved the question of whether claims, brought by the appellants,
as trustees of the insolvent estate of the Trust, to recover commissions paid to
brokers who solicited those investments, had prescribed.
The provisional sequestration order was granted on 1 August 2012. The
appellants were appointed as provisional trustees on 7 August 2012. On
17 August 2012, the appellants obtained an order granting them the necessary
power to institute legal proceedings in terms of s 18(3) of the Act. They were
appointed final trustees on 23 October 2012.
The respondents were all investment brokers recruited by Mr Pretorius. Together
with the brokers, Mr Pretorius succeeded in enticing investors to invest huge
amounts in his scheme on the basis that it would yield returns far exceeding those
achieved by conventional established institutions.
The appellants instituted action against the respondents claiming repayment of
the commissions earned by them on the investments. The actions were instituted
on two bases: under the common law (on the basis of unjust enrichment);
alternatively, under s 26 and s 32 of the Insolvency Act. The respondents raised
two pleas of prescription. Only the first was relevant to the appeal. It was
premised on s 12 (3) of the Prescription Act, which provides that a debt becomes
due when a 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. The issue
was whether the appellants had, or should have had the requisite knowledge under
s 12(3) by 17 August 2012 or, at the latest, by 23 October 2012 (the date on which
the appellants were appointed as final trustees) to institute action against the
respondents.
The high court found that the appellants obtained the necessary power to institute
proceedings in terms of the s 18(3) court order on 17 August 2012. The appellants
did not appeal that finding. Secondly, it held that the appellants had, or could
reasonably have had, the requisite knowledge to institute action against the
respondents by 23 October 2012. The challenge to this finding formed the basis
of the appeal.
The appeal court found that by 23 October 2012, the trustees should, through
reasonable care, have known that the investment scheme was a fraudulent Ponzi
scheme; that the Trust was insolvent from inception; that the scheme was
dependant on the participation of the brokers, who had introduced their clients to
the scheme and had been paid commissions therefor; and what amounts were paid
to the brokers as commissions. The knowledge of these facts comprised the
requisite facts upon which the enrichment and the statutory claims were based.
The finding was based upon the following. The appellants had access to the
premises from which the Trust operated from 8 August 2012. Soon thereafter they
became aware that the files relating to the brokers and the commissions earned
by them, were under the control of an employee who would have been able to
provide all the necessary information relating to the claims against the brokers.
The trustees however made a decision to prioritise the investors’ claims and the
inter-group transfers. There was no investigation into the claims against the
brokers during 2012. The auditors and the trustees only began the investigations
of the claims against the brokers in January 2013. They instituted action in
November 2015, more than three years after the cut-off date, being 23 October
2012.
It was held that a creditor is not permitted to postpone prescription through his
own inaction The requirement of reasonable care requires diligence in
ascertaining the facts underlying the debt as well as an evaluation of the
significance of those facts. The question is whether by the exercise of reasonable
care, the relevant facts necessary to institute action against the respondents should
have been ascertained, by 23 October 2012.
The court held that the prioritisation of other issues cannot be a reason for not
exercising reasonable care to ascertain the facts giving rise to a debt. The
appellants’ explanation that they prioritised other matters shows that they failed
to exercise reasonable care in ascertaining the information giving rise to the
claims against and the identity of the respondents.
The plea of prescription was thus upheld and the appeal was dismissed with costs.
The court found it necessary to comment on the persistent failure by attorneys
and counsel to comply with rule 10A(ix) of the Supreme Court Rules which
enjoins counsel to provide a list reflecting those parts of the record that in the
opinion of counsel are necessary for the determination of the appeal. The
appellants’ practice note stated that the entire record should be read. The record
comprised some 1870 pages. Approximately 40 percent of the documents in the
record were irrelevant to the issue in the appeal. The court thus ordered that 40
percent of the costs incurred in the preparation, perusal and copying of the record
should be disallowed.
|
2429
|
non-electoral
|
2013
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 609/2012
In the matter between:
OAKDENE SQUARE PROPERTIES (PTY) LTD
FIRST APPELLANT
EDUCATED RISK INVESTMENTS 54 (PTY) LTD
SECOND APPELLANT
DIMETRYS THEODOSIOU
THIRD APPELLANT
ANTONYS THEODOSIOU
FOURTH APPELLANT
v
FARM BOTHASFONTEIN (KYALAMI) (PTY) LTD
FIRST RESPONDENT
NEDBANK LIMITED
SECOND RESPONDENT
IMPERIAL HOLDINGS LIMITED
THIRD RESPONDENT
Neutral citation:
Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein
(Kyalami) (Pty) Ltd (609/2012) [2013] ZASCA 68 (27 May
2013).
Coram:
Brand, Cachalia JJA, Van der Merwe, Zondi et Meyer AJJA
Heard:
8 May 2013
Delivered:
27 May 2013
Summary:
Companies Act 71 of 2008 – application for business
rescue in terms of s 131(4) – whether court’s decision amounts to exercise
of discretion – what applicant has to show to satisfy requirement of
‘reasonable prospect for rescuing the company’.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (CJ Claassen J
sitting as court of first instance):
The appeal is dismissed with costs in favour of second and third respondents,
including in both instances, the costs of two counsel.
________________________________________________________________
JUDGMENT
________________________________________________________________
BRAND JA (CACHALIA JJA, VAN DER MERWE, ZONDI ET MEYER AJJA
CONCURRING):
[1] This appeal has its origin in an application by the four appellants in the
South Gauteng High Court, Johannesburg, for an order placing the first
respondent, Farm Bothasfontein (Kyalami) (Pty) Ltd (the company) under
supervision and commencing business rescue proceedings as contemplated in
chapter 6 of the Companies Act 71 of 2008. The second and third respondents
not only opposed the main application, but sought the liquidation of the company
instead. When the matter came before Claassen J it was plain that, unless the
business rescue application was successful, the winding-up of the company
would inevitably follow. In the event Claassen J refused the business application
with costs and granted the liquidation order sought. The appeal against that
judgment, which has since been reported sub nom Oakdene Square Properties
(Pty) Ltd and others v Farm Bothasfontein (Kyalami) (Pty) Ltd and others 2012
(3) SA 273 (GSJ), is with the leave of this court.
The parties
[2] I find it convenient to start with an introduction of the appellants and the
capacities in which they were cited. The first appellant is Oakdene Square
Properties (Pty) Ltd (Oakdene). The second appellant is Educated Risk
Investments 54 (Pty) Ltd (Educated Risk), while the third and fourth appellants
are Mr Dimetrys Theodosiou and his brother Antonys. Oakdene alleges that it is a
creditor of the company, while Educated Risk contends that it is a 40 per cent
shareholder of the company. The two Theodosiou brothers have an interest in
both Oakdene and Educated Risk. But for their locus standi they rely on the
allegation that they are the trustees of the MJF Trust which, so they say,
previously owned the 40 per cent shares in the company now held by Educated
Risk.
[3] The reason why the capacities of the appellants are couched in such
guarded terms is because they are clouded by some of the numerous disputes of
fact that arose on the papers. Small wonder therefore that the court a quo
commenced its judgment with a reference to the observation by Harms DP in
National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) para 26
to the effect that motion proceedings such as these are aimed at ‘the resolution of
legal issues based on common cause facts’. They are simply not geared toward
the decision of factual disputes. In consequence, so Harms DP reminded us, it is
well established that, where in motion proceedings disputes of fact arise on the
papers, the matter can only be decided on the respondent’s version of the
disputed facts, unless that version is so farfetched or clearly untenable that it can
justifiably be rejected merely on the papers. What is more, it makes no difference
to this approach that, as in this case, motion proceedings have been dictated by
the legislature. Neither does it make any difference where the legal or evidential
onus lies. That approach was rightly adopted by the court a quo in dealing with
the disputes of fact that proved to be pertinent in this case and it goes without
saying that that is also the course I intend to pursue.
[4] But, to complete the introduction of the parties: the first respondent, as I
have said, is the company. The second respondent is Nedbank Limited
(Nedbank) and the third respondent is Imperial Holdings Limited (Imperial).
Unlike those of the appellants, the interests of Nedbank and Imperial in the
matter are not in dispute. These interests include the following: Nedbank and
Imperial each holds 30 per cent of the shares in the company and they are each
owed R7.5 million by the company in the form of a shareholder’s loan. Moreover,
Nedbank is a secured creditor and has in fact obtained summary judgment
against the company in the sum of R31 247 099; together with interest at 12 per
cent per annum (which runs in excess of R320 000 per month) from 1 June 2011;
and costs.
The application
[5] The concept of ‘business rescue’ had been introduced into our law for the
first time in Chapter 6 of the 2008 Companies Act which came into operation on 1
May 2011. There have been several decisions in the High Court dealing with
these provisions. But this is the first time that this court has been called upon to
interpret and apply some of them. From the nature of things, a more detailed
analysis of the relevant provisions is therefore bound to follow. Yet I find it helpful,
for introductory purposes, to state the essential requirements for an application of
this kind. These are essentially to be found in s 131 of the Act, which provides in
relevant part:
‘131(1) Unless a company has adopted a resolution contemplated in section 129 [which
provides for voluntary business rescue proceedings], an affected person may apply to a
court at any time for an order placing the company under supervision and commencing
business rescue proceedings.
(2)
. . .
(3)
. . .
(4)
After considering an application in terms of subsection (1), the court may –
(a)
make an order placing the company under supervision and commencing
business rescue proceedings, if the court is satisfied that -
(i)
the company is financially distressed;
(ii)
the company has failed to pay over any amount in terms of an
obligation under or in terms of a public regulation, or contract, with
respect to employment-related matters; or
(iii)
it is otherwise just and equitable to do so for financial reasons, and
there is a reasonable prospect for rescuing the company; or
(b)
dismissing the application, together with any further necessary and
appropriate order, including an order placing the company under
liquidation.’
[6] With reference to s 131(1), the definition of ‘affected person’ in s 128(1) –
which is the definition section for purposes of chapter 6 – includes a shareholder
or creditor of the company. On the face of it, Educated Risk is the registered
holder of 40 per cent of the shares in the company. Although its entitlement to
those shares is disputed, it therefore appears to qualify as an ‘affected person’. In
these circumstances the court a quo found it unnecessary (in para 13 of its
judgment) to resolve the disputes surrounding the locus standi of the other three
applicants. I agree with this approach. ‘Financially distressed’ is also defined, in
s 128(1)(f), to mean:
‘. . . that –
(i)
it appears to be reasonably unlikely that the company will be able to pay all of its
debts as they become due and payable within the immediately ensuing six
months; or
(ii)
it appears to be reasonably likely that the company will become insolvent within
the immediately ensuing six months.’
[7] It is common cause that, although the company appears to be factually
solvent in that the value of its assets, at least on the face of it, exceeds its debts,
it is unable to satisfy the judgment debt in favour of Nedbank. This means that it
is both commercially insolvent – for liquidation purposes – and ‘financially
distressed’ within the contemplation of s 131(4)(a)(i). More problematic is the
further requirement imposed by the section; that is, whether or not there was ‘a
reasonable prospect of rescuing the company’. This question, I believe, can only
be resolved with reference to the background facts.
Background
[8] The company owns three immovable properties adjoining one another
which are held under separate title deeds, namely, (a) portion 169 of the farm
Bothasfontein, measuring about 69 hectares in extent, which constitutes what is
known as the Kyalami Racetrack; (b) erf 5 Kyalami measuring about 2.3
hectares; and (c) erf 6 Kyalami, measuring about 1.3 hectares. On the papers
these properties are jointly referred to as the ‘immovable property’ and I find it
convenient to follow the same description.
[9] All the shares in the company were previously held by the Automobile
Association of South Africa (the AA). During March 2004 the AA sold these
shares to Mr Michael Fogg, acting on behalf of the MJF Trust. A suspensive
condition of the sale provided that the company would repay its debt of R42
million to the AA. In order to do so, the company obtained a loan of R28 million
from Nedbank against registration of a mortgage bond over the immovable
property. To raise the shortfall which, together with expenses, amounted to R15
million, the MJF Trust, represented by Fogg, entered into a memorandum of
understanding (the MOU), dated 29 June 2004, with Imperial and a predecessor
of Nedbank, known as Imperial Bank Ltd. Since nothing turns on the difference in
the roles played by Nedbank, on the one hand, and its predecessor, on the other,
I shall refer to them both as Nedbank.
[10] For present purposes, the main features of the MOU were the following:
(a)
Nedbank and Imperial undertook to put up a bank guarantee for R15
million and each became entitled to 30 per cent of the shares in the company.
(b)
The MJF Trust, Imperial and Nedbank would each nominate a director to
the board of the company with a chairman and a fifth director to be jointly
nominated by all three.
(c)
The MJF Trust undertook to transfer the shares to Imperial and Nedbank;
to appoint their nominees as directors; and to sign all documents necessary for
the appointment of the remaining directors. All this was to happen upon
registration of the mortgage bond in favour of Nedbank.
[11] Nedbank and Imperial advanced the R15 million in the form of
shareholders’ loans of R7.5 million each and the Nedbank mortgage bond was
registered. Despite all this, the MJF Trust failed to comply with its obligations
under the MOU. As a result, Nedbank and Imperial successfully brought an
application in the High Court to compel performance of these obligations.
However, when they eventually became members of the company, pursuant to
the High Court’s order, Nedbank and Imperial discovered that in the meantime,
Fogg had caused the company to enter into a lease agreement with
Motortainment Kyalami (Pty) Ltd (Motortainment), a company wholly owned by
the MJF Trust. In terms of the lease, Motortainment became entitled to occupy
the immovable property of the company for seven years, with the right of renewal
for a further seven years, terminating in 2018. What is more, Nedbank and
Imperial also discovered that six days before they became members of the
company, Fogg and his wife had resigned as trustees of the MJF Trust pursuant
to a cession transaction in terms of which the beneficiaries of the MJF Trust – the
Foggs and their two children – ceded all their rights in the trust to Educated Risk.
These rights included the 40 per cent shareholding in the company. Educated
Risk, as we know, is controlled by the two Theodosiou brothers. In consequence
they were also appointed as the trustees of the MJF Trust, in which capacities
they controlled both the company and Motortainment.
[12] Following upon the discovery of these transactions, Nedbank and Imperial
launched two proceedings in the High Court: first, an action to set aside the lease
to Motortainment and, secondly, an application to enforce their alleged pre-
emptive right – in terms of the articles of the company – to the 40 per cent
shareholding previously held by the trust, which were now held by Educated Risk.
Neither case has been finalised. In the meantime, Motortainment was liquidated
at the behest of Absa Bank Limited. In an apparent attempt to avoid the
consequences of this liquidation, the Theodosiou brothers ceded Motortainment’s
rights in terms of the lease to another company under their control, Kyalami
Events and Exhibitions (Pty) Ltd (Kyalami Events). This caused Nedbank and
Imperial to bring a further application to the High Court for the eviction of Kyalami
Events and Motortainment (in liquidation) from the immovable property. Shortly
thereafter the business rescue application was launched by the four appellants.
In the event the business rescue application and the eviction application were
simultaneously heard by Claassen J in the court a quo. By virtue of the liquidation
order granted in respect of the company in the business rescue application,
Claassen J ordered that the eviction application be suspended in terms of s 359
of the (old) Companies Act 61 of 1973, pending the appointment of a liquidator
for the company.
[13] Further events involving the Theodosiou brothers were the following:
(a)
According to a note in the financial statements of the company for the year
ended 31 December 2005, the company sold its rights to develop its immovable
property to yet another company controlled by the Theodosiou brothers, at a
price of R112 530 000, which is reflected as an interest free loan by the company
with no fixed terms of repayment. With reference to this note, the auditors of the
company entered the qualification that they were unable to verify the
recoverability of the purchase price.
(b)
According to a letter written by Antonys Theodosiou, as director of Kyalami
Events, to his brother Dimetrys, as director of the company, on 2 August 2007,
the company’s ‘income stream’ derived from its immovable property had been
ceded to Oakdene. It is not clear what happened with that ‘income stream’
between 2 August 2007 and March 2011. But it is common cause that from the
latter date the company received no income from its assets. That seems to be the
main reason why it was in no position to reduce its liability to Nedbank under the
mortgage bond which in turn led to the latter obtaining judgment.
[14] Dimetrys Theodosiou is a director of the company as nominee of the MJF
Trust. The company also has two other directors who were nominated to the
board by Nedbank and Imperial. Initially the management of the company’s
affairs was largely left to Theodosiou. As a result of the way in which he
performed this function, so Nedbank and Imperial alleged, they decided that their
nominees should become more directly involved in the company’s affairs. When
they informed Theodosiou of that decision, his response was, however, that the
company’s board of directors had never been properly constituted. The basis he
relied upon for that response was that the original tri-partite agreement,
embodied in the MOU, provided for a chairman and a fifth director to be
appointed by mutual agreement, which had never occurred. Every majority
decision by the nominees of Nedbank and Imperial that Theodosiou found
unacceptable was therefore simply met by the same response that no valid
decision could be taken by an improperly constituted board. In the result the
board became largely dysfunctional. The fact that no further directors could be
agreed upon created a catch-22 situation.
[15] Lastly, with regard to the background facts, it is apparent that the business
rescue application was brought in the wake of Nedbank’s arrangements of a sale
in execution pursuant to the High Court judgment in its favour for about R31.5
million, together with interest and costs. Understandably, in the circumstances,
the crux of the appellants’ case in their founding affidavit was that a forced sale in
execution would be to the detriment of the shareholders and creditors of the
company. If the immovable property were to be sold in an execution sale, so they
contended, it would realise no more than R120 million. If, on the other hand, the
property were to be sold in the normal course, the appellants said, it could realise
its true market value which was determined by their experts at between R300
million and R350 million. Hence the purpose of the business rescue application
was not to ensure the continued existence of the company on a solvent basis. On
the contrary, the essential aim of the application was formulated in the appellants’
founding affidavit in the following way:
‘In the event of this Honourable Court granting the relief sought herein, it will facilitate the
sale of the Property by way of normal means as opposed to by way of a forced sale. . . .
The further liabilities [of the company] . . . will be settled with the balance of the funds
(after settling [Nedbank]) realised by way of the normal and arm’s length sale of the
Property in accordance with the business rescue plan.’
[16] In their answering affidavit, Nedbank and Imperial denied the valuation of
the immovable property by the appellants’ experts in excess of R300 million. For
this denial they relied primarily on a valuation by their own experts of R97 million
for portion 169 of the farm Bothasfontein and R32 million for erven 5 and 6
Kyalami, thus amounting to a total valuation of R129 million for the immovable
property as a whole. Yet it seems that no valuation on behalf of any party took
note of either the alleged alienation of the company’s right to develop its property,
or the existing long term lease of the immovable properties which endures until
2018. The influence of these on the value of the property is therefore unknown.
But, on the face of it, the assets of the company are worth at least R129 million.
Although the liabilities of the company are also in dispute, it appears to be
common cause that they add up to no more than about R75 million. Again, purely
on the face of it and without any proper analysis, the company thus appears to be
factually solvent.
[17] However, of greater significance, with reference to the answering
affidavits, was the position taken by Nedbank with regard to the execution sale.
Since it was moving for the liquidation of the company, so Nedbank said, it no
longer intended to pursue the forced sale of the immovable properties in
execution. In this light, the whole purpose of the business rescue application as
formulated in the founding affidavit – which was to avoid a sale in execution –
essentially fell by the wayside. In their replying affidavit the appellants
nonetheless pursued their application for business rescue on the basis that it
would yield a better return than liquidation. They did so on the following three
grounds:
(a)
A business rescue practitioner would be able to realise the immovable
property at a higher price than a liquidator.
(b)
The costs of a business rescue practitioner are likely to be considerably
lower than those of a liquidator.
(c)
The sale of the two Kyalami erven forming part of the property would be
sufficient to satisfy Nedbank’s secured claim, which would leave the business
rescue practitioner in a position to trade with the remaining 69 hectares of the
farm Bothasfontein.
The nature of the court’s discretion under s 131(4)
[18] Against this background I can now turn to the legal principles involved.
First amongst these concerns the intrinsic nature of the decision taken by the
court a quo when it refused the business rescue application. The issue has its
origin in the contention by Nedbank and Imperial that, because the decision by
the court a quo derived from the exercise of a discretion, this court’s authority to
interfere with that decision is limited. The contention has its roots in the well-
established principle that a court of appeal is not allowed to interfere with the
exercise of a discretion merely because it would have come to a different
conclusion. It may interfere only if the lower court had been influenced by wrong
principles of law, or a misdirection of fact, or if it had failed to exercise a
discretion at all. The reason for the limitation, it is said, is because, in an appeal
against the exercise of a discretion, the question is not whether the lower court
had arrived at the right conclusion, but whether it had exercised its discretion in a
proper manner (see eg Mabaso v Law Society of the Northern Provinces 2005 (2)
SA 117 (CC) para 20). Equally well-settled, however, is the principle that this
limitation on interference only applies to the exercise of a discretion in the strict
sense. What gives rise to the emphasis on the ‘strict sense’ in this context, is that
the term ‘discretion’ is sometimes used in the loose sense to indicate no more
than the application of a value judgment. Where the ‘discretion’ exercised by the
lower court was one in the loose sense of a value judgment, the limitation
imposed on the authority of the court of appeal to interfere does not apply. In that
event the court of appeal is both entitled, and in fact duty-bound, to interfere if it
would have come to a different conclusion.
[19] Assuming therefore that the court’s function under s 131(4) can be said to
constitute the exercise of a ‘discretion’, the question remains whether it is a
discretion in the strict sense or not. The guiding principles, I believe, are to be
found in Knox D’Arcy Ltd v Jamieson 1996 (4) SA 348 (SCA), which principles
have been approved and applied by the Constitutional Court on several
occasions, eg in Giddey NO v J C Barnard & Partners 2007 (5) SA 525 (CC)
paras 19-23. As explained by Grosskopf JA in Knox D’Arcy (at 361C-D), a
discretion in the strict sense is confined to those instances where the lower court
could legitimately adopt any one of a range of options about which there may well
be a justifiable difference of opinion as to which one would be the most
appropriate. An award of general damages, for example, may vary from say
R90 000 to R120 000. No award within that range could be described as ‘wrong’.
That is a discretion in the strict sense. Since all these options would be
legitimate, the choice of any one of them could therefore not be said to be
inappropriate, as long as the choice was properly made.
[20] Reference to a ‘discretion’ without these attributes does not convey the
meaning of a ‘discretion in the strict sense’. Even if a discretion without these
qualifications is described as a ‘wide discretion’, it conveys no more than the
meaning that the court is entitled to have regard to a variety of diverse and
contrasting considerations in reaching a conclusion. But in the end, that
conclusion will be either right or wrong. And if it is wrong, the court of appeal will
be bound to interfere (Knox D’Arcy at 361H-I). That is a ‘discretion’ in the loose
sense. In Media Workers Association of South Africa and others v Press
Corporation of South Africa Ltd (Perskor) 1992 (4) SA 791 (A) at 795-796,
Grosskopf JA sought to explain the concept of a discretion in the loose sense
with reference to the threefold distinction between matters of fact, matters of law
and matters of discretion. The third category would therefore include all those
issues arising in litigation which cannot be classified as either questions of fact or
questions of law. These would include, for example, the question whether the
defendant acted reasonably in the circumstances; or whether the legal
convictions of the community require the imposition of delictual liability for the
purpose of defining wrongfulness; or whether the applicant for an interdict has an
alternative remedy (see eg Transvaal Property & Investment Co and Reinhold &
Co v SA Townships Mining & Finance Corporation Ltd and the Administrator
1938 TPD 512 at 521). As I see it, a discretion in the loose sense would therefore
indicate all instances where the court is required to make a value judgment (see
also M M Corbett – address at the First Orientation Course for New Judges –
‘Writing a Judgment’ (1998) 115 SALJ 116 at 125; Harms Civil Procedure in the
Supreme Court C1.39). With hindsight it would perhaps be better not to refer to
these instances of a discretion in the loose sense as the exercise of a discretion
at all, but as the exercise of a value judgment. But since the terminology has
become so well entrenched, we can do no better than to heed the caution
sounded, eg in Knox D’Arcy, that the limitations on the powers of a court of
appeal are confined to the exercise of a discretion in the strict sense.
[21] With this rather lengthy prelude I can now revert to the pertinent question:
does s 131(4) afford the court a discretion in the strict sense or not? I think the
short answer is ‘no’. In a case such as this, the court’s discretion is bound up with
the question whether there is a reasonable prospect for rescuing the company.
The other pertinent requirement in s 131(4), namely, that the company must be
financially distressed, seems to turn on a question of fact. As to whether there is
a reasonable prospect of rescuing the company, it can hardly be said, in my view,
that it involves a range of choices that the court can legitimately make; of which
none can be described as wrong. On the contrary, as I see it, the answer to the
question whether there is such a reasonable prospect can only be ‘yes’ or ‘no’.
These answers cannot both be right. The position is comparable to the decision
whether or not the conduct of a defendant in a case based on negligence met the
standards of the reasonable person, or whether the negligent conduct should
attract legal liability and thus be regarded as wrongful. Hence it involves a value
judgment. And if the court of appeal should disagree with the conclusion, it is
bound to interfere. Hence the question is whether we agree with the conclusion
reached by the court a quo that the appellants had failed to establish a
reasonable prospect of rescuing the company.
The meaning of ‘rescuing the company’
[22] The next debate between the parties turned on what would constitute
‘rescuing the company’ within the contemplation of s 131(4)(a). This debate has
its origin in the definition of that expression in s 128(1)(h), read with 128(1)(b)(iii).
According to s 128(1)(h), ‘rescuing the company’ means ‘achieving the goals set
out in the definition of “business rescue” in paragraph (b)’. Section 128 (1)(b) in
turn provides:
‘“Business rescue” means 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 by restructuring its affairs, business, property, debt and other liabilities, and
equity in a manner that maximises the likelihood of the company continuing in existence
on a solvent basis or, if it is not possible for the company to so continue in existence,
results in a better return for the company’s creditors or shareholders than would result
from the immediate liquidation of the company;’
[23] The potential business rescue plan s 128(1)(b)(iii) thus contemplates has
two objects or goals: a primary goal, which is to facilitate the continued existence
of the company in a state of insolvency and, a secondary goal, which is provided
for as an alternative, in the event that the achievement of the primary goal proves
not to be viable, namely, to facilitate a better return for the creditors or
shareholders of the company than would result from immediate liquidation. In this
light the debate arose whether a business rescue application can succeed where
the proposed rescue plan provides for the secondary goal only. In other words,
whether the requirement of ‘rescuing the company’ as contemplated in
s 131(4)(a) is satisfied where it is clear from the outset that the company can
never be saved from immediate liquidation and that the only hope is for a better
return than that which would result from liquidation. In A G Petzetakis
International Holdings Ltd v Petzetakis Africa (Pty) Ltd 2012 (5) SA 515 (GSJ)
this question was answered in the negative. The reason for this decision appears
to be encapsulated in para 2 of the judgment which reads:
‘Section 131(4) does not incorporate the alternative object of the . . . rescue plan which is
referred to in s 128, namely a plan which could result in a better return for creditors or
shareholders than would result from immediate liquidation. It seems that the intention of
the legislature on this point is as follows:
[17.1] The requirements for the granting of a s 131 rescue order include that the
company under consideration must have a reasonable prospect of recovery.
[17.2] Once a company is under business rescue, its rescue plan may be aimed at the
alternative object, namely a better return than the return of immediate liquidation.’
[24] In Australia it is accepted, on the other hand, that recourse to the rescue
provisions of that country’s Corporations Act 50 of 2001 – which are not dissimilar
in wording to our s 128(1)(b) – need not necessarily be to save the company from
liquidation. In Dallinger v Halcha Holdings (Pty) Ltd [1995] FCA 1727 para 28, for
example, the Federal Court of Australia held that the statutory rescue machinery
‘should be available in a case where, although it is not possible for the company
to continue in existence, an administration is likely to result in a better return for
creditors than would be the case with an immediate winding-up’. This also
appears to have been the approach, at least by implication, in Propspec
Investments (Pty )Ltd v Pacific Coast Investments 97 Ltd 2013 (1) SA 542 (FB)
para 7; Koen v Wedgewood Village Golf & Country Estate (Pty) Ltd 2012 (2) SA
378 (WCC) para 17.
[25] Nedbank and Imperial contended that we should endorse the approach in
Petzetakis. In support of this contention they referred to the dictionary meaning of
‘rescue’ and ‘rehabilitate’ both of which convey the notion of a return or
restoration to a normal healthy state. When s 128(1)(b) therefore defines
‘business rescue’ as ‘proceedings to facilitate the rehabilitation of a company’, so
they argued, it is clear that these proceedings must be aimed at the achievement
of the primary goal in s 128(1)(b)(iii), that is, to restore the company to the normal
healthy state of solvency. The secondary objective, to provide a better deal for
creditors and shareholders than liquidation, so their argument proceeded, can
only be an alternative goal of the proposed rescue plan. It follows, so they
concluded, that a proposed plan which holds out no hope for a return of the
company to a state of solvency, but provides at best for achievement of the
secondary goal, does not amount to ‘rescuing the company’ as defined by
s 128(1)(h) read with s 128(1)(b). In consequence, such a plan fails to satisfy the
requirement to that effect in s 131(4)(a).
[26] Although I have no problem with the dictionary meaning of ‘rescue’ and
‘rehabilitation’ on which the argument relies, it fails to recognise, I think, that
s 128(1)(b) gives its own meaning to these terms, which does not coincide with
these definitions. As I understand the section, it says that ‘business rescue’
means to facilitate ‘rehabilitation’, which in turn means the achievement of one of
two goals: (a) to return the company to solvency, or (b) to provide a better deal
for creditors and shareholders than what they would receive through liquidation.
This construction would also coincide with the reference in s 128(1)(h) to the
achievement of the goals (plural) set out in s 128(1)(b). It follows, as I see it, that
the achievement of any one of the two goals referred to in s 128(1)(b) would
qualify as ‘business rescue’ in terms of s 131(4).
[27] The interpretation that business rescue proceedings are not limited to the
return of the company to solvency is, in my view, also supported by the historical
context of Chapter 6. With regard to judicial management under the 1973
Companies Act, one of the prerequisites – in s 427(1)(b) of that Act – was ‘a
reasonable probability that, if [the company] is placed under judicial
management, it will be enabled to pay its debts or to meet its obligations and
become a successful concern’. In the light of this requirement it was held, eg in
Millman, NO v Swartland Huis Meubileerders (Edms) Bpk: Repfin Acceptances
Ltd Intervening 1972 (1) SA 741 (C) at 745A that:
‘. . . even though it might be more advantageous to dispose of the business of the
company as one under judicial management rather than as one in liquidation, this is not
a factor that should influence the Court to grant an order of judicial management in
respect of a company which will in all probability never be able to discharge more than a
percentage of its liabilities.’
[28] The rhetorical question that arises is: why, as a matter of common sense
and policy, should this be so? Why should a company not be temporarily
protected against claims of creditors if that will, as in the case of Millman, NO,
allow the sale of the business as a going concern at optimum value, in order to
give creditors and shareholders a better return than would result from liquidation?
Why should the law in these circumstances insist on the requirement that the
creditors eventually be paid in full? It has been suggested that this insistence on
an eventual return to solvency was one of the reasons why the institution of
judicial management turned out to be an ‘abject failure’ (see eg Carl Stein and
Geoff Everingham The New Companies Act Unlocked (2011) at 409). I believe it
can be accepted with confidence that the legislature did not intend to repeat the
mistakes of the past. Hence the pertinent question is – did the appellants
establish a reasonable prospect of achieving any one of the two goals
contemplated in s 128(1)(b) on the facts of this case?
A reasonable prospect
[29] This leads me to the next debate which revolved around the meaning of ‘a
reasonable prospect’. As a starting point, it is generally accepted that it is a lesser
requirement than the ‘reasonable probability’ which was the yardstick for placing
a company under judicial management in terms of s 427(1) of the 1973
Companies Act (see eg Southern Palace Investments 265 (Pty) Ltd v Midnight
Storm Investments 386 Ltd 2012 (2) SA 423 (WCC) para 21). On the other hand,
I believe it requires more than a mere prima facie case or an arguable possibility.
Of even greater significance, I think, is that it must be a reasonable prospect –
with the emphasis on ‘reasonable’ – which means that it must be a prospect
based on reasonable grounds. A mere speculative suggestion is not enough.
Moreover, because it is the applicant who seeks to satisfy the court of the
prospect, it must establish these reasonable grounds in accordance with the rules
of motion proceedings which, generally speaking, require that it must do so in its
founding papers.
[30] Self-evidently it will be neither practical nor prudent to be prescriptive
about the way in which the appellant must show a reasonable prospect in every
case. Some reported decisions laid down, however, that the applicant must
provide a substantial measure of detail about the proposed plan to satisfy this
requirement (see eg Southern Palace Investments 265 (Pty) Ltd) paras 24-25;
Koen v Wedgewood Village Golf & Country Estate (Pty) Ltd 2012 (2) SA 378
(WCC) paras 18-20). But in considering these decisions Van der Merwe J
commented as follows in Propspec Investments v Pacific Coasts Investments 97
Ltd 2013 (1) SA 542 (FB) para 11:
‘I agree that vague averments and mere speculative suggestions will not suffice in this
regard. There can be no doubt that, in order to succeed in an application for business
rescue, the applicant must place before the court a factual foundation for the existence of
a reasonable prospect that the desired object can be achieved. But with respect to my
learned colleagues, I believe that they place the bar too high.
And at para 15:
‘In my judgment it is not appropriate to attempt to set out general minimum particulars of
what would constitute a reasonable prospect in this regard. It also seems to me that to
require, as a minimum, concrete and objectively ascertainable details of the likely costs
of rendering the company able to commence or resume its business, and the likely
availability of the necessary cash resource in order to enable the company to meet its
day-to-day expenditure, or concrete factual details of the source, nature and extent of the
resources that are likely to be available to the company, as well as the basis and terms
on which such resources will be available, is tantamount to requiring proof of a
probability, and unjustifiably limits the availability of business rescue proceedings.’
[31] I agree with these comments in every respect. Yet, the appellants
contended that the bar should be set even lower than that. Relying on the
reference in s 128(1)(b) to ‘the development and implementation, if approved, of
a plan to rescue the company’ their argument was that the reasonable prospect
for rescuing the company in s 131(4) demands no more than the reasonable
prospect of a rescue plan. According to this argument, the applicant for business
rescue is therefore not required to show a reasonable prospect of achieving one
of the goals contemplated in s 128 (1)(b). All the applicant has to show is that a
plan to do so is capable of being developed and implemented, regardless of
whether or not it may fail. Once it is established that it is the intention of the
applicant to develop and implement a rescue plan which has that as its purpose,
so the argument went, the court should grant the business rescue application
even if it is unconvinced that this will result in the company surviving insolvency
or even achieve a better return for creditors and shareholders. I do not agree with
this line of argument. As I see it, it is in direct conflict with the express wording of
s 128(1)(h). According to this section ‘rescuing the company’ indeed requires the
achievement of one of the goals in s 128(1)(b). Self-evidently the development of
a plan cannot be a goal in itself. It can only be the means to an end. That end, as
I see it, must be either to restore the company to a solvent going concern, or at
least to facilitate a better deal for creditors and shareholders than they would
secure from a liquidation process. I have indicated my agreement with the
statement in Propspec that the applicant is not required to set out a detailed plan.
That can be left to the business rescue practitioner after proper investigation in
terms of s 141. But the applicant must establish grounds for the reasonable
prospect of achieving one of the two goals in s 128(1)(b).
Application to the facts
[32] In applying the approach to ‘rescuing the company’ that I thus subscribe
to, it will be remembered that the appellants initially set out to prove that business
rescue would be better than a sale in execution of the judgment in Nedbank’s
favour. When Nedbank made it plain in its answering affidavit that it no longer
intended to pursue a sale in execution, but that it sought a liquidation of the
company instead, the appellants had to change their tack. The case they then
tried to make out in their replying papers was that business rescue would be
better than liquidation. In the process they proffered two options. First, that the
immovable property of the company be sold by the business rescue practitioner
as a whole and that the proceeds be divided amongst the shareholders after the
creditors have been paid in full. The second option they suggested was that the
two Kyalami erven be sold, whereafter the business rescue practitioner could
pursue the business of the company by utilising the rest of its property, which
primarily consists of the Kyalami race track. The second option could perhaps
also be understood as a proposal to return the company to a state of solvency,
but that appears to be neither here nor there. Overlooking, for the moment, the
general rule that the appellants are not allowed to make out their case in their
replying papers, I propose to deal with the two options they propose in turn.
[33] My problem with the proposal that the business rescue practitioner, rather
than the liquidator, should sell the property as a whole, is that it offers no more
than an alternative, informal kind of winding-up of the company, outside the
liquidation provisions of the 1973 Companies Act which had, incidentally, been
preserved, for the time being, by item 9 of schedule 5 of the 2008 Act. I do not
believe, however, that this could have been the intention of creating business
rescue as an institution. For instance, the mere savings on the costs of the
winding-up process in accordance with the existing liquidation provisions could
hardly justify the separate institution of business rescue. A fortiori, I do not
believe that business rescue was intended to achieve a winding-up of a company
to avoid the consequences of liquidation proceedings, which is what the
appellants apparently seek to achieve.
[34] In any event, I believe that, even on its own terms, the appellants’ proposal
consisting of not more than an alternative winding-up, cannot be sustained. In
motivating this proposal the appellants relied on two grounds. The first was that a
business practitioner would be able to obtain a better price for the property than a
liquidator. But I share the court a quo’s difficulty in understanding why this should
be so (see para 49(1) of the judgment). In short, this ground appears to rest on
no more than pure speculation. Their second ground was that the remuneration
of the liquidator would exceed that of the business rescue practitioner. It departs
from the premise that the fees of the liquidator are calculated as a percentage of
the assets of the company, while those of the business rescue practitioner are
based on a daily rate. The reasoning then proceeds on the supposition that the
business rescue proceedings will be finalised within a period of one year. This
supposition seems to be highly questionable. I say this particularly in view of the
litany of litigation – which is likely to occupy the business practitioner for many
years to come – concerning the validity of the 40 per cent shareholding of
Educated Risk; the entitlement of Oakdene to the ‘income stream of the
company’; the validity of the sale of the development rights of the company; the
validity of the long term lease over the immovable property of the company; the
validity of the cession of that lease; and so forth.
[35] Reference to these transactions of doubtful validity, and the other sinister
aspects in the management of the company’s affairs, lead me to the conclusion
that liquidation proceedings are in fact better geared for the situation that arose in
this case. On the respondents’ version the company has been stripped of all its
income and virtually all its assets while under the management of Dimetrys
Theodosiou. These allegations are, of course, denied by the appellants. But, as I
see it, that is not the point. The point is that these are the very circumstances at
which the investigative powers of the liquidator – under s 417 and 418 of the
1973 Companies Act – and the machinery for the setting aside of improper
dispositions of the company’s assets – provided for in the Insolvency Act 24 of
1936 – are aimed. In this light I believe there is a very real possibility that
liquidation will in fact be more advantageous to creditors and shareholders –
excluding, perhaps, the appellants – than the proposed informal winding-up of the
company through business rescue proceedings.
[36] The appellants’ further proposition, which involves the sale of the two
Kyalami erven only, raises more problems than solutions. First amongst these is
that it starts out from the premise that the two erven can be sold for R32 million. It
is true that this is based on a valuation put forward on behalf of Nedbank and
Imperial. Nonetheless, the valuation pays no heed, so it seems, to the influence
of either the alienation of the rights to development of the company’s property or
to the long term lease and it would be surprising, to say the least, if these have
no influence on the value of the property. But be that as it may, even if the two
erven were to be sold for R32 million, that would not be enough to satisfy the
judgment debt of R31.5 million in favour of Nedbank which has grown
substantially in magnitude, due to interest at the rate of R320 000 per month
since June 2011. That would leave all the other debts unpaid. In addition, the
company would still have no income because, on the appellants’ version, the
remainder of the property would still be leased on a long term basis and the
‘income stream’ of the company would still be ceded to Oakdene. Hence there is
no suggestion how the business rescue practitioner would go about satisfying
outstanding debts. In fact, it is not even clear where the remuneration of the
business rescue practitioner would come from.
[37] In these circumstances I do not believe Nedbank and Imperial can be
branded unreasonable in their declared intent to oppose any business plan in line
with either of the two options proposed by the appellants. The court a quo
regarded this declared intent by the two major creditors – and the holders of 60
per cent of the shareholding in the company – as one of the reasons why
business rescue was doomed to fail (see para 47). In argument before us the
court a quo was criticised for doing so. Authority for this criticism was sought in
the following statement from Nedbank Ltd v Bestvest 153 (Pty) Ltd; Essa v
Bestvest 153 (Pty) Ltd 2012 (5) SA 497 (WCC) at para 55:
‘In the answering affidavit both [the major creditors] make it clear that they are not in
favour of any BRP plan, and that they will vote against it at any meeting to be convened
by the business rescue practitioner in terms of ss 132(2)(c) and 152 of the Act. They
accordingly urged the court not to sanction an exercise in futility, and to rather make an
order of winding-up. Such an approach appears, at first blush, to be a stratagem to
advance the argument for winding-up: one would have expected a responsible creditor to
be open to any proposal that may ultimately redound to its benefit. Such an approach
certainly does not accord with the overall purpose of BRP which, as I have demonstrated
above, are aimed at saving rather than destroying a business, and in which consultation
and consensus-seeking would be the point of departure.’
[38] If the statement is intended to convey that the declared intent to oppose by
the majority creditors should in principle be ignored in considering business
rescue, I do not agree. As I see it, the applicant for business rescue is bound to
establish reasonable grounds for the prospect of rescuing the company. If the
majority creditors declare that they will oppose any business rescue scheme
based on those grounds, I see no reason why that proclaimed opposition should
be ignored. Unless, of course, that attitude can be said to be unreasonable or
mala fide. By virtue of s 132(2)(c)(i) read with s 152 of the Act, rejection of the
proposed rescue plan by the majority of creditors will normally sound the death
knell of the proceedings. It is true that such rejection can be revisited by the court
in terms of s 153. But that, of course, will take time and attract further costs.
Moreover, the court is unlikely to interfere with the creditors’ decision unless their
attitude was unreasonable. In these circumstances I do not believe that the court
a quo can be criticised for having regard to the declared intent of the major
creditors to oppose any business rescue plan along the lines suggested by the
appellants.
[39] In this court counsel for the appellants proposed another version of the
company’s return to solvency which had not been raised before. According to this
proposal, a sale of the immovable property and payment of the creditors is likely
to result in a cash surplus. This result, so the argument went, would in itself
terminate the commercial insolvency of the company. That, so it seems to me,
can be said of any company which is commercially insolvent, but factually
solvent. Though the simple logic of the argument cannot be faulted, I do not
believe it constitutes a ‘business rescue’ within the meaning of s 128(1)(b)(iii).
What the section requires is ‘the continuing existence of the business of the
company on a solvent basis’. A company which merely exists to own cash in the
bank, has lost its raison d‘être. Unless there is a real possibility that the cash in
the bank will lead to the resurrection of the company’s business, the
requirements of s 128(1)(b)(iii) had thus not been satisfied. In view of the history
of irreconcilable differences between the shareholders, that possibility can safely
be excluded in this case. It follows that, in my view, the court a quo cannot be
criticised for finding that, on the facts of this case, business rescue proceedings
were not appropriate and that liquidation of the company was the preferred
remedy.
[40] In the result the appeal is dismissed with costs in favour of second and
third respondents, including in both instances, the costs of two counsel.
________________
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANTS:
D Mahon
INSTRUCTED BY:
Schindlers Attorneys
JOHANNESBURG
CORRESPONDENTS:
Webbers
BLOEMFONTEIN
FOR SECOND RESPONDENT:
A Subel SC
A C Botha
INSTRUCTED BY:
Lowndes Dlamini
SANDTON
CORRESPONDENTS:
Lovius Block Attorneys
BLOEMFONTEIN
FOR THIRD RESPONDENT:
J J Brett SC
E Kromhout
INSTRUCTED BY:
TWB-Tugendhaft Wapnick Banchetti &
Partners
SANDTON
CORRESPONDENTS:
Lovius Block 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:
__ May 2013
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
OAKDENE SQUARE PROPERTIESS (PTY) LTD and others v FARM
BOTHASFONTEIN (KYALAMI) (PTY) LTD and others
The Supreme Court of Appeal (SCA) today dismissed an appeal against the decision of the
South Gauteng High Court to refuse an application for an order placing the first respondent,
Farm Bothasfontein (Kyalami) (Pty) Ltd (the company) under supervision and commencing
business rescue proceedings as contemplated in the ‘new’ Companies Act 71 of 2008.
The case arose out of the commercial insolvency of the company, who is unable to satisfy a
judgement debt awarded against it, in favour of the respondents and majority shareholders in
the company, to the tune of R31.5 million. The minority shareholder, seeking to avoid a
liquidation order, brought an application for business rescue on the premise that a business
rescue practitioner would be able to realise the company’s assets on more favourable terms.
The concept of ‘business rescue’ under the new Companies Act has, until the present matter,
remained untested in the SCA. As such, the court took this opportunity to clarify the law in
this regard. For one, the term ‘business rescue’ was held to incorporate not only plans to
restore the company to solvency – as it was under the previous regime – but also scenarios
which aim solely at securing a better deal for creditors and shareholders than that which they
would receive through liquidation. Secondly, the court interpreted the requirement that there
be a ‘reasonable prospect’ for rescuing the company to mean that the applicant must evidence
‘reasonable grounds’ - something more than a mere prima facie case, but less than a
reasonable probability (the yardstick as it was under the old system) – that the goals of
business rescue may be achieved. Cases requiring a substantial measure of detail as to the
content of the proposed business rescue plan were rejected, as was the contention that mere
speculative suggestion would suffice. Further, this determination was held to require a value
judgment, thus affording the courts discretion in the wide sense.
In the result, the SCA upheld the decision of the court a quo and reasoned that the
appellants’ proposal, consisting of not more than an alternative winding-up, could not be
sustained: for one, the proposal that a business rescue practitioner would be able to obtain a
better price for the assets of the company than that which would be achieved under
liquidation was found to rest on no more than pure speculation; secondly, the contention that
the remuneration of the liquidator would exceed those of the business rescue operator was
held to be irrational. Reference to transactions of doubtful validity and other sinister aspects
in the management of the company’s affairs further persuaded the court that liquidation
proceedings were better suited to the situation that arose in this case.
|
2957
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1008/13
In the matter between:
SOPHY MOLUSI
FIRST APPELLANT
DAVID MAMAGALO
SECOND APPELLANT
ISAAC SELOLWANE
THIRD APPELLANT
K L TWARISANG
FOURTH APPELLANT
JOSEPH RAMOKANE
FIFTH APPELLANT
FRANS MOKANSI
SIXTH APPELLANT
and
FRANCOIS DANIËL JAMES
VOGES NO
FIRST RESPONDENT
FREDERIKA MARIA CHRISTINA
VOGES NO SECOND RESPONDENT
THE HEAD OF THE NORTH WEST
PROVINCIAL OFFICE OF THE
DEPARTMENT OF RURAL
DEVELOPMENT AND LAND REFORM THIRD RESPONDENT
THE RUSTENBURG LOCAL
MUNICIPALITY
FOURTH RESPONDENT
Neutral citation: Molusi v Voges NO (1008/13) [2015] ZASCA 64 (08 May
2015)
Coram:
Mpati P, Ponnan, Bosielo, Shongwe and Saldulker JJA
Heard:
20 February 2015
Delivered: 08 May 2015
Summary: Land – eviction of peri-urban occupiers from leased property – one
ground of termination of lease relied on in notice of termination and founding
affidavit no bar to owner relying on common law ground of ownership of leased
property when ownership alleged in founding papers – reliance on common law
ground of ownership not constituting new cause of action – interpretation of
relevant provisions of Extension of Security of Tenure Act 62 of 1997.
ORDER
________________________________________________________________
On appeal from: Land Claims Court, Randburg (Sidlova AJ sitting as court of
first instance):
1 The appeal is dismissed.
2 The appellants and all other persons occupying under or through them are
ordered to vacate Portion 81 (a portion of Portion 65) of the farm Boschfontein
330-JQ, Rustenburg (the farm), on or before 7 June 2015.
3 Failing compliance with the order in 2 the Sheriff for the district of
Rustenburg is authorised to evict the appellants and all other persons occupying
under or through them from the farm 10 days after the date contemplated in 2
above.
JUDGMENT
________________________________________________________________
Shongwe JA (Bosielo JA concurred)
[1] The question of land, the right of ownership and the right of occupiers
has reared its ugly head once again. Clearly this is a thorny, sensitive and
emotive issue particularly in the context of the spatial development of the then
apartheid South African government. It is a painful but a known fact that the
property laws of the apartheid regime were geared towards denying Blacks,
Africans in particular any form of secure tenure to land. Amongst these
obnoxious laws were the Group Areas Act 41 of 1950 and the Prevention of
Illegal Squatting Act 52 of 1951 (PISA). It is this PISA which resulted in many
people, Africans in particular being arbitrarily thrown into the wilderness and
rendered homeless. Driven by its quest to restore people’s rights to equality and
human dignity as encapsulated in s 1 of the Constitution, our new government
introduced some new and revolutionary Acts, including Prevention of Illegal
Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE) and
Extension of Security of Tenure Act 62 of 1997 (ESTA), first, to put a stop to
arbitrary evictions of people, and secondly, to ensure, where an eviction is
justified, that it is done with compassion and dignity – Ubuntu – Botho. The
authors S Woolman and Bishop Constitutional Law of South Africa 2 ed (2013)
set out the legislature’s intentions when introducing ESTA to be:
‘The State’s constitutional obligation to promulgate legislation dealing with the promotion of
secure tenure was in part fulfilled with the enactment of ESTA in 1997. The aims of the Act
are threefold: to promote long-term security of tenure; to regulate eviction; and to introduce a
set of rights and duties in relation to both occupiers and land owners.’
The authors referred to Prize Trade 44 (Pty) Ltd v Isaac Tefo Memane (LCC)
35/07 (unreported judgment 21 August 2003) which confirmed that one of the
main functions of ESTA is to ensure that evictions are conducted equitably in
the interests of both parties.
[2] This appeal is against the judgment and order of the Land Claims Court
(Sidlova AJ), ordering the appellants and all persons occupying under or
through them to vacate Portion 81 (a portion of portion 65) of the farm
Boschfontein 330 – JQ, Rustenburg (‘the property’). The appellants are
occupiers as defined in ESTA. The appeal is before us with the leave of the
court a quo.
[3] The first and second respondents (hereinafter the respondents), in their
capacity as trustees of the Voges Family Trust, are nominal owners of the
aforesaid property. No relief is sought against the third and fourth respondents,
who are cited by virtue of the provisions of s 9 of ESTA and they abide the
decision of the court.
[4] Let me conveniently mention at this stage that none of the appellants are
employed by the respondents or their predecessors in title. Further that it is
common cause that none of the appellants have resided on the property for 10
years and has reached the age of 60. All of the appellants have been resident on
the property after 4 February 1997, except for the first appellant who is said to
have resided there since 1995. Nothing really turns on this.
[5] It is common cause that in or about October 2001, the respondents
concluded written lease agreements with some of the appellants and oral lease
agreements with others. The respondents’ case as reflected in the founding
affidavit is that the appellants were in breach of a material term of the lease
agreements in that they failed or refused to pay rental. As a result, the
respondents cancelled the lease agreements. See Vol. 1 – Founding affidavit
para 4.5; 5.5; 6.5; 7.5, 8.5; 9.5; 10.5; 11.5; 12.5; 13.5; 14.5; 15.5 and 17.5. All
these paragraphs read:
‘The basis for cancellation was that the 1st respondent failed to perform in terms of the lease
agreement between her and the applicants, in that she failed to pay the agreed monthly rental
since May 1998, which amounted to a substantial breach of the lease agreement, and or failed
to rectify the position after receiving due demand, in terms of which agreement her right of
residence was terminated. ’
Paragraph 17.1 reads somewhat differently but in essence is the same. The
appellants dispute that they failed to pay the monthly rental. They allege that
when they tendered payment of rental during May 2008, the respondents
refused to accept it because they were going to demolish the structures occupied
by the appellants. Furthermore, the appellants deny that they received the
notices to terminate.
[6] Although the notice of termination and the founding affidavit allege that,
despite demand, the respondents refused or failed to pay rental, no such demand
was attached to the papers. Importantly, all the respondents denied that they
failed or refused to pay the rental. To the contrary, they all alleged that the
applicant wrongfully refused to accept their payments.
[7] The court a quo considered the conflicting rights of the respondents, in
particular, the right of ownership as opposed to the protection of the rights of
the appellants as occupiers. It also pertinently recognised the fact that should it
decide to grant the eviction order it would ineluctably render the appellants
homeless.
[8] The court a quo reasoned that in exercising its discretion on whether or
not to grant an eviction order, it was duty bound to consider whether the right of
occupation of the appellants had been properly terminated in accordance with
ESTA and whether the procedural requirements of ESTA had been met. The
court a quo recognised that it had to consider whether or not it was just and
equitable to order the eviction of the appellants. In this regard it mentioned that
it had to consider the interests of the parties, the fairness of the procedure
followed, as well as the availability of suitable alternative accommodation. This
list is not exhaustive. Regarding the consideration of suitable alternative
accommodation the court a quo said that a probation officer’s report mentioned
that there was no suitable alternative accommodation available to the appellants.
No such report was included in the record before us.
[9] Furthermore, the judgment is silent regarding any engagement by the
court with the third and fourth respondents who in terms of s 26(1) of the
Constitution have a constitutional obligation to ensure that everyone has access
to adequate housing read with s 25(1) which prohibits arbitrary deprivation of
property – the third and fourth respondents were parties to these proceedings. It
is not clear to me why they were before court if the intention was not to engage
them and ensure that, even when the eviction is finally granted, at least the court
is assured that these important government departments will ensure that the
evictees are not rendered homeless.
[10] As alluded to above, the appellants contended that they did not receive
the notice of termination of their right of occupation. Their version is that the
deputy sheriff (Mpho Letlhake), together with another person, arrived at their
place of residence on 18 May 2009. The deputy sheriff told them that the
respondents had obtained an eviction order against them (appellants). He also
indicated to them that they have only eight days to vacate the property. When
the deputy sheriff handed over the documents to them, which they examined
and discovered that there was no official court stamp. They then refused to
accept service thereof and requested documents with a proper court stamp. The
deputy sheriff and his colleague then left with the documents.
[11] The following day, 19 May 2009 the deputy sheriff returned to the
property with what appeared to be the same documents as the ones produced the
previous day. It also appeared that the said documents were in fact the s 8
notices and not eviction orders as alleged. The appellants aver that had the
nature and effect of the documents been properly explained to them, they would
have accepted them on 18 May 2009.
[12] The appellants contended, first that the lease agreements were not
properly and effectively cancelled as required by s 8(1) of ESTA, and secondly
that the court a quo erred in deciding the application in favour of the
respondents on a new ground that was not relied upon by the respondents in
their notices of termination and founding affidavit. In both the letters of
termination and the founding affidavit the respondents had alleged that the
appellants were in breach of a material term of the lease in that they had failed
to pay the agreed rental fees.
[13] On the other hand, the respondents contended that as this lease was
periodic, a mere notice of cancellation/termination of the lease was sufficient.
The law does not require the owner to give reasons for termination of the lease.
Based on this it was contended first that the fact that the landlord purported to
give reasons for termination which were wrong was irrelevant, and secondly the
fact that the landlord relied on cancellation of the lease, notwithstanding the fact
that it was never pleaded, was of no moment. Essentially it was contended that
the notice was reasonable in the circumstances.
[14] This case requires a proper understanding of the philosophy underpinning
ESTA. I now turn to deal with the legislative framework relevant to this matter.
This necessitates that I quote in full the preamble of ESTA, which reads as
follows:
‘To provide for measures with State assistance to facilitate long-term security of land tenure;
to regulate the conditions of residence on certain land; to regulate the conditions on and
circumstances under which the right of persons to reside on land may be terminated; and to
regulate the conditions and circumstances under which persons, whose right of residence has
been terminated, may be evicted from land; and to provide for matters connected therewith.
WHEREAS many South Africans do not have secure tenure of their homes and the land
which they use and are therefore vulnerable to unfair eviction;
WHEREAS unfair evictions lead to great hardship, conflict and social instability;
WHEREAS this situation is in part the result of past discriminatory laws and practices;
AND WHEREAS it is desirable –
that the law should promote the achievement of long-term security of tenure for occupiers of
land, where possible through the joint efforts of occupiers, land owners, and government
bodies;
that the law should extend the rights of occupiers, while giving due recognition to the rights,
duties and legitimate interests of owners;
that the law should regulate the eviction of vulnerable occupiers from land in a fair manner,
while recognising the right of land owners to apply to court for an eviction order in
appropriate circumstances;
to ensure that occupiers are not further prejudiced.’
[15] It is clear that ESTA seeks to regulate the conditions under which the
rights of people to reside on another’s land may be terminated. ESTA does not
say that people may not be evicted from properties. However, it seeks to avert
situations where people may be evicted arbitrarily without any intervention by
courts and in circumstances where such evictions may lead to great hardship,
conflict and social disruption with concomitant instability. Essentially ESTA
seeks to ensure that evictions, when they are inevitable, must be done humanely
and not with a sledgehammer. Hence ss 8 and 9 which provide as follows:
‘8 Termination of right of residence. – (1) Subject to the provisions of this section, an
occupier’s right of residence may be terminated on any lawful ground, provided that such
termination is just and equitable, having regard to all relevant factors and in particular to –
(a) the fairness of any agreement, provision in an agreement, or provision of law on
which the owner or person in charge relies;
(b) the conduct of the parties giving rise to the termination;
(c) the interests of the parties, including the comparative hardship to the owner or person
in charge, the occupier concerned, and any other occupier if the right of residence is
or is not terminated;
(d) the existence of a reasonable expectation of the renewal of the agreement from which
the right of residence arises, after the effluxion of its time; and
(e) the fairness of the procedure followed by the owner or person in charge, including
whether or not the occupier had or should have been granted an effective opportunity
to make representations before the decision was made to terminate the right of
residence…
‘9 Limitation on eviction – (1) Notwithstanding the provisions of any other law, an occupier
may be evicted only in terms of an order of court issued under this Act.
(2) A court may make an order for the eviction of an occupier if-
(a) the occupier's right of residence has been terminated in terms of section 8;
(b) the occupier has not vacated the land within the period of notice given by the
owner or person in charge;
(c) the conditions for an order for eviction in terms of section 10 or 11 have been
complied with; and
(d) the owner or person in charge has, after the termination of the right of residence,
given-
(i) the occupier;
(ii) the municipality in whose area of jurisdiction the land in question is situated;
and
(iii) the head of the relevant provincial office of the Department of Rural
Development and Land Reform, for information purposes not less than two
calendar months' written notice of the intention to obtain an order for eviction,
which notice shall contain the prescribed particulars and set out the grounds on
which the eviction is based: Provided that if a notice of application to a court
has, after the termination of the right of residence, been given to the occupier,
the municipality and the head of the relevant provincial office of the
Department of Rural Development and Land Reform not less than two months
before the date of the commencement of the hearing of the application, this
paragraph shall be deemed to have been complied with.’
[16] In terms of s 8(1), the right of an occupier to a residence can only be
terminated when first, there are lawful grounds for such termination, and
secondly, when it is just and equitable to do so. To my mind, these are the
jurisdictional requirements that have to be met before an eviction can be
sanctioned under ESTA.
[17] I now turn to the facts of this case. First, the appellants deny receiving the
notices to terminate the lease. Against this the respondents failed to file a
confirmatory affidavit by the sheriff or any other witness to gainsay this
allegation – not even a replying affidavit was filed to counter this allegation.
Undoubtedly this is a dispute of fact which could not be resolved on the papers.
On the authority of Plascon Evans-Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984 (3) SA 623 (A) the case should have been decided on the respondent’s
version or referred to oral evidence or to trial on this disputed issue. Secondly
and most crucially they contended that the court a quo decided this matter on a
totally different cause of action than the one alleged in the founding affidavit.
[18] It is common cause that the founding affidavit alleged that the
respondents terminated the lease on the basis that the appellants failed to
perform in terms of the lease agreement in that they failed to pay the agreed
monthly rental since May 2008. This conduct, it is alleged, amounted to a
serious and fundamental breach of the lease agreement. This allegation is
disputed by the appellants pertinently and unequivocally. Instead of dealing
with this serious dispute, the respondents’ counsel raised a new ground of
termination at the hearing. It is not disputed that, this new ground was never
raised in the papers nor in the respondents’ heads of argument. The court a quo
even commented on the sudden change and reliance on a new ground of
termination.
[19] To my mind this is trial by ambush. It may well be that when dealing with
a periodic lease, the law permits the owner to terminate by reasonable notice
without giving reasons. But I do not think that this would be so to the extent of
allowing a landowner to mislead an occupier, be it wittingly or unwittingly by
advancing a different cause of action which when seriously disputed he or she
can just abandon and rely on a different cause of action. In Minister of Safety
and Security v Slabbert [2010] 2 All SA 474 (SCA) para 21-22; Harms DP
commented as follows about such conduct:
‘The onus can arise only after the issue itself has arisen … the plaintiff’s case was that his
arrest and detention were unlawful because he had not been drunk and disorderly. His case on
the pleadings was not, … Cases by ambush are not countenanced.’ (My emphasis.)
[20] It is settled law that the purpose of pleadings is to define the issues for the
parties and the court. In application proceedings, the affidavits do not only
constitute evidence, but they also fulfil the purpose of pleadings. In other words
they must set out the cause of action in clear and unequivocal terms to enable
the respondent to know what case to meet. This is the reason why an applicant
is never permitted to change colours which he/she has pinned to the mast and
plead a new cause of action in a replying affidavit. (See Diggers Development
(Pty) Ltd v City of Matlosana & another [2012] 1 All SA 428 (SCA) para 18 –
Naidoo v Sunker [2012] JOL 28488 (SCA)). A party is duty bound to allege in
his or her affidavit all the material facts upon which it relies. I find the
observation by Mhlantla JA in Minister of Safety and Security v Slabbert (supra)
to be apposite where she stated:
‘It is impermissible for a plaintiff to plead a particular case and seek to establish a different
case at the trial. It is equally not permissible for the trial court to have recourse to issues
falling outside the pleadings when deciding a case.’
(See Moaki v Reckitt and Colman (Africa) Ltd 1968 (3) SA 98 (A) at 102A.)
[21] Explaining the crucial role played by affidavits in motion proceedings,
Joffe J said in Swissborough Diamond Mines v Government of the Republic of
South Africa 1999 (2) SA 279 (T) at 323F-324C:
‘It is trite law that in motion proceedings the affidavits serve not only to place evidence
before the Court but also to define the issues between the parties. In so doing the issues
between the parties are identified. This is not only for the benefit of the Court but also, and
primarily, for the parties. The parties must know the case that must be met and in respect of
which they must adduce evidence in the affidavits.’ (My emphasis.)
The above case was referred to with approval by this court in MEC for Health,
Gauteng v 3P Consulting (Pty) Ltd 2012 (2) SA 542 (SCA) para 28. (See also
Prokureursorde van Transvaal v Kleynhans 1995 (1) SA 839 (T) at 849B.)
Based on what happened in this case, I am unable to find that the appellants
knew what case they had to meet.
[22] Section 9(2)(d) of ESTA provides that a court may make an order for the
eviction of an occupier if the occupier’s right of residence has been terminated
in terms of s 8 and the owner or person in charge has, after the termination of
the right of residence given the occupier, the municipality and the head of the
Department of Rural Development and Land Reform, not less than two calendar
month’s written notice of the intention to obtain an order for eviction, which
notice shall (My emphasis) contain the prescribed particulars and set out the
grounds on which the eviction is based. One must ask the question: what would
be the need of setting out the grounds on which the eviction is based if the
owner can come to court and do a volte-face. In my view it would make no
sense. It follows, on the facts of this case that the respondents failed to comply
with s 9(2)(d) as the case they argued in court is not the one they pleaded in
their notice to terminate and founding affidavit. The court below should not
have granted the eviction order. See also D L Carey Miller and A Pope Land
Title in South Africa (2000) at 502 para 9.4.7.3 – where the writers observed
that:
‘The notice must contain the prescribed particulars and state the grounds on which eviction is
sought, it must be given by the owner or person in charge to the occupier, the municipality
with jurisdiction over the land and, for information purposes, the head of the relevant
provincial office of the Department of Land Affairs.’ (My emphasis)
(See also Lategan v Koopman en andere 1998 (3) SA 457 (LCC) at 463B-D.)
[23] On the above reasons the application in the court a quo should have been
dismissed. I would accordingly uphold the appeal.
_________________________
J B Z SHONGWE
JUDGE OF APPEAL
Mpati P (Ponnan and Saldulker JJA concurring):
[24] I have had the privilege of reading the judgment of my Colleague,
Shongwe JA, but regret that I am unable to agree with the conclusion he has
reached. The appellants were part of 11 occupiers1 of certain rooms on the farm
Boschfontein, situated in the district of Rustenburg (the farm), owned by the
respondents as nominal owners in their capacities as trustees of the Voges
Familie Trust. In those capacities the respondents concluded periodical leases –
some verbal, others reduced to writing – with each of the 11 occupiers, who
agreed to occupy the individual rooms and to pay a monthly rental. Most of the
occupiers took occupation during October 2001, although it appears to be
undisputed that the first appellant lived with her mother in a room rented by the
latter before 1997, but concluded her own lease agreement with the respondents
in 1999. On 16 April 2009 the respondents launched an application for the
eviction of all 11 occupiers (and those occupying under or through them). It was
alleged in the founding affidavit that on 19 May 2009 notices of cancellation of
the lease agreements were served on each one of the occupiers. An eviction
order in respect of all of them was issued by the Land Claims Court (LCC)
(Sidlova AJ) on 18 January 2013. Leave to appeal to this Court against that
order was granted on 12 November 2013, but only five of the 11 occupiers are
before us.
[25] The basis for the cancellation of the occupiers’ leases was an alleged
failure by them to pay the monthly rentals due in terms of their lease agreements
since May 2008. In their answering affidavit, deposed to by the second
1 The names reflected as third and fifth appellants are the different names of the same person.
appellant,2 the appellants (and the other occupiers) disputed the ground for
cancellation of their leases and averred that in May 2008 they had offered
payment of their agreed rental amounts, but that the respondents refused to
accept the payments. They also denied that notices of cancellation of their
leases were served on them as alleged by the respondents. They stated that on
18 May 2009 a Mr Mpho Letlhake3 and another gentleman from the Sheriff’s
office attempted to hand to them certain documents, which Mr Letlhake
(Deputy Sheriff) and his companion said were eviction orders. He also told
them that they should vacate the leased rooms. Because they could not see any
official stamp on the documents they refused to accept the documents and told
the two officials to bring documents ‘with [a] proper Court stamp’. The Deputy
Sheriff and his companion then left with the documents. Had the nature and
effect of the documents - which now appear to have been notices in terms of
section 8(1) of the Extension of Security of Tenure Act 62 of 1997 (ESTA)4 -
been explained to them, the occupiers would have accepted them, so it was
alleged in the answering affidavit.
[26] In a letter addressed to the respondents’ attorneys, dated 7 March 2014,
the appellants’ attorneys, seeking permission to omit certain documents from
the appeal record in terms of rule 9 of the Rules of this Court, mentioned that
the only issue for determination by this Court was whether the respondents were
entitled to rely, at the hearing before the LCC, on the common law ground of
reasonable termination of a lease agreement. Accordingly, parts of the record
not relevant to that issue were omitted from the record that served before us on
appeal. However, in their heads of argument the appellants squarely raised the
2 All the other occupiers deposed to confirmatory affidavits.
3 He was the Deputy Sheriff for the Magistrate’s Court, Rustenburg.
4 That the provisions of the Extension of Security of Tenure Act 62 of 1997 (ESTA) are applicable in this case
and that the appellants are occupiers as defined in ESTA are common cause.
issue of the alleged non-service of the notices of termination of their lease
agreements and their counsel argued the point in this Court. In effect, then, the
case for the appellants was that they were never given notice, or proper notice,
of termination of their lease agreements.
[27] The LCC held, however, that s 9(2)(a) of ESTA had been complied with
‘as the principal reason for termination [of the lease agreements] is that the
applicants need the land for further development.’5 Section 9, which places a
limitation on the eviction of an occupier from leased premises, has been quoted
in full in the judgment of Shongwe JA. Its text shall therefore not be repeated
here. It suffices to mention, for present purposes, that it provides that an
occupier may be evicted only in terms of an order of court issued under it
(subsec (1)), which may be made if the occupier’s right of residence has been
terminated in terms of section 8 (subsec (2)(a)) and the occupier has not vacated
the land within the period of notice given by the owner or person in charge
(subsec (2)(b)).
[28] The second issue for determination in this appeal is whether the
respondents, having grounded their termination of the leases on the appellants’
breach of a material term of each of the agreements, being failure to pay the
agreed rentals, were entitled, at the hearing before the LCC, to rely on the
common law ground of reasonable termination of the leases. With regard to this
issue the LCC said the following:
‘In the course of argument the applicants did not pursue the reason for termination of the
leases mentioned on the notices of termination, but instead argued that as owners they have
the right to terminate a lease agreement if notice is given timeously. It is advanced by
5 Para 16 of the judgment.
applicants that a periodic lease can be terminated on reasonable notice by either the lessor or
the lessee and the tenancy of the 1st to 12th respondents was provided only as an interim
measure susceptible to termination at any time by either party on one (1) month’s written
notice.’6 (Footnote omitted.)
And further:
‘The application raises the issue as to whether it is just and equitable as required by section
8(1) of [ESTA] for the applicants to terminate the lease agreements of the respective
respondents. The applicants allege that they terminated the lease agreements because of non-
payment. This however is disputed by the respondents. It has also been noted that in the
heads of argument and during oral argument the applicants did not pursue this argument and
instead chose to rely on their need to develop their property as the reason for termination.’7
The LCC was not persuaded by the argument advanced on behalf of the
appellants that the respondents were not entitled to rely on the common law
ground of termination of the lease agreements.
[29] I proceed to consider the first issue. It was submitted on behalf of the
appellants that the legal position regarding the return of service of a Sheriff or
Deputy Sheriff is that it is never conclusive, but only constitutes prima facie
proof of service of a particular legal document, which can be rebutted. It was
further contended that in the present case the appellants conclusively disproved
the correctness of the contents of the returns of the Sheriff.
[30] Section 8(1) of ESTA is in the following terms:
6 Para 8 of the judgment.
7 Para 12.
‘(1) Subject to the provisions of this section, an occupier’s right of residence
may be terminated on any lawful ground, provided that such termination is just
and equitable, having regard to all relevant factors and in particular to –
(a) the fairness of any agreement, provision in an agreement, or provision of
law on which the owner or person in charge relies;
(b) the conduct of the parties giving rise to the termination;
(c) the interests of the parties, including the comparative hardship to the
owner or person in charge, the occupier concerned, and any other
occupier if the right of residence is or is not terminated;
(d) the existence of a reasonable expectation of the renewal of the agreement
from which the right to residence arises, after the effluxion of its time;
and
(e) the fairness of the procedure followed by the owner or person in charge,
including whether or not the occupier had or should have been granted an
effective opportunity to make representations before the decision was
made to terminate the right of residence.’
It must be noted that the section does not require the notice of termination of a
right of residence to be in writing, nor that it must be ‘served’ on the occupier
concerned. What would be necessary is that the termination must be
communicated to the occupier, for obvious reasons.
[31] In their answering affidavit the occupiers alleged that in May 2008 they
‘tried to pay their rental to the first [respondent]’ but that he refused to accept
the payments. They went further to allege that the first respondent’s reason for
refusing to accept the rental payments was ‘that he was going to demolish the
structures [they] were occupying’ and that they had stopped paying rental
because the respondents refused to accept it. The common law position is that a
periodical lease, such as the leases in issue in this appeal, can be terminated by
reasonable notice by either party.8 But to constitute a valid termination the
notice must be clear and unequivocal.9
[32] The written notices, which the occupiers denied having received, appear
to have been prompted by an earlier skirmish. From the judgment of the LCC it
appears that on 26 March 2009 the occupiers obtained an interim order against
the respondents,10 in terms of which the latter were directed to rebuild leased
rooms from which corrugated iron roof sheets had been removed. The
allegations that were made by the occupiers in seeking the order were that the
respondents’ actions of removing corrugated iron sheets from the roofs of the
leased rooms had amounted to constructive eviction. These actions (of
removing corrugated iron sheets from the roofs of the leased rooms), though
unlawful (see ss 9(1) and 23(1) of ESTA), were probably resorted to, I should
think, because of the occupiers’ failure to vacate their leased rooms after notice
of termination of their leases had been given. Indeed, the deponent to the
answering affidavit stated that the respondents had told them to vacate the farm.
But no mention was made of such notices in the papers before the LCC and I
am willing to decide the matter without reference to them.
[33] As to service of the written notices the appellants and the other occupiers
averred that on 18 May 2009 the occupiers were told by the Deputy Sheriff that
the documents he attempted to serve on them were eviction orders and that they
refused to accept them after they had examined them. But, except in respect of
the second appellant, it was alleged in the founding affidavit that the lease
8 Tiopaizi v Bulawayo Municipality 1923 AD 317.
9 Putco Ltd v TV & Radio Guarantee Co (Pty) Ltd and other Related Cases 1985 (4) SA 809 (A) at 830E.
10 According to the answering affidavit the interim order was made final on 9 April 2009.
agreements were cancelled on 19 May 2009, which was the date on which the
notices of cancellation were allegedly served on the occupiers. With regard to
the second appellant, the averment was that cancellation of his lease agreement
occurred on 18 May 2009. In the only return of service that forms part of the
record on appeal – the others were omitted because the question of service of
the notices was not in issue at the time of the preparation of the record – the
Deputy Sheriff stated that on 19 May 2009, at 17h36, he served the ‘process’ on
the first appellant personally, by handing to her a copy thereof ‘after exhibiting
the original and explaining the nature and exigency of the said process.’ It was
alleged in the answering affidavit that the Deputy Sheriff returned to the farm
the next day (19 May 2009) and told the occupiers that since they had refused to
accept the ‘eviction papers’ the owner of the farm was going to demolish their
homes. But the answering affidavit did not deal with the stated fact in the return
of service, that the ‘process’ was served on the occupiers on that day. Nor,
critically, did it dispute the assertion in the return of service that the nature and
exigency of the process had been explained to them. In those circumstances, on
these aspects of the matter a replying affidavit was hardly necessary. The same,
it must be said, goes for a confirmatory affidavit from the Deputy Sheriff. I am
thus satisfied that the termination of the individual appellants’ right of residence
(and of the other occupiers) was communicated to them on 19 May 2009. In any
event, the occupiers, on their own version, had known from the day the
respondents refused to accept payment of their rental, that they were required to
vacate the property. In terms of the notices of termination they were given a
period of two months to vacate the premises. To my mind, the notices were
reasonable.
[34] The basis for the termination of the appellants’ right of residence, as
contained in each notice was that they had failed to perform in terms of their
lease agreements ‘in that they failed to pay the monthly rental since May 2008,
which amounted to a fundamental breach of the lease agreement . . . .’11 In their
answering affidavit the appellants denied the allegation that they failed to pay
rental due to the respondents – an issue I deal with in para 36 below - but did
not suggest that the basis for the termination of their right of residence was not
lawful. Failure by a lessee to pay the agreed rental on due date is indeed a
lawful ground for the termination of a right of residence.12 In this instance, the
rent was payable on or before the first day of each month.
[35] The next question to consider is whether the termination was just and
equitable. The submission was made in the answering affidavit that the
termination of the lease agreements was unfair, unjust and inequitable, because
‘there was no wrong-doing’ on the part of the occupiers and that the
respondents had ‘never even demanded payment of arrear rental’ from them. In
considering whether the termination of an occupier’s right of residence is just
and equitable a court is enjoined to have regard to all relevant factors and, in
particular, those enumerated in items (a) to (e) of s 8(1) of ESTA.13 In Brisley v
Drotsky 2002 (4) SA 1 (SCA) this Court, with reference to s 26(3) of the
Constitution, held that the circumstances a court is required to consider before
issuing an eviction order can only be relevant if they are legally relevant.14 The
lease agreements concluded between the respondents, on the one hand, and the
first and second appellants, on the other, were reduced to writing. A copy of the
agreement involving the first appellant forms part of the record. A perusal
thereof reveals no unfairness in its terms and none was suggested by the
11 Clause 8 of the written lease agreement provided that in the event of the lessee failing to comply with the
terms of the agreement of lease and remains in breach, the lessor may (‘kan’) give to the lessee 24 hours’ notice
to vacate the property irrespective of the day and the date of the month.
12 Cf Goldberg v Buytendag Boerdery Beleggings (Edas) Bpk 1980 (4) SA 775 (A).
13 Mkangeli & others v Joubert & others 2002 (4) SA 36 (SCA) para 11; Land en Landbouontwikkelingsbank
van Suid-Afrika v Conradie 2005 (4) SA 506 (SCA) para 12.
14 Para 42.
appellants (s 8(1)(a)). It must be accepted that the written agreement relating to
the second appellant contained similar terms. There is no reason to think that the
terms of the verbal agreements were any different.
[36] As to s 8(1)(b) I have mentioned (in para 32 above) the skirmishes
between the parties. It is common cause that the appellants (and other
occupiers) did not pay the agreed rental to the respondents for a period of a year
since May 2008. On the authority of Plascon-Evans Paints Ltd v Van Riebeeck
Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C, it must be accepted that in
May 2008 the occupiers attempted to pay their rentals and that the respondents
refused to accept the payments. However, the occupiers continued to occupy
their leased rooms for a year and there is no suggestion in the papers that in that
time they tendered payment of the rentals. No tender had been made by any one
of the appellants to pay arrear rental (or the rentals as and when they fell due),
to which the respondents were entitled. Thus, the fact that the respondents
refused to accept payment of the rentals in May 2008 did not exonerate the
occupiers from liability to pay the rentals for the rooms they occupied and,
insofar as the appellants are concerned, still occupy, it being well-settled that
the appellants (as lessees) were under an obligation to pay (or at the very least
tender to pay or signify readiness to pay) the rental agreed upon.15
[37] On the occupiers’ own version the respondents informed them when they
(respondents) refused to accept payment of the rentals that they wished to
demolish the structures. In its judgment the LCC stated that the respondents
‘outlined details on which the property is to be utilized upon vacation’ by the
occupiers. Clearly, the respondents would be unable to utilize the property as
15 Cf Ford Agencies v Hechler 1928 TPD 638 at 641 - 642
they wish if the appellants’ right of residence was not terminated. The
appellants (and the other occupiers) did not suggest any hardship that they
would endure as a result of the termination of their right of occupation (s
8(1)(c)).
[38] Section 8(1)(d) is not relevant in this case. As to subsec (1)(e), the
procedure followed by the respondents in giving written notices of the
termination of the right of residence and affording the occupiers two months to
vacate the premises was, to my mind, fair. Nothing to the contrary was
advanced on behalf of the appellants. The discussions in paragraphs 34 and 35
above also cover the requirement to consider all relevant factors as enjoined by
ESTA. In my view, the termination of each appellant’s right of residence was
just and equitable. I agree, therefore, with the LCC that there was compliance
with the provisions of s 8(1) of ESTA. Subsections (2) to (7) are not applicable
here.
[39] It is now convenient to deal with the point of my disagreement with the
conclusion reached by my colleague, Shongwe JA. In his judgment Shongwe
JA upholds the argument on behalf of the appellants that the respondents,
having based their case in both the notice of termination and the founding
affidavit on the allegation that the lease agreements were terminated because of
non-payment of rent by the appellants, impermissibly argued their case on a
totally different basis. The different basis referred to is, as mentioned by the
LCC in its judgment, that as owners the respondents had the right to terminate
the lease agreement and obtain an order of eviction if timeous notice of the
termination had been given.16 Shongwe JA states, correctly so with respect, that
16 See para 28 above.
affidavits do not only constitute evidence, but also fulfil the purpose of
pleadings and that they must set out the cause of action in clear and unequivocal
terms to enable the respondent to know what case to meet (para 20). He then
refers to the decision of this Court in Minister of Safety and Security v Slabbert
[2010] 2 All SA 474 (SCA), where the following was said:
‘It is impermissible for a plaintiff to plead a particular case and seek to establish a different
case at the trial. It is equally not permissible for the trial court to have recourse to issues
falling outside the pleadings when deciding a case.’
Shongwe JA observes that instead of dealing with the serious dispute of whether
or not the appellants failed to perform in terms of the lease agreement counsel
for the respondents ‘raised a new ground of termination at the hearing’ (para
18). That, he says, constitutes a trial by ambush, since a different cause of action
was advanced and relied upon and the seriously disputed one was just
abandoned (para 19).
[40] With respect, the ground for the termination of the lease agreements was
not the cause of action. The cause of action upon which the respondents relied
in seeking the eviction order was cancellation of the lease agreements,17
elaborated upon as follows: (1) that on 18 or 19 May 2009 the respondents
cancelled the lease agreements they had concluded with each one of the
occupiers; (2) that a notice of cancellation was served on each occupier; (3) that
each occupier’s right to occupy the property terminated on 19 May 2009; and
(4) that the occupiers have failed to vacate the property. The respondents’ case
boiled down to this: their cancellation resulted in the occupiers’ right of
residence being terminated and, on termination the occupiers, as lessees, were
under a duty to vacate the leased property.
17 See s 9(2)(a) of ESTA and Potgieter & another v Van der Merwe 1949 (1) SA 361 at 366.
[41] The contentions advanced on behalf of the respondents before the LCC,
namely, that under the common law a periodical lease can be terminated on
reasonable notice by either party; that the tenancy of the occupiers was only an
interim measure susceptible to termination at any time by either party on one
month’s notice; that therefore cancellation of the lease agreements did not
depend on breach or good reason and that reasonable notice of cancellation
sufficed, are exactly that: contentions advanced during the course of argument
in support of the relief sought, namely, the eviction of the occupiers. And to my
mind, counsel for the respondents was perfectly entitled to rely (as he did) on
such common law grounds as availed the respondents in support of the pleaded
claim for eviction. What mattered was whether a proper foundation for such
argument had been laid in the founding affidavit. In my view, the answer is in
the affirmative. In this regard it is perhaps important to distinguish between a
proper factual foundation in support of the relief sought, on the one hand, and
legal argument, on the other and to appreciate that it is ordinarily impermissible
for legal argument to be raised in an affidavit. It thus seems to me that the
notion of a trial by ambush is misplaced when, as happened here, a single cause
of action is relied upon, which finds support in the pleaded case. Properly
understood, the respondents’ case was that the lease agreements had come to an
end either because they had been validly cancelled for non-payment of rentals
or, alternatively, as the respondents were entitled to, at common law, they had
given reasonable notice of termination of the lease agreements to the occupiers.
In either event the result was termination of the lease agreements, with the
consequence that the occupiers were obliged to vacate the leased property.
[42] In their founding affidavit the respondents averred that in their capacities
as trustees of the trust they are the nominal owners of the property (the farm);
that on particular dates they concluded lease agreements with the individual
occupiers; that on 18 or 19 May 2009 they cancelled the agreements in writing;
that the occupiers’ right to occupy their respective rooms therefore terminated
on 19 May 2009 and that the occupiers had (as at the date the founding affidavit
was deposed to) failed to vacate the property. Whether the notice of termination
was reasonable, clear and unequivocal are matters to be determined by a court. I
have already held that the notice of termination was reasonable. To my mind, it
was also clear and unequivocal. Thus, reliance on the common law ground of
termination of the lease agreements was covered in the papers and the
appellants (and the other occupiers) were neither misled, nor ambushed at the
trial. I might mention, in any event, that in Putco this Court said the following:
‘Where a party seeks to terminate an agreement and relies upon a wrong reason to do so he is
not bound thereby, but is entitled to take advantage of the existence of a justifiable reason for
termination, notwithstanding the wrong reason he may have given (cf Matador Buildings
(Pty) Ltd v Harman 1971 (2) SA 21 (C) at 28A; Stewart Wrightson (Pty) Ltd v Thorpe 1977
(2) SA 943 (A) at 953G.)’18
I must make it clear, lest it be suggested that the allegation, in the founding
affidavit, of failure by the occupiers to pay rental was an inadequate ground for
termination of the lease agreements, that, in my opinion, it was adequate as I
have attempted to show above.
[43] I should mention further that on my reading of the judgment of the LCC
the respondents did not abandon the ground of termination of the lease
agreements as contained in the notice of termination. Counsel for the
18 At 832D.
respondents simply chose to argue the case on another basis, which, as I have
mentioned, he was perfectly entitled to do. That basis was that it was not
necessary for the respondents to set out the ground they did in the founding
affidavit and, to the extent that they did so, that was simply surplus to their
cause of action. As long ago as Graham v Ridley 1931 TPD 476 at 479 it was
stated:
‘One of the rights arising out of ownership is the right to possession; indeed Grotius (Introd.
2, 3, 4) says that ownership consists in the right to recover lost possession. Prima facie,
therefore, proof that the appellant is owner and that respondent is in possession entitles the
appellant to an order giving him possession, i.e., to an order for ejectment. When an owner
sues for ejectment an allegation in his declaration that he has granted the defendant a lease
which is terminated is an unnecessary allegation and is merely a convenient way of
anticipating the defendant’s plea that the latter is in possession by virtue of a lease, which
plea would call for a replication that the lease is terminated. It is the defendant and not the
owner-plaintiff who relies on the lease, and if the lease itself is denied by the defendant, as in
the present case, the allegation of the lease is surplusage.’19
What is of importance is that, unlike the case in Brisley v Drotsky, in the present
matter the right of the owners to possession of their property and to an order of
ejectment against an unlawful occupier are limited by the provisions of ESTA.
Thus, reliance on the common law does not exonerate the owners from
compliance with the provisions of s 8 of ESTA, to mention but one section.20 I
have already dealt with the requirements of s 8 and it is not necessary to do so
again. The LCC did so too and found ‘that section 9(2)(a) was complied with as
the principal reason for termination is that the applicants need the land for
further development.’ It also found that s 9(2)(b) had been complied with in that
‘the occupiers had not vacated the land within the notice period.’
19 This was an extract from an earlier unreported judgment in Gordon v Kamaludin (T.P.D. 15.9.27), referred to
with approval in Graham v Ridley.
20 Compare Brisley v Drotsky, para 43.
[44] As to s 9(2)(c) the LCC’s finding that the provisions of s 11 apply to all
the occupiers was not challenged in this Court. There was no suggestion that, in
dealing with the provisions of s 11, particularly whether it was just and
equitable to grant an order for eviction (s (9)(2) and (3)), and in exercising its
discretion against the occupiers by granting such order, the LCC erred. Counsel
for the appellants put all his efforts on the issues of the alleged introduction of a
new ground for the termination of the lease agreements, which, according to his
submission, was wrongly allowed by the LCC, and the alleged non-service of
the notice of termination and, therefore, denial of receipt thereof. There is, in
my view, no reason to interfere with the exercise of its discretion by the LCC.
For, on either of the two legs advanced by the respondents, they would, at
common law, have been entitled to the relief sought. And, as I have shown, they
have, in addition, satisfied the further requirements for an eviction set by ESTA.
[45] The LCC ordered the occupiers, including the appellants, to vacate the
farm by 31 March 2013, failing which the Sheriff was authorised to remove
them on or after 3 April 2013. Its order was issued on 18 January 2013. It was
not suggested that these dates were not just and equitable (s 12(1) and (2) of
ESTA). As at 20 February 2015 (the date this appeal was heard) the appellants
had been living on the farm, occupying their leased rooms, for a further period
of two years. In my view, it would be reasonable for the appellants to be given a
further period of one (1) month to vacate the farm from the date of the order of
this Court.
[46] In the result I would make the following order:
1 The appeal is dismissed.
2 The appellants and all other persons occupying under or through them are
ordered to vacate Portion 81 (a portion of Portion 65) of the farm Boschfontein
330-JQ, Rustenburg (the farm), on or before 7 June 2015.
3 Failing compliance with the order in 2 the Sheriff for the district of
Rustenburg is authorised to evict the appellants and all other persons occupying
under or through them, from the farm 10 days after the date contemplated in 2
above.
_____________________
L MPATI
PRESIDENT
Appearances
For the Appellant:
J J Botha
Instructed by:
Matshitse Attorneys, Potchefstroom;
Matsepes Inc, Bloemfontein.
For the Respondent:
A Vorster (with him I Oschman)
Instructed by:
Frese Moll & Partners, Johannesburg;
Webbers, Bloemfontein.
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
08 May 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Molusi v Voges NO (1008/13) [2015] ZASCA 64 (08 May 2015)
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) dismissed an appeal by Sophy Molusi and 5 others
(the appellants) and upheld the eviction order of the Land Claims Court, Randburg (LCC) granted in
favour of Francois Voges and Frederika Voges, acting in their capacity as trustees of a family trust
(the respondents).
In the context of an eviction from a farmhouse following the termination of the appellants’ lease
agreements, the issues before the SCA were (i) whether the appellants’ rights of residence had been
lawfully terminated in terms of s 8(2) of the Extension of Security of Tenure Act 62 of 1997 (the Act) in
a situation where the respondents sought to rely on a different ground for cancellation of the lease at
the LCC hearing from what had been stated in the founding papers; (ii) whether the appellants had
been adequately notified of the termination of the lease agreements; and (iii) whether it was just and
equitable to order the eviction.
The appellants leased certain rooms in a farmhouse from the respondents. Subsequently, the
respondents wished to develop the property, and in April 2010 they launched an application for the
eviction of the appellants.
In the respondent’s founding papers, they alleged that the lease agreements had been cancelled and
notices of termination of the leases were handed to each occupier by the Sheriff. The basis for
termination in the founding papers was cancellation for breach of contract in that the appellants had
failed to pay rent due in terms of the lease agreement. However, this was denied by the appellants,
who alleged that the respondents had refused to accept payment despite tender. At the hearing of the
case at the LCC, the respondents sought to rely on another basis for cancellation, being cancellation
on reasonable notice. As a separate defence, the appellants denied that notice of termination was
validly served on them, because although the Sheriff had visited them and attempted to serve the
notice they had understood it to be an eviction order, which they had refused to accept as it did not
appear to be a formal order of court.
The majority judgment by Mpati P (Ponnan and Saldulker JJA concurring) held as to (i) that the
respondents were entitled under common law to cancel the lease agreements upon reasonable
notice, and they were further entitled to rely upon this ground for cancellation at the LCC hearing
even if a different initial ground for termination was pleaded, but provided that for an eviction order to
be granted there had to be compliance with the provisions of the Act. On the facts of the case, the
majority held that there had been compliance with the provisions of the Act..
As to (ii), the majority held that the Act did not require notice of termination to be in writing or for it to
be ‘served’ on the occupiers. What is necessary is simply that the termination must be adequately
communicated to the occupiers, which had occurred in this instance.
As to (iii), the majority held that in the result, the eviction was just and equitable and complied with the
provisions of the Act, and accordingly the eviction order should be granted.
The dissenting judgment of Shongwe JA (Bosielo JA concurring) would have upheld the appeal and
dismissed the eviction application.
--- ends ---
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2502
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 93/2013
In the matter between:
COLIN MACRAE
First Appellant
THEONY ELIZABETH MACRAE
Second Appellant
and
THE STATE
Respondent
Neutral citation: Macrae v State (93/2013) [2014] ZASCA 37 (28
March 2014)
Coram:
MHLANTLA and WALLIS JJA and MOCUMIE AJA.
Heard:
24 March 2014
Delivered: 28 March 2014
Summary: Criminal law and procedure – baboon – seizure in terms of ss
20 and 21 of the Criminal Procedure Act 51 of 1977 (CPA) – obligations
of police in respect of seized animal – theft – requirements – defeating or
obstructing administration of justice – fair trial where accused not
represented – duties of prosecutor restated.
ORDER
On appeal from: North Gauteng High Court, Pretoria (Webster J,
Mngqibisa-Thusi J concurring, sitting on appeal from the Magistrates‟
Court):
The appeals are upheld and the convictions and sentences on all counts
are set aside.
JUDGMENT
Wallis JA (Mhlantla JA and Mocumie AJA concurring)
[1] This is a case about a baboon. By all accounts, until it apparently
met an untimely end, the baboon behaved impeccably. The saga has
involved a trial in the district court over four days, an appeal to the full
court of the North Gauteng High Court, a petition to this court and then
this appeal. The expenditure of time and effort and the costs to the public
purse and the appellants, Dr and Mrs Macrae, have been considerable.
Those include emotional costs, because for seven and a half years the trial
and their convictions for defeating or obstructing the administration of
justice and theft of the baboon have hung over their heads. And all this
was caused by a bureaucratic insistence by the officials of the Gauteng
Directorate Nature Conservation that the baboon be removed from their
possession, where it is common cause it was being properly cared for.
The irony of the situation is that, so we were informed from the bar, after
the baboon was handed to these officials at the end of the trial in the
district court, it was placed in a shelter where it appears to have burned to
death in a fire. Had it remained with the Macraes there is no reason to
believe that it would now be anything other than hale and hearty. To
understand how all this came about it is necessary to trace the history in a
little detail.
[2] The story commences on 10 October 2006, when Mrs Coetzee and
Mrs Boshoff, both nature conservation officers employed by the
Directorate Nature Conservation of the Gauteng Department for
Agriculture, Conservation, Environment and
Land
Affairs (the
Directorate), found the baboon and three ant bears in cages on the
property of a Mr Lourens in Hammanskraal. Mrs Boshoff had earlier
obtained a search warrant from a magistrate. As only a police official can
execute a search warrant,1 Inspector Grobler of the South African Police
Service (SAPS) accompanied the two nature conservation officers. The
ant bears required urgent veterinary treatment at the Johannesburg Zoo,
but neither that zoo, nor the Pretoria Zoo, could accommodate the baboon
and the conservation officers had not brought sufficient transport crates
with them to carry the baboon safely to the Emerald Zoo, some 370 kms
away in Vanderbijlpark. Instead it had to be transported in a makeshift
crate.
[3] As a result of this difficulty Mrs Coetzee contacted Mrs Macrae,
the second appellant, who, together with her husband, Dr Macrae, the
first appellant, operated a game lodge under the name Horseback Africa,
and asked if they would take the baboon. The Macraes had a zoo licence
entitling them to be placed in possession of the baboon and already had a
domesticated baboon, called Jessica. Mrs Macrae agreed to take the
1 Section 21(2) of the Criminal Procedure Act 51 of 1977 (the CPA).
seized baboon and later that day Mrs Coetzee handed it over to Dr
Macrae at the game lodge. I will return to the conversation between Mrs
Coetzee and Mrs Macrae in due course.
[4] The baboon was handed to Dr Macrae, in the presence of Inspector
Grobler, and Mrs Coetzee completed and signed a document on the
stationery of the Directorate and headed “Certificate of Handover to
Institution‟. It identified Horseback Africa as the institution and recorded
that:
„I HEREBY HANDOVER ACCORDING TO TREASURY APPROVAL FROM
GAUTENG
PROVINCIAL
GOVERNMENT:
DIRECTORATE
NATURE
CONSERVATION
THE
UNDERMENTIONED
ANIMAL
…
TO
THE
HORSEBACK AFRICA ZOO …‟
The document identified the animal as the baboon and recorded that it
had been seized that day at Hammanskraal.
[5] Thus far there was no problem. That only arose the following day
when Mrs Hugo, the Assistant Director: General Investigations in the
Directorate informed Mrs Coetzee that she had made a mistake in leaving
the baboon with the Macraes and that she would need to recover it. In the
result over the next few days there were some exchanges between
officials of the Directorate and the Macraes over the baboon, with the
officials demanding its return and the Macraes contending that it was now
theirs.
[6] On 18 October 2006 this dispute culminated in Mrs Boshoff and
Mrs Eloff, also a nature conservation officer; a private vet and, for some
unexplained reason, a representative of a group that deals with elephants;
together with Inspector Grobler and two other SAPS officers attached to
the flying squad, going to Horseback Africa‟s premises to retrieve the
baboon. After the convoy arrived a confrontation ensued, with Dr Macrae
asserting that the baboon was now theirs and claiming that in the absence
of a warrant their presence on his property was unlawful. The officials
and the police pushed past him and went to the animal cages, where they
found Jessica, the other baboon, but not the one they sought. It had
apparently gone for a walk with the Macraes‟ son. Tempers became
somewhat heated and in blunt terms Dr Macrae told the officials and
police to leave his property. Instead, Inspector Grobler, at the request of
Mrs Boshoff, arrested him for obstructing the administration of justice.
According to her she did so because he would not hand over the baboon
or tell them where it was. Mrs Macrae returned at this stage and tried to
intervene in her husband‟s arrest, eventually removing the keys from the
ignition of the SAPS vehicle. This led to her also being arrested.
[7] Dr and Mrs Macrae were then charged in the district court at
Cullinan with three counts. The first was that they were both guilty of
„obstructing/defeating the administration of justice‟ by refusing to hand
over the baboon to Inspector Grobler and the nature conservators, ie Mrs
Boshoff; by ordering them to leave the premises and by refusing to
disclose the whereabouts of the baboon. The second count was directed at
Mrs Macrae alone and was one of „attempted obstructing/defeating the
administration of justice‟. The allegation was that she had refused to hand
over the baboon and had grabbed the keys of the SAPS vehicle and
refused to give them back. Thirdly they were both charged with the theft
of the baboon. The magistrate found them guilty on those three charges
and imposed wholly suspended sentences in respect of all of them. An
appeal to the Gauteng North High Court, Pretoria failed and this further
appeal is with the leave of this court.
[8] Throughout the course of this dispute the Macraes have steadfastly
maintained that once Mrs Coetzee handed the baboon to them it became
theirs, subject only to their being obliged to produce it as an exhibit at
any trial of Mr Lourens, insofar as that might become necessary, and to
make it available for any forensic purpose related to any charges against
Mr Lourens. They also accepted that, if at the end of any such trial the
court ordered that the baboon be returned to Mr Lourens they would
return it. No criticism was directed at their ability to care properly for the
animal and it was not suggested that they would not co-operate with the
police, the Directorate and the prosecution service in the conduct of any
trial. Nor was it suggested that by leaving the baboon in their care this
would place the animal or any trial at risk.
[9] One wonders in those circumstances why it was thought necessary
to interfere with the perfectly satisfactory arrangements that had been put
in place for the care of the baboon. The answer is that Mrs Hugo, the
Deputy Director of the Directorate, took the view that it was contrary to
some unspecified treasury regulations to allow it to remain with the
Macraes. Her view was that the baboon had to be kept at a treasury-
approved zoo pending the trial, because there was a court case pending,
and thereafter, if the baboon was forfeited to the State, a decision would
be made about its future. This was why she instructed Mrs Coetzee to
retrieve the baboon and why she was, throughout her dealings with the
Macraes, obdurate that the baboon could not remain with them. It is why
she instructed Mrs Boshoff to go and fetch the baboon on 18 October
2006. Mrs Coetzee and Mrs Boshoff for their part adopted the approach
that the baboon was state property and therefore that the Macraes were
obliged to hand it over on demand to them as the appropriate
functionaries of the state.
[10] At the outset it is necessary to note two points. The first is that, as
all three charges depended on the failure to hand over the baboon, there
was an improper splitting of charges and an improper duplication of
convictions.2 The second is that at no stage in these proceedings has there
been any attempt to place before any of the courts seized of the case,
either the relevant provisions of the Nature Conservation Ordinance 12 of
1983 (Transvaal) under which the baboon was seized in the first place, or
the alleged treasury regulations on which Mrs Hugo relied in giving
instructions that the baboon be removed from the Macraes.
[11] So far as the court can ascertain from its research baboons are
listed in Schedule 8 to the Ordinance as „problem animals‟ and as such
are dealt with in Chapter 5, which provides in s 56(1) that if they are
found outside a nature reserve or national park, they are deemed to be
vermin or animals that cause damage. As such they are liable to be
hunted. Possession of a baboon without a permit is prohibited under
s 66(1)(b) of the Ordinance. That appears to justify the seizure of the
baboon, but it hardly means that it was likely to be an exhibit at a trial.
After all, if, as presumably was the case, Mr Lourens did not have a
permit to be in possession of the baboon it is hard to see how the presence
of the baboon could be relevant at his trial for unlawful possession of the
baboon. There was accordingly no practical reason, relating to any
prosecution of Mr Lourens, for removing the baboon from the Macraes.
2 Maseti v S [2014] 1 All SA 420 (SCA) para 3.
[12] Because the treasury regulations were not placed before the trial
court or this court we have no way of knowing whether Mrs Hugo was
correct in her interpretation of them. Her officers thought that an animal
seized under a search warrant became the property of the state and had to
be handed over for that reason. That view was plainly wrong in law. The
baboon was owned by Mr Lourens and would not cease to be his property
unless and until it was forfeited to the state in terms of s 112(1)(a)(i) of
the Ordinance. I can understand that the treasury regulations would deal
with the care of state property, but the baboon was not state property. If
therefore they were applicable it must have been on some other basis.
[13] Mrs Hugo did not expressly endorse the view that the baboon was
state property, but said that, because the baboon was an exhibit in a
pending court case, it had to be held at a designated zoo. As pointed out
earlier it was unlikely that the baboon would be needed as an exhibit at
the trial, but, even if it was, the Macraes were willing and able to make
arrangements for it to attend. Furthermore the police, in the guise of
Inspector Grobler, and not the conservation officers from the Directorate,
had seized the baboon under a warrant issued in terms of the CPA and
were obliged to deal with it in terms of the CPA. Indeed the argument for
the State in this appeal depended upon the correctness of that proposition.
In those circumstances, it would be unusual, to say the least, for treasury
regulations issued at a provincial level to dictate how the police, who
function at a national level of government, were to perform their statutory
functions. It follows that there is every reason to doubt whether Mrs
Hugo was correct in her understanding of the regulations and whether her
actions consequent upon that understanding were justified.
[14] Turning to the merits of the convictions, on the assumption that the
issues already discussed can be disregarded, as they have been throughout
the case‟s peregrinations through the court system, all the charges faced
by the Macraes arose from their failure to hand the baboon to Mrs
Boshoff on 18 October 2006. Even if they were obliged to do so, I think
that on the evidence their refusal was entirely bona fide and based on
their belief that, subject to the outcome of Mr Lourens‟ criminal trial, the
baboon was theirs. That conclusion suffices to exclude the possibility of
their having acted with any criminal intent and justifies their acquittal on
all of the charges. My reasons for thinking this are briefly as follows.
[15] Mrs Macrae testified that when Mrs Coetzee telephoned her on
10 October and asked if they could accommodate the baboon she asked
whether they would like a mate for their baboon, Jessica. That evidence
finds support in Mrs Coetzee‟s evidence that she told Mrs Macrae that
after Mr Lourens‟ trial, there was a possibility they could make the
baboon available to the Macraes as a companion for Jessica. The terms of
the handover document were also definitive and not qualified in any way.
Mrs Coetzee tried to suggest that she qualified it by saying that the
arrangement was temporary, but that was refuted by both Dr and Mrs
Macrae, as well as their daughter who was present. Their evidence was
barely challenged in cross-examination.
[16] Furthermore Mrs Macrae said that she specifically asked whether
they needed to amend their existing zoo permit to include the new
baboon, or whether they needed to record it as a drop off, and was told by
Mrs Coetzee that neither step was necessary. It would suffice to say that
the magistrate made no credibility findings against the Macraes and
accordingly Mrs Macrae‟s evidence on this point must be accepted.
However, it is supported by the probabilities. They had previously
experienced problems with officers from the Directorate and Inspector
Grobler over Jessica and would have been careful to ensure that
procedures were correct on this occasion. Then there was Mrs Coetzee‟s
statement in which she recorded that she had left the baboon with the
Macraes „Tot na die hofsaak‟ (Until after the court case). In addition she
testified that it was only the following day, when she went into the office
that Mrs Hugo told her that she had made a mistake and must retrieve the
baboon. That mistake can only have been that she had handed the baboon
to the Macraes on a permanent basis. Furthermore the evidence of Mrs
Hugo on this point is not wholly satisfactory. She had been present when
the baboon was seized and was a party to the arrangement that it be taken
and left with the Macraes. If at the time she had believed that this was a
purely temporary arrangement for a day or two until alternative
arrangements could be made, it would be surprising had she not made
that clear to both Mrs Coetzee and Inspector Grobler. Instead her
epiphany appears to have come when she returned to the office and
consulted both the regulations and her superior in regard to the
disposition of the baboon.
[17] Lastly on this aspect of the case, if Mrs Hugo thought that the
baboon had been left temporarily with the Macraes, it is unclear why she
would have told Mrs Coetzee that she had made a mistake. That would
not have been true if this had in fact been a temporary arrangement as an
emergency measure. Instead one would have expected her to make a
routine enquiry about when Mrs Coetzee proposed to collect the baboon
and which zoo she intended taking it to. In my view, weighing the
evidence as a whole the probabilities favoured the version of the Macraes
in regard to the circumstances in which the baboon was handed to them.
At the trial much was made of an e-mail Mrs Macrae sent to Mrs Hugo,
after Mrs Coetzee contacted her on 11 October and said that procedures
had not been followed in handing the baboon to them. However, read in
context, that was nothing more than an attempt by Mrs Macrae to assist
Mrs Coetzee and Mrs Hugo to get their paperwork in order. It did not
undermine her evidence concerning the basis upon which the baboon was
delivered to them.
[18] Having said that the question remains whether it is correct that the
Macraes were under an obligation to hand the baboon to Mrs Boshoff on
18 October as she demanded. If there was no obligation to do so, then the
demand was unlawful; Dr Macrae‟s approach that they were not welcome
on his property was entirely justified; and, because he was acting within
his rights in refusing to hand over the baboon in response to an unlawful
demand, his arrest was unlawful. Mrs Macrae‟s actions in seeking to
come to his assistance were also lawful and her arrest unlawful.
[19] Starting, as one must, with the charge of theft it was based on the
proposition that the baboon was „the property or in the lawful possession
of Nature Conservation3 and/or M Boshoff‟. However, that was incorrect.
Inspector Grobler seized the baboon, not Mrs Boshoff or Mrs Coetzee.
Having seized it she was under an obligation in terms of s 30(c) of the
CPA either to retain it in police custody, which was not a practical option,
or to „make such other arrangements with regard to the custody thereof as
the circumstances may require‟. That is precisely what she did on the
3 I assume that by „Nature Conservation‟ the person who drafted the charge had in mind the Directorate
Nature Conservation or the provincial department of which it formed a part and that this was simply
sloppy drafting.
advice of Mrs Hugo (who was present when the animal was seized) and
Mrs Coetzee. She took it to the Macraes, who were undoubtedly able to
care for it and placed it in their custody. It is clear that they understood
that there was a potential for there to be a criminal trial at which the
baboon might need to be produced and that they were aware that unless
the baboon was forfeited to the State, it would have to be returned to Mr
Lourens. Inspector Grobler had therefore discharged her statutory
obligations. The baboon was in appropriate safe custody and available to
the police for the purposes of the prosecution of Mr Lourens to the extent
that was necessary.
[20] The baboon was neither the property of, nor in the lawful
possession of, either „Nature Conservation‟ or Mrs Boshoff. It had been
in the lawful possession of Inspector Grobler and she had placed it in the
lawful possession of the Macraes. It had never been in the possession of
the nature conservation officers. However, Mrs Hugo and the other
officials from the Directorate were plainly of the view that it was for
them to dispose of the baboon as they deemed appropriate, subject to
their understanding of the treasury regulations. They were the people who
decided to recover the baboon from the Macraes. They were the ones who
demanded its return. They were the ones who organised to go to the
Macraes‟ property on a mission to recover the baboon. They organised
for the two officers, Mrs Boshoff and Mrs Eloff, to be accompanied by a
vet, Inspector Grobler and the two flying squad officers. On arrival there
they were the ones who demanded that the baboon be handed over. In all
this Inspector Grobler played at most a supporting role. Her own evidence
was that the decision of what to do with the baboon „is not for me to
make‟. Her complete subordination to the nature conservation officers is
summed up in the following passage from her evidence:
„I act on what they tell me. If they say the baboon must be taken there so that they can
make a decision on where the baboon must go, then I am not going to question that.‟
[21] This entirely misconceived the legal position. It was Inspector
Grobler who had seized the baboon and it was her responsibility to make
arrangements for its custody pending any criminal trial. That is why I am
doubtful whether the treasury regulations on which Mrs Hugo relied in
fact had any application to this situation. As it was for Inspector Grobler
to decide where and in what circumstances the baboon was to be kept,
she, or one of her colleagues in the SAPS, was the only person who was
entitled to remove it from the Macraes and then only in circumstances
where the exigencies of the criminal process required it. What she was
not permitted to do was to take instructions from a third party in the form
of the officials of the Directorate Nature Conservation as to the disposal
of the baboon.
[22] I have no doubt that it is correct, as submitted by Mr Luyt, who
appeared for the State, that Inspector Grobler was entitled to seek the
advice of those officials as to a suitable place to have the baboon cared
for pending a criminal trial. That is what rendered the handover to the
Macraes lawful. However, when it came to the removal of the baboon,
Inspector Grobler was not acting on the advice of the conservation
officers about the care of the baboon, but was assisting them to comply,
as they thought, with treasury regulations that may or may not have had
any application to the situation. Her purpose was to satisfy their
bureaucratic wishes, not to act in terms of the powers she had under
s 30(c) of the CPA. She simply went along with Mrs Boshoff‟s request
that she accompany them on the operation to retrieve the baboon without
enquiry. The fact that she took two colleagues from the flying squad with
her shows that they intended a show of force to back up the conservation
officers in retrieving the baboon. Tellingly, when she was being cross-
examined by Mrs Macrae, she was asked why the baboon needed to be
removed from the Macraes and the magistrate interposed:
„I do not think that is relevant to her in terms of whether it was removed or not, so to
her it might not mean anything. She is a police officer who has been called up to say:
“Help us to go there”.‟
The magistrate went on to say:
„Whether it is removed or not, it is none of her business.‟
Notwithstanding her claimed familiarity with the provisions of the CPA
Inspector Grobler did not demur at this intervention from the court or
assert that she had in fact exercised any independent judgment in regard
to caring for the baboon.
[23] The end result is that the charge of theft was utterly
misconceived. The baboon was not, and never had been, either owned by
or in the lawful possession of either „Nature Conservation‟ or Mrs
Boshoff. In those circumstances Mr Luyt accepted that the conviction for
theft could not stand. Of course, once the demands made by Mrs Boshoff
for the return of the baboon lacked a legal foundation so did the arrest of
Dr Macrae for refusing to hand it over. Mrs Macrae‟s intervention to try
and assist her husband was likewise not unlawful and her arrest also
lacked any legal foundation. It follows that the appeals must succeed and
their convictions and sentences must be set aside.
[24] There is, however, a further ground on which the appeals would in
any event have to have succeeded. The Macraes chose to represent
themselves at the trial, notwithstanding the magistrate‟s suggestion that
they secure legal representation. However, once that was the case, the
magistrate was under a special duty to ensure that they had a fair trial.
When asked whether they had in fact had a fair trial, Mr Luyt‟s response
was: „Not really.‟ That concession was undoubtedly correct. The
problems commenced at the outset when they were confronted with
charges improperly separated 4 and continued when Dr Macrae was
invited to cross-examine the first witness Mrs Coetzee. The magistrate
did not explain the purposes of cross-examination or draw his attention to
the need to put to witnesses where his and his wife‟s version of events
differed from theirs. This was highly relevant for the following reasons.
[25] I have already mentioned that, when the nature conservation
officers found the animals with Mr Lourens, they did not have the means
to transport the baboon for any distance and they needed to deal with it
quickly. That is why the Macraes were approached. Of vital importance
in that regard is what they were told when approached. I have dealt with
this in paras 15 to 17. The prosecutor challenged Mrs Macrae‟s evidence
on her conversation with Mrs Coetzee. She asked her why this evidence
had not been put to Mrs Coetzee. The magistrate then intervened to say
that he had underlined this evidence, as a matter not put to the earlier
witness. He did the same again when Mrs Macrae testified that when the
baboon was handed over she asked if there was anything further that had
to be done, either to amend their existing permit or to register the animal
as a drop off and was told that nothing more was necessary. He said that
this was the third time this had occurred. However, as Mrs Macrae had
not been warned of the need to put disputed matters to witnesses that was
4 The magistrate should have intervened to remedy this at the outset. S v Makazela 1965 (3) SA 675
(N).
blatantly unfair of him, as was the cross-examination by the prosecutor. It
was even more unfair in view of the fact that in crucial respects Mrs
Coetzee‟s evidence corroborated that of Mrs Macrae.
[26] It was a central plank of the defence being raised by the Macraes
that what happened when the baboon was dropped off with them was in
accordance with past practice in other cases where nature conservation
officers seized animals. However, when Dr Macrae asked that the
documents bearing on such cases be disclosed to him, the magistrate
explained that he would only adjudicate on what happened on the
incident on 18 October. For the same reason he did not accede to the
request that Dr Macrae be furnished with the affidavit by Mrs Boshoff
when she applied for the search warrant. Every time either Dr Macrae or
Mrs Macrae tried to deal with these matters the magistrate told them that
it was not relevant because he was only concerned with the events of
18 October. That was wrong and it prevented the Macraes from
advancing their defence properly.
[27] There were problems in other respects. At the end of his evidence
the magistrate questioned Dr Macrae at length and his questions cover 10
pages in the record. That was inappropriate. Dr and Mrs Macrae‟s
daughter was called to give evidence and the magistrate was quick to say
that he must not put answers in her mouth and that he could not put
questions to his own witness. 5 Mrs Coetzee‟s statement was clearly
material as were the statements of other conservation officials. Yet the
magistrate made no attempt to ensure that they were made exhibits. All
that he did was to tell them that they should not cross-examine on a
5 The magistrate also told him that he could not object to the questions being put to Mrs Macrae even
though the purpose of the objection was to correct a factual error on the part of the prosecutor.
statement, without first proving its authenticity, which was a bizarre
proposition bearing in mind that the statements would have been
furnished to the Macraes by the prosecution. When Dr Macrae sought to
cross-examine Mrs Boshoff on what was in Mrs Eloff‟s statement he
stopped him from doing so, on the ground that Mrs Eloff was not going to
be called as a witness. That too was clearly wrong. On other occasions,
such as the one mentioned in para 18 above, he cut short legitimate cross-
examination.
[28] The above more than suffices to demonstrate that the Macraes
did not have a fair trial and that the concession by Mr Luyt was well-
founded. What is inexplicable in those circumstances is why he in this
court, and his predecessor in the full court, did not make that concession
at the outset. Instead the office of the Director of Public Prosecutions not
only pursued the prosecution, but defended the conviction in the full court
and resisted leave to appeal being granted to this court. The concession
was only forthcoming at the end of Mr Luyt‟s argument. It needs to be
stressed once again that the duty of prosecutors is not to secure a
conviction at all costs or to defend convictions once obtained. Their duty
is to see that so far as possible justice is done. As Jones J expressed it in S
v Fani:6
„The object of criminal proceedings in our law has never been to secure a conviction
at all costs. The duty of the prosecution is to present all the facts in an objective and
fair manner so as to place the court in a position to arrive at the truth.‟
Where an appeal is being argued one expects the prosecutor to do so in an
objective and fair manner and, if satisfied that the conviction is flawed, to
draw that to the attention of the court, particularly where the flaw goes to
6 S v Fani and others 1994 (3) SA 619 (E) at 621I-J.
the heart of the fairness of the trial at which the accused person was
convicted.
[29] Before concluding it is necessary for me to say that the course of
events in this case is a classic instance of bureaucratic overreach.
Whatever the merits of Mrs Hugo‟s concerns it was clear that there was a
genuine disagreement with the Macraes over the status of the baboon.
That did not warrant sending a convoy including three armed police
officers and a vet with a gun to dart the animal to collect the baboon. The
image is redolent of an American police drama rather than a dispute over
the impact of treasury regulations on the care and custody of a baboon.
The behaviour of Mrs Boshoff in demanding that Dr Macrae hand over
the baboon was calculated to put his back, up as it did. There was no
attempt to engage in a courteous fashion with the Macraes and resolve
their concerns. Throughout, the conservation officials, starting with Mrs
Hugo, obdurately insisted that they were entitled to the baboon and
demanded that it be given to them. On the day in question they were
supported by an implicit threat of force from the police. Their approach
was to assert that they were entitled to the baboon and insist that Dr
Macrae submit to their demands. It seems reasonably clear that if the
baboon had been in one of the cages they would have taken it forcibly.
[30] The conservation officers knew that Dr Macrae would resist their
demands and were aware of his basis for doing so. If there was some real
and pressing need for them to retrieve the baboon they could have
approached a court on notice for a suitable order. If the matter was urgent
that could be accommodated within the ordinary court processes. Then
their entitlement to the baboon would have been tested in the appropriate
way. Instead, they resorted to force and wound up arresting two perfectly
peaceable citizens for no good reason, the arrest in Mrs Macrae‟s being
preceded by Inspector Grobler grabbing her by the collar and shaking her
while screaming at her. That is not the kind of conduct we expect of our
public officials. When that conduct was sought to be made the subject of
a criminal charge the prosecutor, or her appropriate superior, should have
exercised a sensible discretion and declined to prosecute. Had they done
so, this case, which does no credit to the conservation officers and police
involved or to the prosecution service that has pursued it to this court,
would have been still born.
[31] The appeals are upheld and the convictions and sentences on all
counts are set aside.
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant:
S J Maritz SC
Instructed by:
J P A Venter, Menlo Park, Pretoria and
Symington & De Kok, Bloemfontein
For respondent:
P C B Luyt
Instructed by:
Director of Public Prosecutions
Pretoria 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: 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.
Macrae v State
Dr and Mrs Macrae operate a game lodge. On 10 October 2006 a
conservation officer, from the Directorate Nature Conservation in
Gauteng, asked them if they would take a baboon that had been seized by
the police, in conjunction with the Directorate, under a warrant issued in
terms of the Criminal Procedure Act. They agreed to do so and the
baboon was handed to them in terms of a document headed ‘Certificate of
Handover to Institution’ and signed on behalf of the Directorate by the
conservation officer. The reason for approaching them was that no public
zoo was available to take the baboon.
The following day a senior official in the Directorate told the
conservation officer that she had made a mistake in handing the baboon
to the Macraes, as in terms of certain treasury regulations it should have
been placed in a zoo approved by the treasury. There followed some
exchanges between the officials of the Directorate and the Macraes, in
which the officials demanded the return of the baboon and the Macraes
maintained that it had become their property, subject to the outcome of
criminal proceedings against the person from whom it had been seized.
On 18 October an official, Mrs Boshoff, arranged for a party
including two conservation officers, a vet, a third party, the police officer
who had originally seized the baboon and two members of the flying
squad, to proceed in convoy to the Macraes’ property in order to retrieve
the baboon. They found that the baboon had gone for a walk and Dr
Macrae challenged their right to take the baboon. This resulted in Dr
Macrae, and thereafter his wife, Mrs Macrae, being arrested. They were
both charged with theft of the baboon and with defeating or obstructing
the administration of justice. They were convicted in the magistrates’
court after a four day trial and their appeal to the Gauteng North High
Court failed.
The SCA today set aside their convictions and sentences on all
counts. It held that they had bona fide believed that the baboon had been
given to them and that this negated any criminal intention on their part. In
any event, they had not stolen the baboon. There was a misapprehension
by the conservation officers as to their rights in relation to the animal. It
was for the police to deal with the animal once it had been seized and
they had made perfectly acceptable arrangements for its care pending the
criminal trial. Instead the police had co-operated with the conservation
officers to recover the baboon for bureaucratic reasons unconnected with
the requirements of the Criminal Procedure Act. Furthermore the
Macraes had not had a fair trial and on that ground also the convictions
could not stand.
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3796
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non-electoral
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2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 145/2021
In the matter between:
RTS INDUSTRIES
FIRST APPELLANT
CGC INDUSTRIES (PTY) LTD
SECOND APPELLANT
CHRISTIAAN ARNOLDUS KURTZ
THIRD APPELLANT
CARL WILLIAM RICHTER
FOURTH APPELLANT
C-QUIPTECH (PTY) LTD
FIFTH APPELLANT
and
TECHNICAL SYSTEMS (PTY) LTD
FIRST RESPONDENT
LAVIRCO BELEGGINGS (PTY) LTD
SECOND RESPONDENT
Neutral citation:
RTS Industries and Others v Technical Systems (Pty) Ltd and
Another (Case No. 145/2021) [2022] ZASCA 64 (5 May 2022)
Coram:
PETSE DP and ZONDI, DLODLO and GORVEN JJA and MOLEFE
AJA
Heard:
4 March 2022
Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme
Court of Appeal website and release to SAFLII. The date and time
for hand-down is deemed to be 09h45 on 5 May 2022.
Summary:
Interim interdict – appealability of interim interdictory relief and refusal of
counter-application – interests of justice do not require that appeal be entertained.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town
(Mangcu-Lockwood AJ sitting as court of first instance):
The appeal is struck from the roll.
The appellants shall jointly and severally bear the respondents’ costs, the one
paying the others to be absolved, including the costs of two counsel.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Molefe AJA: (Petse DP and Zondi, Gorven and Dlodlo JJA concurring):
[1] This appeal turns on the appealability of the order made by the
Western Cape Division of the High Court, Cape Town (the high court) on 9 March 2020
(the 2020 order), enforcing the terms of the order – granted by agreement between the
parties – on 2 June 2015 (the 2015 order). The 2020 order (per Mangcu-Lockwood AJ)
in essence, confirmed the 2015 order and ordered compliance therewith. It is against this
2020 order that this appeal is directed and is before us with the leave of this Court.
[2] The 2015 order was granted pursuant to proceedings instituted by the respondents
for relief arising from the appellants’ alleged misappropriation of the confidential
information relating to the auger manufacturing process and machinery of the first
respondent, as well as the unlawful use of such information, thereby unlawfully competing
with the first respondent.
[3] The relevant background of the 2015 order is briefly as follows. The third appellant,
Mr Christiaan Arnoldus Kurtz (Mr Kurtz), was previously employed by the first respondent
as a plant engineer and, in the course of his employment, gained intimate knowledge of
the manufacturing processes of the first respondent. He had unfettered access to the first
respondent’s technical drawings and technical data relating to the manufacturing
processes. As part of Mr Kurtz’s conditions of employment with the first respondent, he
was obliged to enter into a confidentiality undertaking and restraint of trade agreement in
favour of the first respondent.
[4] During 2009, Mr Kurtz left the employ of the first respondent. Shortly thereafter,
rumours emerged of a competitor in the market selling a product similar to that of the
first respondent. The competitor’s product was offered for sale at a lower price than that
of the first respondent. The competing entity appeared to be RTS Industries, the first
appellant, but the first respondent was not able to ascertain the identity of the individual
who was the first appellant’s controlling mind for some time. It was only in July 2014 that
the first respondent was able to confirm the involvement of Mr Kurtz with RTS Industries
and, as a result, the 2014 application, which culminated in the 2015 order, was launched.
[5] Following the launch of the 2014 application, the first respondent came into
possession of technical drawings prepared by the appellants. It was then discovered that
these drawings infringed the copyright of the first respondent in 1179 of its technical
drawings. The appellants had made reproductions and adaptations of the copyrighted
work. Subsequently, the notice of motion of the 2014 application was amended to include
a prayer for relief based on the copyright infringement of the first respondent’s technical
drawings relating to its auger machinery and equipment. It became clear from the
discovery process that the second appellant, CGC Industries (Pty) Ltd, and Mr Kurtz had
unlawfully competed with the first respondent between 2009 and June 2015. Thereupon,
they had no choice but to capitulate and accede to the 2015 order.
[6] In terms of the 2015 consent order, the appellants recognised the confidentiality of
the first respondent’s production process for the production of auger. The order interdicted
the respondents from using this information for as long as it retained its confidentiality.
They were also interdicted from infringing the copyright of the first respondent in its artistic
works comprising its 1179 technical drawings for a period of three years from the date of
the granting of the order. The 2015 order obliged the appellants to deliver up to the first
respondent all works infringing the latter’s copyright for destruction. In addition, the
appellants were restrained from competing in the field of manufacturing, marketing and
sale of flat wire, auger and auger coiling machinery.
[7] The scheme of the 2015 order regulated the manner in which the appellants would
be free to resume competition with the respondents. Paragraph 23 of that order in clear
terms provided that upon the expiry of three years, and in the event of the appellants
manufacturing flat wire or auger or equipment for the manufacture of flat wire or auger,
such manufacture would not infringe the confidential information or copyright of the
respondents. Paragraph 24 of the order prescribes a procedure to be followed for the
determination of compliance by the appellants with paragraph 23. Experts for the parties
would independently be appointed to inspect the proposed production facility and
thereupon compile a joint report in respect of the extent to which the production facility
complies with paragraph 23 of the 2015 order. The experts would record their agreements
and disagreements, after which each party would have the opportunity of commenting on
the report, whereupon the experts would submit their final report.
[8] The 2015 order also prescribes a procedure designed to resolve disagreements
between the parties in respect of the final report. An application would be made to court,
and the court would be entitled to determine the procedures necessary to determine the
disputes. Until such time that a court had made a determination, the appellants would not
be entitled to commission the production facility.1 Evidently, and until such time that the
process had been completed, the appellants’ proposed production facility would not be
put into service for the commercial production of auger. On 22 August 2019, the
1 The meaning of ‘commission’ is:
‘order or authorize the production of [something, such as a building, piece of equipment etc]; order or
authorise (someone) to do r produce something.’ (Concise Oxford English Dictionary 12 ed (2011))
respondents discovered that the first appellant had allegedly sold auger to an Egyptian
company, Techno Max, which is one of the respondents’ existing clients. The shipment
was destined to depart on 30 September 2019. The appellants admitted to issuing a quote
(pro-forma invoice) to Techno Max, but denied issuing a stamped invoice or that a sale
was made and claimed that the invoice relied upon by the respondents was ‘a fake
[document] generated solely for the purpose of this litigation’.
[9] The respondents then launched the 2019 proceedings seeking a rule nisi
interdicting and restraining the appellants from manufacturing, processing, marketing for
sale or selling flat wire and auger, pending the completion of the process stipulated in the
2015 order. They also sought an order declaring the appellants to be in contempt of the
2015 court order and their committal to prison, alternatively payment of a fine.
[10] The appellants submitted that the lawfulness of the agreement, which culminated
in the 2015 order, was the subject of an investigation by the Competition Commission.
Further, the appellants contended that the respondents had deliberately delayed and
frustrated the appellants’ efforts to give effect to the terms of the 2015 order to prevent
the appellants from competing with them. It was the appellants’ contention that no part of
the respondents’ manufacturing process was in fact confidential, and that the prohibitions
contained in the 2015 order had ceased to be of any force and effect.
[11] On 9 March 2020, Mangcu-Lockwood AJ delivered her judgment and granted the
following order:
‘1) That an interim interdict is granted in the following terms:
1.1 Pending the finalisation of the process provided for in paragraphs 23 to 25 of the order
granted by this Court under case number 17470/14 on 2 June 2015 (the Court Order), the
respondents are interdicted and restrained from –
1.1.1 manufacturing and/or producing flat wire for purposes of manufacturing
auger;
1.1.2 manufacturing and/or producing auger;
1.1.3 marketing for sale and/or selling any flat wire and/or auger produced by
any of the respondents;
1.2 The respondents are restrained and interdicted from removing, causing or permitting
the removal of any of the unlawfully produced products from the premises situated at 6
Distillery Way, BAT Building, Paarl, Western Cape, or from any other premises where
same may be located.
1.3 Within 5 court days of the issue of this Order, the respondents are directed to furnish
the applicants with the addresses of all premises where the respondents are storing the
unlawfully produced products.
2) That the respondents are in contempt of the Court Order of 2 June 2015.
3) That the respondents are directed to pay to the applicants a fine of R450 000.00 (four hundred
and fifty thousand rand) jointly and severally, the one paying the other to be absolved, by no later
than 30 April 2020.
4) The respondents are to pay the costs of all the proceedings to date, including costs of two
counsel, save for costs relating to the respondents’ application to strike out portions of the
applicants’ founding affidavit.’
Following the notice of the current appellants’ intention to apply for leave to appeal against
the 2020 judgment, the respondents abandoned all the relief granted to them save for the
interim interdicts and the costs order.
Leave to adduce new evidence
[12] On the date of the hearing of this appeal, the respondents made an application in
terms of s 19(b) of the Superior Courts Act 10 of 2013 (the Act). The application was for
leave to adduce further evidence contained in the founding affidavit of their expert,
Mr Mattheus Willem Johannes Kühn (Mr Kühn) dated 25 January 2022, and ancillary
relief. The appellants opposed the application.
[13] Counsel for the respondents submitted that this application was necessitated by
the narrative advanced by the appellants in the appeal that the respondents had frustrated
the execution of paragraphs 24 and 25 of the 2015 order, alternatively that paragraphs
24 and 25 are not capable of execution. Mr Broekhuizen, the respondent’s expert, had
prior to the appellants launching their application for leave to appeal, produced his report
and the appellants’ expert, Mr Bowles had responded to the report. It was further
submitted that when the application for leave to appeal served before this Court, Mr
Broekhuizen was in the process of considering and responding to Mr Bowles’ inputs.
[14] The respondents argued that the process contemplated in paragraphs 24 and 25
of the 2015 order had been implemented and completed as the experts’ report was
finalised. The parties had, on 16 November 2021, delivered their respective commentary
on the report. The opinions, findings and conclusions of the respective experts are not
uniform but are widely divergent. Following the delivery of the experts’ final report, the
respondents launched the application under case number 17470/2014 on 30 November
2021 for the court a quo to determine the process to be followed in terms of paragraph
24 for the determination of the disputes between the parties. It is the respondents’
contention that the determination of the disputes identified in the report now fall to be
determined by the court a quo, which therefore renders the relief to set aside the
provisions of paragraphs 24 and 25 of the 2015 order moot.
[15] The respondents further submitted that it is in the interests of justice and fairness
that they be allowed to adduce further evidence and that the evidence is dispositive of
substantial issues that the appellants require this Court to determine. It was argued that
the respondents will be severely prejudiced if the false narrative of the frustration of the
implementation of the order and the purported non-executability of the 2015 order is not
addressed.
[16] Section 19 of the Act provides:
‘The Supreme Court of Appeal or a Division exercising appeal jurisdiction may, in addition to any
power as may specifically be provided for in any other law –
(a) dispose of an appeal without the hearing of oral argument;
(b) receive further evidence;
(c) remit the case to the court of first instance, or to the court whose decision is the subject of the
appeal, for further hearing, with such instructions as regards the taking of further evidence or
otherwise as the Supreme Court of Appeal or the Division deems necessary; or
(d) confirm, amend or set aside the decision which is the subject of the appeal and render any
decision which the circumstances may require.’
[17] Our Courts have laid down basic requirements to emphasise the court’s reluctance
to reopen the trial. They may be summarised as follows:2
(a) There should be a reasonably sufficient explanation, based on true allegations, why
the evidence sought was not led at the trial;
(b) There should be a prima facie likelihood of the truthfulness of the evidence;
(c) The evidence should be materially relevant to the outcome of the trial.3
[18] A court of appeal will exercise its discretion to receive further evidence on the
hearing of an appeal only if the circumstances are exceptional.4 A court of appeal should,
in the normal course, decide whether the judgment appealed from is right or wrong
according to the existing facts and not according to new circumstances. Therefore, as a
general rule, evidence of events subsequent to the judgment under appeal should not be
admitted in deciding the appeal.5 In general, a court of appeal should exercise the power
conferred by s 19(b) of the Act sparingly.6
[19] In the case of In re Certain Amici Curiae: Minister of Health and Others v Treatment
Action Campaign and Others,7 the Constitutional Court, in the context of an application
to introduce further evidence said:
‘. . . However, this is subject to the condition that such facts “are common cause or otherwise
incontrovertible” or “are of an official, scientific, technical or statistical nature, capable of easy
verification”. This rule has no application where the facts sought to be canvased are disputed.’
2 See Pepkor Holdings Ltd and Others v AJVH Holdings (Pty) Ltd and Others; Steinhoff International
Holdings NV and Another v AJVH Holdings (Pty) Ltd and Others [2020] ZASCA 134; [2021] 1 All SA 42
(SCA); 2021 (5) SA 115 (SCA) para 49
3 Johannesburg Society of Advocates and Another v Nthai and Others [2020] ZASCA 171; 2021 (2) SA 343
(SCA); [2021] 2 All SA 37 (SCA), the Supreme Court of Appeal refused to receive further evidence which
amounted to mere surplusage para 115.
4 Goudini Chrome (Pty) Ltd v MCC Contracts (Pty) Ltd [1993] 1 All SA 259 (A); 1993 (1) SA 77 (A).
5 Weber-Stephen Products Co v Alrite Engineering (Pty) Ltd and Others [1992] 4 All SA 453 (A); 1992 (2)
SA 489 (A) at 507D.
6 Rail Commuters Action Group and Others v Transnet Ltd t/a Metrorail and Others 2005 (2) SA 359 (CC)
at 388F-389A.
7 In Re Certain Amicus Curiae Applications: Minister of Health and Others v Treatment Action Campaign
and Others 2002 (10) BCLR 1023 (CC); 2002 (5) SA 713 (CC) para 8.
[20] The evidence in Mr Kühn’s founding affidavit that the applicants seek to introduce
on appeal is clearly controversial. It is not only disputed by the respondents but is also
not germane to the issues raised in this appeal. Accordingly, there is no basis for its
admissibility. Therefore, the application to adduce such evidence falls to be dismissed.
Appealability of the March 2020 order
[21] I now turn to the question whether the 2020 order is appealable. On this score it
bears mentioning that I am alive to the fact that this Court is under no obligation to
entertain an appeal against an unappealable order merely because the appellants were
granted leave to appeal by this Court. If we find that the 2020 order is not appealable,
then it will not be necessary to deal with the merits of the appeal.
[22] As already indicated above, what gave rise to this appeal was the 2015 order
granted by agreement between the parties. The respondents sought to ensure
compliance with the 2015 order. It was not in dispute that the appellants were in breach
of that order in that they were manufacturing and selling flat wire and auger before
completion of the process envisaged in paragraph 24 of the 2015 order. The March 2020
order is manifestly an interim interdict pending the finalisation of the process provided for
in paragraphs 23 to 25 of the 2015 order.
[23] The crux of the matter is firstly, whether this order was ‘final in effect’ and was
therefore appealable even if its stated character was interim. Secondly, whether the
interests of justice warrant that an appeal against the order in issue should be entertained.
Our courts have established that an interim order may, if the interests of justice in a
particular case so dictate, be appealable.8 The constitutional standard for appealing an
interim order when it best serves the interests of justice was reiterated by the
Constitutional Court in City of Tshwane Metropolitan Municipality v Afriforum and Another.
There the Constitutional Court emphasised that ‘[i]f appealability or the grant of leave to
8 Philani-Ma-Afrika and Others v Mailula and Others [2009] ZASCA 115; 2010 (2) SA 573 (SCA) para 20.
appeal would best serve the interest of justice, then the appeal should be proceeded with
no matter what the pre-Constitution common law impediments may suggest’.9
[24] Whether or not an interim order is appealable is fact-specific. This was affirmed in
South African Informal Traders Forum v City of Johannesburg,10 where the Constitutional
Court held that when determining whether it is in the best interests of justice to appeal an
interim order, the court must have regard to and weigh carefully all relevant
circumstances. The factors that are relevant or decisive in a particular instance, will vary
from case to case.
[25] The appellants’ complaint is that the high court failed to issue a rule nisi
(operating in part as an interim interdict) in circumstances where this was the only relief
which the respondents had sought at the hearing of this matter. In support of the
complaint, the appellants submitted that the relief granted in paragraphs 1.3 and 2 of
the 2020 order was final in effect. It is common cause that the respondents had
abandoned the relief in paragraph 2.11 Different considerations apply in respect of
paragraph 1.3.
[26] The appellants’ argument, in essence, is that had the 2020 order taken the form of
a rule nisi, returnable on a specified date, such an order would have afforded the
appellants the opportunity to deliver such further affidavits as they considered
appropriate. And to the extent that the court was minded to grant relief as it did, it was
obliged to apply the Plascon-Evans12 rule in assessing the evidence. Had the court done
so, it was argued, all factual disputes would be determined on the basis of the appellants’
9 City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19; 2016 (9) BCRL 1133
(CC); 2016 (6) SA 279 (CC) para 41.
10 South African Informal Traders Forum and Others v City of Johannesburg and Others; South African
National Traders Retail Association v City of Johannesburg and Others [2014] ZACC 8; 2014 (6) BCLR 726
(CC); 2014 (4) SA 371 (CC) para 20.
11 Paragraph 2 stipulates ‘[t]hat the respondents are in contempt of the Court Order of 2 June 2015’.
12 Plascon-Evans Paints (TVL) Ltd v Van Riebeck Paints (Pty) Ltd [1984] 2 All SA 366 (A); 1984 (3) SA 623
(A); 1984 (3) SA 620.
(the respondents in the high court) version, and the appellants would have succeeded in
their opposition.
[27] The appellants’ argument is, in my view, without any merit. On a proper
interpretation of paragraph 1.3 of the 2020 order, it is ancillary to that granted in paragraph
1.1 and the remainder of the relief is evidently interim. The order stands, pending the
finalisation of the process provided for in paragraphs 23 and 25 of the 2015 order. Where
both parties are before the court; the issues raised have been fully ventilated; and an
order granted, which clearly endures only until paragraphs 23 and 25 of the 2015 order
have been complied with, there is no point in issuing a rule nisi.13
[28] In International Trade Administration Commission v SCAW South Africa (Pty)
Ltd,14 the Constitutional Court, in the course of addressing the controversy about whether
the order under consideration was appealable, remarked:
‘In this sense, the jurisprudence of the Supreme Court of Appeal on whether a “judgment or order”
is appealable remains an important consideration in assessing where the interests of justice lie.
An authoritative restatement of the jurisprudence is to be found in Zweni v Minister of Law and
Order which has laid down that the decision must be final in effect and not open to alteration by
the court of first instance; it must be definitive of the rights of the parties; and lastly, it must have
the effect of disposing of at least a substantial portion of the relief claimed in the main proceedings.
On these general principles the Supreme Court of Appeal has often held that the grant of an
interim interdict is not susceptible to an appeal.
The “policy considerations” that underlie these principles are self-evident. Courts are loath to
encourage wasteful use of judicial resources and of legal costs by allowing appeals against
interim orders that have no final effect and that are susceptible to reconsideration by a court a
quo when final relief is determined. Also allowing appeals at an interlocutory stage would lead to
piecemeal adjudication and delay the final determination of disputes.’15
13 Bosman NO v Tworeck en Adere 2000 (3) SA 590 (C); See also Turquoise River Incorporated v
McMenamin and Others 1992 (3) SA 653 (D) at 658A.
14 International Trade Administration Commission v SCAW South Africa (Pty) Ltd [2010] ZACC 6; 2010 (5)
BCLR 457 (CC); 2012 (4) SA 618 (CC) paras 49 & 50.
[29] The question before Mangcu-Lockwood AJ was simply whether the appellants
complied with the 2015 order. Evidently, until the process ordained in paragraph 24 is
completed, the proposed production facility of the appellants will be out of service for the
commercial production of auger. Considering the evidence relating to background facts
and ‘surrounding circumstances’, it is clear that the 2020 order was not final in effect and
was thus open to alteration by the court of first instance. All of this means that, in my view,
the order of the high court is not appealable. In such an instance, the appropriate order
is that this application be struck from the roll. As for the question of costs, the failure of
the appellants to have the appeal heard requires that they bear the costs jointly and
severally.
[30] In the circumstances, I make the following order:
The appeal is struck from the roll.
The appellants shall jointly and severally bear the respondents’ costs, the one
paying the others to be absolved, including the costs of two counsel.
___________________
DS MOLEFE
ACTING JUDGE OF APPEAL
Appearances
For the appellants:
G S Myburgh SC appearing R D E Gordon
Instructed by:
Faure & Faure Inc., Paarl
Symington De Kok Attorneys, Bloemfontein
For the first respondent:
R M Robinson SC appearing with F W Landman
and M de Wet
Instructed by:
Nabal Attorneys, Durbanville
Webbers Attorneys, Bloemfontein.
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
5 May 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
RTS Industries and Others v Technical Systems (Pty) Ltd and Another (145/2021) [2022] ZASCA 64
(5 May 2022)
Today the Supreme Court of Appeal (SCA) handed down a judgment striking down a matter from the
roll, with costs, an appeal against the Western Cape Division of the High Court, Cape Town (the high
court).
The issues before the SCA were whether the 2015 order was ‘final in effect’ and was therefore
appealable even if its stated character was interim; and secondly, whether the interests of justice
warranted that an appeal against the order in issue should be entertained.
This appeal turns on the appealability of the order made by the Western Cape Division of the High
Court, Cape Town (the high court) on 9 March 2020 (the 2020 order), enforcing the terms of the order
– granted by agreement between the parties – on 2 June 2015 (the 2015 order). The 2020 order
confirmed the 2015 order and ordered compliance therewith.
The third appellant, Mr Christiaan Arnoldus Kurtz (Mr Kurtz), was previously employed by the first
respondent as a plant engineer and, in the course of his employment, gained intimate knowledge of the
manufacturing processes of the first respondent. He had unfettered access to the first respondent’s
technical drawings and technical data relating to the manufacturing processes. As part of Mr Kurtz’s
conditions of employment with the first respondent, he was obliged to enter into a confidentiality
undertaking and restraint of trade agreement in favour of the first respondent.
In 2009, Mr Kurtz left the employ of the first respondent. Shortly thereafter, rumours emerged of a
competitor in the market selling a product similar to that of the first respondent. The competitor’s product
was offered for sale at a lower price than that of the first respondent. The competing entity appeared to
be RTS Industries, the first appellant, but the first respondent could not ascertain the identity of the
individual who was the first appellant’s controlling mind for some time. It was only in July 2014 that the
first respondent was able to confirm the involvement of Mr Kurtz with RTS Industries, and as a result,
the 2014 application, which culminated in the 2015 order, was launched.
Following the launch of the 2014 application, the first respondent came into possession of technical
drawings prepared by the appellants. It was then discovered that those drawings infringed the copyright
of the first respondent in 1179 of its technical drawings. The appellants had made reproductions and
adaptations of the copyrighted work. It became clear from the discovery process that the second
appellant, CGC Industries (Pty) Ltd, and Mr Kurtz had unlawfully competed with the first respondent
between 2009 and June 2015. Thereupon, they had no choice but to capitulate and accede to the 2015
order.
In terms of the 2015 consent order, the appellants recognised the confidentiality of the first respondent’s
production process for the production of auger. The order interdicted the respondents from using this
information for as long as it retained its confidentiality. They were also interdicted from infringing the
copyright of the first respondent in its artistic works comprising its 1179 technical drawings for a period
of three years from the date of the granting of the order. The 2015 order obliged the appellants to deliver
up to the first respondent all works infringing the latter’s copyright for destruction. In addition, the
appellants were restrained from competing in the field of manufacturing, marketing and sale of flat wire,
auger and auger coiling machinery.
The respondents then launched the 2019 proceedings seeking a rule nisi interdicting and restraining
the appellants from manufacturing, processing, marketing for sale or selling flat wire and auger, pending
the completion of the process stipulated in the 2015 order. They also sought an order declaring the
appellants to be in contempt of the 2015 court order and their committal to prison, alternatively payment
of a fine.
On the date of the hearing of this appeal, the respondents made an application in terms of s 19(b) of
the Superior Courts Act 10 of 2013 (the Act) for leave to adduce further evidence and ancillary relief.
On this point for leave to adduce new evidence, the SCA found that a court of appeal should, in the
normal course, decide whether the judgment appealed from was right or wrong according to the existing
facts and not according to new circumstances. Moreover, the SCA found that the evidence in Mr Kühn’s
founding affidavit that the applicants seek to introduce on appeal was clearly controversial. It was not
only disputed by the respondents but was also not germane to the issues raised in this appeal.
Accordingly, there was no basis for its admissibility. As a result, the SCA found that the application to
adduce such evidence fell to be dismissed.
In dealing with the question of whether the 2020 order was appealable, the SCA held that on this score,
it bore mentioning that this Court was alive to the fact that it was under no obligation to entertain an
appeal against an unappealable order merely because the appellants were granted leave to appeal by
this Court. Moreover, If it found that the 2020 order was not appealable, then it would not be necessary
to deal with the merits of the appeal.
In addition, the SCA held that what gave rise to this appeal was the 2015 order granted by agreement
between the parties. The respondents sought to ensure compliance with the 2015 order. The SCA held
that it was not in dispute that the appellants were in breach of that order in that they were manufacturing
and selling flat wire and auger before completion of the process envisaged in paragraph 24 of the 2015
order. According to the SCA, the March 2020 order was manifestly an interim interdict pending the
finalisation of the process provided for in paragraphs 23 to 25 of the 2015 order.
Finally, the SCA found that, evidently, until the process ordained in paragraph 24 was completed, the
proposed production facility of the appellants would be out of service for the commercial production of
auger. Furthermore, considering the evidence relating to background facts and ‘surrounding
circumstances’, it was clear that the 2020 order was not final in effect and was thus open to alteration
by the court of first instance. Hence, the SCA held that all of this meant that, in its view, the order of the
high court was not appealable. As a result, the SCA held that in such an instance, the appropriate order
was that this application be struck from the roll.
~~~~ends~~~~
|
2775
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 633/2011
Reportable
In the matter between
CITY OF CAPE TOWN
Appellant
and
FAIZEL HENDRICKS
First Respondent
MOGAMAT SMITH
Second Respondent
Neutral citation:
City of Cape Town v Hendricks (633/11) [2011] ZASCA 90
(31 May 2012)
Coram:
NUGENT, VAN HEERDEN, SNYDERS, MHLANTLA JJA and
SOUTHWOOD AJA
Heard:
10 May 2012
Delivered:
31 May 2012
Summary:
Warning/compliance notice of contravention of By-Law and demand
that recipient comply to avoid legal action not ‘administrative action’ for purposes of
Promotion of Administrative Justice Act 3 of 2000.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
SOUTHWOOD AJA (NUGENT, VAN HEERDEN, SNYDERS and MHLATLA JJA
concurring)
[1] On 10 May 2012 when this appeal was called only the appellant was present.
The court made an order that the appeal was upheld and that the order of the court a
quo was set aside and replaced with an order that ‘the application is dismissed’.1
The court indicated that reasons would follow and these are the reasons.
[2] The appellant, the City of Cape Town (the City), appealed against the order of
the court a quo (Mantame AJ) –
(1) Reviewing and setting aside the City’s decision of April 2010 to compel the
respondents to remove and rebuild their business structures daily on their
trading sites;
(2) Reviewing and setting aside the City’s notices served on the respondents
on 23 April 2010 to remove their business structures from their trading
sites;
(3) Declaring that the respondents are entitled to remain in their existing
structures until the City has afforded the respondents sufficient
opportunity to make representations as to why their trading pattern cannot
be altered.
The issues before the court a quo were whether the City took the first decision,
whether the City’s decision to issue the notices on 23 April 2010 was administrative
action for the purposes of the Promotion of Administrative Justice Act 3 of 2000
(PAJA), and, if so, whether the City was entitled to depart from the provisions of
s 3(2) of PAJA. The court a quo granted leave to appeal.
1 On 19 and 20 April 2012 the appellant’s attorney served notices of set down on the respondents
personally and on their attorneys of record and the respondents did not file heads of argument or
appear at the hearing.
[3] The first and second respondents are informal traders who conduct their
businesses from large, sturdy, temporary structures erected on pavements at the
corners of, respectively, Vanguard Drive and Highlands Drive and Vanguard Drive
and Morganster Street, in Mitchells Plain. A portion of each structure (and each
business) encroaches onto a neighbouring property where the Westgate Mall is
situated. The owner of the property, Vusani Investments (Pty) Ltd, objects to this
encroachment and has called on the respondents to remove their structures.
[4] The City is the owner of the property where the respondents’ structures stand.
The structures were erected there without the City’s consent or authorisation and
contravene a number of the City’s by-laws. Despite having conducted their
businesses in the structures for a number of years the respondents have not sought
the City’s consent or authorisation. On 23 April 2010, Constable Swartbooi, a
member of the City’s Specialised Law Enforcement Unit, issued and handed to each
respondent a written notice in which each respondent was informed that the
structure placed on the City’s property at the relevant intersection had been placed
there without the necessary consent or authorisation of the City; that the respondent
was instructed to immediately remove the offending structure from the City’s property
and, that in the event of the respondent failing to comply with the instruction by 10
May 2010, a fine could be imposed and the offending structure removed by the City
at the respondent’s expense. When serving the notices Constable Swartbooi
informed the respondents that the notices did not prohibit the respondents from
trading on the property and (although no such decision had been taken by the City)
that the respondents could erect temporary structures at the beginning of the day but
that they would have to dismantle them at the end of the day. It is clear that the
respondents would become entitled to erect such structures only if the City granted
permission.
[5] After receiving the notices the respondents did not seek the City’s consent or
authorisation. Instead, on 10 May 2010 the respondents urgently sought and were
granted in the high court a rule nisi interdicting and restraining the City from
removing their structures or interfering with the respondents’ right to trade from those
structures. On 17 June 2010 this order was confirmed. Curiously both orders were
sought and granted in the absence of the City which had no knowledge of the
proceedings, so it is not surprising that, when the City applied for the rescission of
these orders, the respondents did not oppose its application and ultimately
abandoned their application for an interdict.
[6] The respondents still did not seek to regularise their position regarding the
structures. On 16 August 2010 they launched their review application which the City
opposed. The respondents did not file a replying affidavit or insist on the production
of the record of the proceedings sought to be corrected.
[7] In their founding affidavit the respondents state that their right to trade on the
relevant sites is not being challenged or assailed by the City. They say that the
apparent purpose of the notices was ‘to require us to demolish our business
structures at the end of the day and to re-erect the same at the start of the following
day.’ Their main ground of review was that the City was obliged to give them notice
and give them an adequate opportunity to make representations before taking the
decision to act against them (i.e. by delivering the notices to them). It is not
necessary to deal with the other grounds alleged.
[8] At the hearing before the court a quo the City pointed out that the City had not
taken a decision that the respondents must remove and rebuild their structures daily
and argued that the issue and delivery of the notices did not constitute administrative
action for the purposes of PAJA and merely constituted notification to the
respondents of the City’s intention to enforce compliance with the relevant By-law.
The City contended that the issue and service of the notice was not reviewable as
the notices do not constitute a final decision; do not adversely affect the rights of any
person and have no direct, external legal affect.
[9] The court a quo found that the notices were issued and served on the
respondents after the City had taken a decision; that the notices themselves qualified
as a decision; that the decisions threatened the respondents’ right to trade and
accordingly that the decisions constituted administrative action and were reviewable.
The court a quo also found that the City was obliged to afford the respondents
sufficient opportunity to make representations prior to the issue of the notice and had
not done so. The court a quo further found that the decisions violated the
respondents’ legitimate expectations (which was not part of the respondents’ case).
[10] It is clear that the City did not take a decision that the respondents are obliged
to remove and rebuild their business structures daily on their trading sites and that
the notices cannot reasonably be construed to mean that. The notices simply
informed the respondents that they must comply with the law (i.e. remove the
structures which contravene the by-laws and the Ordinance) and informed them of
the consequences should they fail to do so. This was not administrative action as
defined in PAJA.
[11] As contended by the City, by issuing and delivering the notices to the
respondents, the City’s conduct did not have direct and immediate consequences for
the respondents2; it was a preliminary step by the City (a notification or warning that
it would enforce the by-laws)3; and did not adversely affect the respondents’ rights or
have any direct or external legal effect4. The City was doing no more than it was
entitled to do in terms of the section of the relevant by-law.5 The provisions of PAJA
therefore did not apply and all the orders were wrongly granted by the court a quo.6
2 Greys Marine Hout Bay (Pty) Ltd v Minister of Public works 2005 (6) SA 313 (SCA) para 24.
3 Eastern Metropolitan Substructure v Peter Klein Investments 2001 (4) SA 661 (W) para 15.
4 Greys Marine Hout Bay (Pty) Ltd v Minister of Public Works 2005 (6) SA 313 (SCA) paras 29 to 30;
Joseph v City of Johannesburg 2010 (4) SA 55 (CC) para 27; City of Cape Town v Bouley Properties
(Pty) Limited [2010] ZAWHC 650 (21 December 2010) para 32; J de Ville Judicial Review of
Administrative Action in South Africa LexisNexis Butterworths (2003) para 2 1 6 p 54.
5 The section provides:
“THE CITY MAY ACT AND RECOVER COSTS
22. (1) Notwithstanding any other provision of this by-law, the City may –
(a) where the permission of the City is required before a person may perform a certain action or
build or erect anything, and such permission has not been obtained; and
(b) where any provision of this By-law is contravened under circumstances in which the
contravention may be terminated by the removal of any structure, object, material or
substance, serve a written notice on the owner of the premises or the offender, as the case
may be, to terminate such contravention, or to remove the structure, object, material or
substance, or to take such other steps as the City may require to rectify such contravention
within the period stated in such notice.
(2) Any person who fails to comply with a notice in terms of subsection (1) shall be guilty of an
offence, and the City may, without prejudice to its powers to take action against the offender,
take the necessary steps to implement such notice at the expense of the owner of the premises
or the offender, as the case may be.”
6 Joseph v City of Johannesburg 2010 (4) SA 55 (CC) para 27.
_________________________
B R SOUTHWOOD
ACTING JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
A. Katz SC
Instructed by:
Fairbridges Attorneys, Cape Town;
McIntyre & Van Der Post Attorneys, Bloemfontein.
FOR RESPONDENTS:
No appearance
Instructed by:
Petersen’s Attorneys, Cape Town.
|
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.
CITY OF CAPE TOWN v FAIZEL HENDRICKS
The Supreme Court of Appeal today held that a warning/compliance notice notifying the
recipient of his/her contravention of a By-law and calling upon the recipient to comply with
the By-law in order to avoid legal action is not ‘administrative action’ for the purposes of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA).
The respondents, two informal traders in Mitchells Plain, Cape Town, conducted business in
temporary structures erected on property owned by the City of Cape Town. The structures
contravened the City’s By-laws and the City’s enforcement unit issued and served on the
respondents’ notices informing them that the structures contravened the By-laws and should
be removed to avoid further action by the City. Instead of seeking the City’s authorisation for
the structures the respondents applied in terms of PAJA to review and set aside the City’s
decision to issue the notices. The Western Cape High Court granted the application despite
the City’s argument that the notices did not constitute ‘administrative action’ and were
therefore not reviewable. The High Court set aside the decision and granted other interdictory
relief.
The Supreme Court of Appeal upheld the City’s appeal and set aside the orders made by the
High Court.
|
3846
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 150/2021
In the matter between:
PETRUS JOHANNES BESTBIER
FIRST APPELLANT
HANLIE BESTBIER N O
SECOND APPELLANT
CAREL BRINK BESTBIER N O
THIRD APPELLANT
FRANS STEFANUS BOTES N O
FOURTH APPELLANT
and
NEDBANK LIMITED
RESPONDENT
Neutral citation:
Petrus Johannes Bestbier and Others v Nedbank Limited (Case No.
150/2021) [2022] ZASCA 88 (13 June 2022)
Coram:
SALDULKER, MOLEMELA and DLODLO JJA and WEINER and
MOLEFE AJJA
Heard:
9 March 2022
Delivered:
13 June 2022
Summary:
Applicability of rule 46A of the Uniform Rules of Court (the rules) –
whether rule 46A of the rules applies when property sought to be declared executable
was owned by a trust and is a primary residence of trust beneficiaries – whether trust
beneficiaries and their employees are entitled to the constitutional safeguards.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Kusevitsky J
sitting as court of first instance):
1 The appeal is dismissed.
2 The appellants shall pay the respondent’s costs jointly and severally, the one paying
the others to be absolved, including the costs of two counsel where so employed.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Molefe AJA (Saldulker, Molemela and Dlodlo JJA and Weiner AJA concurring):
[1] This is an appeal against the order and judgment of the Western Cape Division of
the High Court, Cape Town (the high court), per Kusevitsky J. The high court granted
judgment in favour of the respondent, Nedbank Limited, against the first to the fourth
appellants in their official capacities as trustees of Goede Hoop Trust (the trust), for
payment of the undisputed debt, as well as declaring Goede Hoop Wine Estate (the
property) executable. Judgment was also granted against the first appellant, Petrus
Johannes Bestbier, in his personal capacity based on a suretyship agreement. Leave to
appeal was granted by the high court in respect of both the money judgment and the
order declaring the property executable.
[2] This appeal concerns the applicability of rule 46A of the Uniform Rules of Court
(the rules) and Practice Directive 33A of the high court as the property sought to be
declared executable is owned by a trust and is a primary residence of the trust
beneficiaries, as well as the trust employees and their families (the farmworkers).
Factual background
[3] The appellants are the trustees of the trust, and the first appellant is also a surety.
The trust conducts business as a wine farm, wine cellar, wine merchant and restaurateur
in Stellenbosch, Western Cape. The trust also owns equipment, machinery and stock in
trade amounting to approximately R5 million. The first and second appellants reside in
the main house while their son occupies a cottage on the property. The trust’s permanent
employees and their families occupy 12 smaller cottages on the property.
[4] The trust obtained substantial financial assistance from the respondent in the form
of an overdraft and a loan, secured by nine mortgage bonds over the property, totalling
R9,2 million. When the appellants failed to comply with their obligations, the respondent
issued summons against them for repayment of the debt and an order declaring the trust’s
mortgaged property executable. The respondent’s claim against the appellants amounts
to R8 564 443.00 plus interest.
[5] Thereafter, the respondent launched an application for a summary judgment.
Following this, the matter was settled in terms of a written settlement agreement between
the parties in March 2019. In terms of that settlement agreement, the appellants,
admitted, inter alia, their indebtedness to the respondent and agreed to pay a specified
amount together with interest. They also agreed that in the event that they failed to pay
the amount in question, the respondent would be entitled to proceed with an application
that provided for payment, failing which, the private sale of the property or, failing which
judgment by consent. They also agreed to an order declaring the property bonded to the
respondent executable and they agreed on the minimum reserve price. The appellants
reneged on their undertaking to pay the respondent, failed to sell the property privately
and refused to honour their consent for the immovable property to be declared
executable.
[6] As a result, the respondent launched an application for judgment by consent,
including an order declaring the property executable, which was opposed by the
appellants. The high court granted judgment for payment and an order declaring the
immovable property executable. The appellants appeal both the judgment and the order.
In addition, the appellants dispute the order declaring the property executable,
substantially on the grounds that the respondent was obligated to comply with the
procedure prescribed by rule 46A, although the appellants had agreed to privately sell the
property and consented to the sale in execution if they failed to pay.
[7] The appellants contend that the immovable property owned by a trust and
occupied as a primary residence by natural persons (such as the trustees, trust
beneficiaries and trust employees) constitutes ‘residential immovable property of a
judgment debtor’, therefore triggering the application of rule 46A. The appellants
submitted that the wording and literal meaning of the rule confirm that the requirement of
compliance with rule 46A is not limited to property that is the primary residence of the
judgment debtor.
The legislative and historical context of rule 46A
[8] It is trite that the Constitution of South Africa provides for justiciable socio-
economic rights and this includes the right to have access to adequate housing which is
enshrined in s 26 of the Constitution. The underlying rationale of rule 46A is to impose
procedural rules to give effect to that fundamental right. Rule 46A must therefore be
interpreted purposively against the backdrop of s 26 of the Constitution, which grants
access to housing.
[9] In 2010, the rules were amended to introduce the express requirement in rule
46(1)(a)(ii) that residential property may only be sold in execution if so authorised by a
court having considered all the relevant factors.1 Rule 46A was added to the rules on 22
December 2017 in response to divergent approaches adopted by the South African courts
regarding the nature of the enquiry and factors to be considered when exercising judicial
oversight over orders of execution against residential immovable property.2
1 High Court Rules of Court, rule 46(1)(a)(ii) as formulated pre-2017 GN R 981, 19 November 2010.
2 Uniform rule 46A inserted by GN R1272, GG 41257, 17 November 2017.
[10] Rule 46A must be interpreted in view of the relevant historical and legislative
context, and taking into account the purpose and objectives of the rule. Rule 46A(1) and
(2) provide that:
‘(1) This rule applies whenever an execution creditor seeks to execute against the residential
immovable property of a judgment debtor.
(2)(a) A court considering an application under this rule must –
(i) establish whether the immovable property which the execution creditor intends to execute
against is the primary residence of the judgment debtor; and
(ii) consider alternative means by the judgment debtor of satisfying the judgment debt, other
than execution against the judgment debtor’s primary residence.
(b) A court shall not authorise execution against immovable property which is the primary
residence of a judgment debtor unless the court having considered all relevant factors,
considers that execution against such property is warranted.
(c) The registrar shall not issue a writ of execution against the residential immovable property of
any judgment debtor unless a court has ordered execution against such property.’ (My
emphasis).
[11] In Jaftha v Schoeman and Others, Van Rooyen v Stoltz and Others (Jaftha),3 the
Constitutional Court had occasion to consider the constitutionality of section 66 of the
Magistrates’ Court Act 32 of 1944 (the Magistrates’ Act). The impugned section 66
provided as follows:
‘Whenever a court gives judgment for the payment of money or makes an order for the payment
of money in instalments, such judgment, in case of failure to pay such money forthwith, or such
order in case of failure to pay any instalment at the time and in the manner ordered by the court,
shall be enforceable by execution against the movable property and, if there is not found sufficient
movable property to satisfy the judgment or order, or the court, on good cause shown, so orders,
then against the immovable property of the party against whom such judgment has been given or
such order has been made.’
3 Jaftha v Schoeman and Others, Van Rooyen v Stoltz and Others [2004] ZACC 25; 2005 (2) SA 140 (CC);
2005 (1) BCLR 78 (CC).
The Constitutional Court held that section 66(1)4 was unconstitutional as it violated the
right to access to housing as provided for in s 26(1)5 of the Constitution to the extent that
it allowed for the execution of the homes of indigent debtors resulting in them losing their
security of tenure even where there were no countervailing considerations in favour of the
creditor justifying the sales in execution. The Constitutional Court ordered that the
appropriate remedy to save the section would be an order requiring judicial oversight over
the execution process of all immovable property.6 The construction and the order in Jaftha
recognised that the sale in execution of a person’s home limits the right to housing, and
such limitation must be justifiable in terms of s 36 of the Constitution. Thus, judicial
oversight was an essential element of the application for the sale in execution of a
residential home.
[12] In Gundwana v Steko Development and Others (Gundwana),7 the Constitutional
Court clarified that the Jaftha decision applies not only in exceptional cases but also in
typical mortgage foreclosure cases brought before the high court.
[13] This Court, in Mkhize v Umvoti Municipality and Others,8 endorsed the observation
of the court a quo,9 per Wallis J, who, relying on this Court in Standard Bank of South
Africa Ltd v Saunderson and Others,10 held that s 26(1) of the Constitution is not
compromised in every case where execution is levied against immovable property. Wallis
J observed that:
4 Section 66(1)(a) of the Magistrates’ Court Act 32 of 1944 allowed the sale and execution of a property
without judicial oversight in certain cases.
5 Section 26(1) of the Constitution provides that everyone ‘has the right to the have access to adequate
housing’.
6 Jaftha fn 3 ibid paras 54 & 55.
7 Gundwana v Steko Development CC and Others [2011] ZACC 14; 2011 (3) SA 608 (CC); 2011 (8) BCLR
792 (CC) paras 41-49.
8 Mkhize v Umvoti Municipality and Others [2011] ZASCA 184; 2012 (1) SA 1 (SCA); [2011] 4 All SA 460
(SCA); 2012 (6) BCLR 635 (SCA) para 10.
9 Reported sub nom Mkhize v Umvoti Municipality and Others [2010] ZAKZPHC 20; 2010 509 (KZP); [2011]
1 All SA 144 (KZP).
10 Standard Bank of South Africa Ltd v Saunderson and Others [2005] ZASCA 131; [2006] 2 All SA 382
(SCA); 2006 (9) BCLR 1022 (SCA).
‘. . . The present is a case where it is not compromised or even engaged. It would be wrong to
construe the declaration made and reading-in decreed by the Constitutional Court as applying to
sales in execution in the magistrates’ court that it did not consider or hold to suffer from a
constitutional defect. That would amount to saying that the Court has amended s 66(1)(a) in the
absence of a constitutional foundation for doing so. Such a result would infringe the doctrine of
the separation of powers that is fundamental to our constitutional order.’11
[14] In Standard Bank of South Africa v Hendricks and Another and Related Cases,12
the court emphasised that creating a greater degree of national uniformity between
divisions of the high court would be advantageous to litigants as well as to the courts. In
Camps Bay Ratepayers and Residents Association v Harrison, the Constitutional Court
quoted with approval Hahlo and Kahn, who explained the principles underlying the
doctrine of precedent as follows:
‘certainty, predictability, reliability, equality, uniformity, convenience: these are the principal
advantages to be gained by a legal system from the principle of stare decisis.’13
The Constitutional Court in Camps Bay went on to say that the doctrine of precedent is
‘. . . a manifestation of the rule of law itself, which in turn is a founding value of our
Constitution. To deviate from this rule is to invite legal chaos’.14
[15] Section 39(2) of the Constitution mandates a value-orientated approach to the
interpretation of the law, in which the values that ‘suffuse the whole process are derived
from the concept of an open and democratic society based on freedom and equality. . .’.15
We must guard against manufacturing our interpretation of the law to erode constitutional
authority.
11 Mkhize fn 9 above para 40.
12 Standard Bank of South Africa v Hendricks and Another and Related Cases [2018] ZAWCHC 175; [2019]
1 All SA 839 (WCC); 2019 (2) SA 620 (WCC) para 68.
13 Camps Bay Ratepayers and Residents Association and Another v Harrison and Another [2010] ZACC
19; 2011 (2) BCLR 121 (CC); 2011 (4) SA 42 (CC) para 28.
14 Ibid para 28.
15 Coetzee v Government of the Republic of South Africa, Matiso and Others v Commanding Officer, Port
Elizabeth Prison and Others [1995] ZACC 7; 1995 (10) BCLR 1382 (CC); 1995 (4) SA 631 (CC) para 46.
Analysis
[16] The appellants contended that the high court erred and misinterpreted rule 46A in
finding that the rule is only triggered when a property is the debtor’s primary residence. It
is further argued that the interpretation adopted by the high court is contrary to the value-
orientated approach sanctioned by the Constitutional Court, which demands that the
interpretation must be generous and purposive and give expression to the values of the
Constitution whilst paying due regard to the language used.16 It was further argued that
the high court’s interpretation of rule 46A is inconsistent with s 39(2) of the Constitution
and that the restrictive interpretation fails to adequately protect the rights under s 26,
particularly the rights of persons occupying property owned by a trust, as well as
vulnerable farmworkers.
[17] As aforementioned, Gundwana determined that the combined effect of Jaftha and
Lesapo v North West Agricultural Bank and Another17 was that (a) execution may only
follow upon a judgment by a court of law; and (b) where execution against the homes of
indigent debtors who run the risk of losing their security of tenure is sought, judicial
oversight of the execution process by a court of law is essential. Simply put, rule 46A was
meant to protect indigent debtors who were in danger of losing their homes and give effect
to s 26 of the Constitution.18
[18] The facts in casu indicate a diametrically opposite situation. The circumstances do
not involve a mortgage loan taken out to acquire a primary residence but involve a
commercial loan to be employed in the business of the trust, which conducts business as
a wine farm. The question is whether the execution of the immovable property could
impair the appellants’ existing and potential access to adequate accommodation.
16 S v Makwanyane and Another [1995] ZACC 1995 3; (6) BCLR 665; 1995 (3) SA 391 (CC); [1996] 2
CHRLD 164; 1995 (2) SACR 1 para 9.
17 Lesapo v North West Agricultural Bank and Another [1999] ZACC 16; 2000 (1) SA 409; 1999 (12) BCLR
1420.
18 Investec Banks Limited v Fraser NO and Another [2020] ZAGPJHC 107; 2020 (6) SA 211 (GJ) para 39.
[19] As aforementioned, Jaftha and Gundwana were only concerned with cases where
the right to adequate housing was impaired or potentially impaired. Section 26(1) of the
Constitution is not compromised in every case where execution is levied against
immovable property.19 In Jaftha, the two applicants were unemployed women who
occupied homes purchased with the assistance of a State housing subsidy. It was clear
that if they were evicted because of the sale in execution, they would have been left with
no adequate accommodation.
Judicial Oversight
[20] The aim of rule 46A is to assist the Court in considering whether the s 26 rights of
the judgment debtor would be violated if his/her house is sold in execution. Rule 46A
contains procedural prescripts, not substantive law.20 The requirement of judicial
oversight in s 26 of the Constitution must be viewed in light of South Africa’s history of
forced removals and racist evictions during apartheid and the need to protect security of
tenure of all South Africans. The following passage in Jaftha is apposite:
‘Section 26 must be seen as making that decisive break from the past. It emphasises the
importance of adequate housing and in particular security of tenure in our new constitutional
democracy. The indignity suffered as a result of evictions from homes, forced removals and the
relocation to land often wholly inadequate for housing needs has to be replaced with a system in
which the state must strive to provide access to adequate housing for all and, where that exists,
refrain from permitting people to be removed unless it can be justified.’21
[21] As correctly stated in Jaftha, ‘judicial oversight . . . is constitutionally required so
that the judicial officer can “engage in a balancing process” and “consider all the relevant
circumstances of a case” to determine whether there is good cause to order execution
against the immovable property concerned’.22 In my view, the observations made by the
majority judgment in Mkhize v Umvoti are equally apposite in the circumstances of this
19 Mkhize fn 8 above para 10 (SCA judgment).
20 Karpakis v Mutual and Federal Insurance Co Ltd 1991 (3) SA 489 (O) at 492F.
21 Jaftha fn 3 para 29.
22 Mkhize v Mvoti fn 8 para 18. See Jaftha fn 3 paras 42-43 and 55.
case, even though they were expressed in a slightly different context before rule 46A was
added to the rules. The majority judgment said:
‘[20] . . . the order made in Jaftha, as the context of the judgment shows, is aimed at preventing
the infringement of the right to adequate housing. This is the sole purpose of requiring judicial
oversight in all cases of execution against immovable property.
. . .
[24] We detect no ambiguity in the order in Jaftha. In that case and later in Gundwana the
Constitutional Court made it clear that in all cases of execution against immovable property
judicial oversight is required. …. In Gundwana Froneman J said the following: “Some preceding
enquiry is necessary to determine whether the facts of a particular matter are of the Jaftha-kind”.
. . .
[26] The object of judicial oversight is to determine whether rights in terms of s 26(1) of the
Constitution are implicated. In the main a number of cases grappling with Jaftha sought to arrive
at that determination without accepting that judicial oversight was required in every case. How, it
must be asked, can a determination be made as to whether s 26(1) rights are implicated, without
the requisite judicial oversight? We are unable to understand the difficulty of applying the principle
that it is necessary in every case to subject the intended execution to judicial scrutiny to see
whether s 26(1) rights are implicated. . . .’ 23
With these remarks I would like to express unqualified agreement.
[22] Rule 46A requires judicial oversight and consideration by a court of various factors
when a creditor seeks to execute against ‘the residential immovable property of a
judgment debtor’. There is considerable force in Du Plessis and Penhold’s argument in
their discussion of Jaftha and Saunderson that the only way to determine whether the
right to adequate housing has been compromised is to require judicial oversight in all
cases of execution against the immovable property on a case-by-case basis.24 The sole
purpose of judicial oversight in all cases of execution against immovable property is to
23 Mkhize fn 8 paras 20, 24 and 26.
24 ‘Bill of Rights Jurisprudence’ 2005 Annual Survey of South African Law 27 at 77 to 81 and 87.
ensure that the orders being granted did not violate s 26(1) of the Constitution and that
the judgment debtor is likely to be left homeless as a result of the execution.
[23] The court’s function is to remain consistent with the legislative scheme and protect
the entrenched rights. Accordingly, Rogerson posits that:
‘Courts should certainly go as far as required to protect rights, but no further. Interference with
legitimate legislative purposes should be minimized and laws serving such purposes should be
allowed to remain operative to the extent that rights are not violated. Legislation which serves
desirable social purposes may give rise to entitlements which themselves deserves some
protection.’25
[24] The high court correctly found that the appellants’ rights to adequate housing were
not engaged or compromised. The application to declare the property executable was
brought after numerous attempts by the respondent to obtain payment from the
appellants, who did not dispute the debt and even consented to the judgment. However,
the appellants failed to show how their constitutional rights to adequate housing might be
impacted.
[25] The text of rule 46A(1) reveals that the rule applies whenever an execution creditor
seeks to execute against residential immovable property of a judgment debtor. Notably,
rule 46A(2) provides that a court considering an application in which a creditor seeks to
execute against the judgment debtor’s immovable property must consider various
matters.26 Given that rule 46A(2) provides that a court ‘shall not’ authorise execution
unless ‘all relevant factors’ have been considered, I can see no reason why the fact that
the relevant immovable property is owned by a trust and occupied as a place of residence
by the beneficiaries of that Trust should not be one of the factors to be taken into account.
25 C Rogerson ‘The Judicial Search for Appropriate Remedies under the Charter: The Examples of
overbreadth and Vagueness’ in Robert J Sharpe (ed) Charter Litigation (1987) 233 at 288 cited with
approval in the Supreme Court of Canada in R v Schachter [1992] 2 SCR 679; [1992] 10 CRR (2d) 1 at 13-
15.
26 These include whether the immovable property which the execution creditor intends to execute against
is the primary residence of the judgment debtor and whether there are other alternative means by which
the judgment can satisfy the debt other than execution against the judgment debtor’s primary residence.
It is also noteworthy that rule 46A(3) requires that ‘every notice of application to declare
residential immovable property executable shall be . . . on notice to the judgment debtor
and to any other party who may be affected by the sale in execution . . .’. (Own emphasis).
[26] It is clear from a plain reading of the entire text of rule 46A that it is important to
have a preceding enquiry in all cases where the immovable property of the judgment
debtor is used as residential immovable property. This preceding enquiry should be
directed at establishing whether the persons occupying the immovable property in
question are of the Jaftha kind.27. As I see it, a creditor seeking to execute against
immovable property owned by a trust would have to establish whether beneficiaries of
that trust occupy the immovable property in question. Where that has been established,
rule 46A would have to be followed and, consequently, rule 33 of the Practice Directive
would have to be complied with. I therefore disagree with the submission made by the
respondent’s counsel that the person to be protected by rule 46A is, in the tradition of
Jaftha and Gundwana, a natural person and not a legal persona such as a company or a
close corporation, nor an institution such as a trust, ‘. . .even if the immovable property is
the shareholder’s, member’s or beneficiary’s only residence’.28 Clearly, a blanket
approach that considers all immovable property held in the name of a juristic person to
fall outside the protection of rule 46A is too narrow.
[27] Due regard must be had to the impact that the sale in execution is likely to have
on vulnerable and poor beneficiaries who are occupying the immovable property owned
by the judgment debtor, who are at risk of losing their only homes. Given the clear
provisions of rule 46A, I can see no reason why trust beneficiaries who fall in the Jaftha-
kind category and occupy the trust’s immovable property as a primary residence (and are
thus likely to be affected by the order declaring the immovable property specially
executable) should be barred from the protection of rule 46A merely because the property
in question is owned by a trust.
27 Gundwana para 43.
28 Firstrand Bank Ltd v Folscher and Another and similar matters 2011 (4) SA 314 (GNP) para 32.
[28] In my opinion, the fact that, in addition to being a primary residence for the trust
beneficiary, the trust’s immovable property was also used commercially as a wine-farm
cannot, in and of itself, and without any preceding enquiry, be a bar to affording the
beneficiaries the protection of rule 46A. The protection of rule 46A should be objective.
Thus, the exclusive consideration of the nature of the entity in which the judgment debtor’s
immovable property is registered as the decisive determining factor for affording the
protection envisaged in s 26 of the Constitution as set out in rule 46A would defeat the
very purpose for which the protection is granted. Vulnerable and poor beneficiaries of a
trust who use the trust’s immovable property as their home ought not to be barred from
the protection of s 26 of the Constitution merely because the judgment debtor is a trust
and not a natural person.
The farmworkers
[29] As to the prejudice that the farmworkers would suffer through a sale in execution,
the appellants in their argument go no further than the bald allegation that they would be
seriously affected by the sale in execution, and do not explain the farmworkers’ tenure,
ie, whether it was dependant on a contract of employment, or lease or any other
arrangement. The same cannot be said about the trust beneficiary in casu, as he does
not fall within the definition of ‘occupier’ in the relevant statute. The applicability of rule
46A under these circumstances could not be more manifest.
[30] The appellants argue that the finding of the high court that service was not
necessary for the farmworkers and their families is contrary to Firstrand Bank Limited v
Mgedesi and Another (Mgedesi).29 The court in Mgedesi acknowledged that a new owner
would be compelled to comply with the legislation regulating the eviction of occupiers. In
that matter, the applicable legislation was the Prevention of Illegal Eviction from and
Unlawful Occupation of Land Act 19 of 1998 (the PIE Act), and the court observed that
the occupiers’ and tenants’ rights enjoyed comprehensive protection. In my opinion,
29 Firstrand Bank Limited v Mgedesi and Another [2019] ZAMPMHC 12.
Mgedesi is not authority for the appellant’s proposition. Notably, the court found that the
occupiers’ entitlement to protection in terms of s 26(1) will arise in any future eviction
application (if any) and that it would be unnecessary and an ineffective application of the
law to afford a person protection where he already enjoys such effective protection in
terms of the PIE Act. Similarly, the farmworkers in casu already enjoy the protection in
terms of the Extension of Security of Tenure Act 62 of 1997 (ESTA), in that their rights to
adequate housing are protected should any after-sale developments endanger their
tenure.
[31] I find that in the specific circumstances of this case, it is of significance that the
impugned order was granted by agreement between the parties, in circumstances where
both parties were, from the outset, legally represented. When the settlement terms were
being negotiated, the appellants were represented by an attorney, who happens to be the
first and second appellants’ daughter. The parties expressly consented to judgment being
granted against them, coupled with an order declaring the trust’s immovable property
specially executable. Moreover, the appellants have failed to disclose any factors which
may suggest that, if rule 46A was applied, the consent order would not have been granted.
To use the terminology used in Gundwana, the appellants have not established facts that
show that the matter can be categorised as being of the Jaftha-kind. This is because they
have not shown that as a result of indigence, the beneficiaries will be left vulnerable to
homelessness if the farm in question is sold in execution. On the contrary, the farm is
valued at between R35 million and R40 million, and the reserve price was fixed at a
minimum of R21 million; the ability to acquire alternative accommodation is
unquestionable. Given this finding, I deem it unnecessary to deal with the arguments
raised in relation to one of the trustee’s status as a surety.
[32] To sum up, the object of judicial oversight is to determine whether rights in terms
of s 26(1) of the Constitution are implicated, and such determination cannot be made
without the requisite judicial oversight. In the present case I find that rule 46A was
applicable despite the judgment debtor being a trust. However, judicial scrutiny based on
the facts of this case reveals that the applicability of rule 46A cannot avail the appellants
because they have failed to show that they fall under the Jaftha-kind category of the home
owner. Thus, there is nothing to show that if rule 46A was applied, default judgment and
an order declaring the immovable property specially executable would not have been
granted.30 It is for this reason that the appeal falls to be dismissed with costs.
[33] In the circumstances, the following order is made:
1 The appeal is dismissed.
2 The appellants shall pay the respondent’s costs jointly and severally, the one paying
the others to be absolved, including the costs of two counsel where so employed.
___________________
D S MOLEFE
ACTING JUDGE OF APPEAL
30 See Mkhize fn 8 para 29; Baloyi N.O. and Others v Pawn Star CC and Another [2022] ZACC 10 para 23.
Appearances:
For the appellants:
J Roux SC (with J Foster)
Instructed by:
Thomson Wilks Inc, Cape Town
Honey Attorneys, Bloemfontein
For the respondent:
C W Kruger
Instructed by:
Van der Spuy, Cape Town
Hill McHardy & Herbst Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
13 June 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Petrus Johannes Bestbier and Others v Nedbank Limited (Case No. 150/2021) [2022] ZASCA 88 (13
June 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs including the
costs of two counsel, an appeal against the decision of the Western Cape Division of the High Court,
Cape Town (the high court).
This appeal concerned the applicability of rule 46A of the Uniform Rules of Court (the rules) and Practice
Directive 33A of the high court as the property sought to be declared executable was owned by a trust
and was a primary residence of the trust beneficiaries, as well as the trust employees and their families
(the farmworkers). The appellants were the trustees of the trust, and the first appellant was also a
surety. The trust conducted business as a wine farm, wine cellar, wine merchant and restaurateur in
Stellenbosch, Western Cape. The first and second appellants resided in the main house while their son
occupied a cottage on the property. The trust’s permanent employees and their families occupied 12
smaller cottages on the property. The trust obtained substantial financial assistance from the
respondent (Nedbank) in the form of an overdraft and a loan, secured by nine mortgage bonds over the
property, totalling R9,2 million. When the appellants failed to comply with their obligations, the
respondent issued summons against them for repayment of the debt and an order declaring the trust’s
mortgaged property executable. The respondent’s claim against the appellants amounted to R8 564
443.00 plus interest. The respondent launched an application for judgment by consent, including an
order declaring the property executable, which was opposed by the appellants. The high court granted
judgment for payment and an order declaring the immovable property executable. The appellants
appealed both the judgment and the order. In addition, the appellants disputed the order declaring the
property executable, substantially on the grounds that the respondent were obligated to comply with
the procedure prescribed by rule 46A.
The appellants contended that the immovable property owned by a trust and occupied as a primary
residence by natural persons (such as the trustees, trust beneficiaries and trust employees) constituted
residential immovable property of a judgment debtor, therefore triggering the application of rule 46A.
The appellants also contended that the high court erred and misinterpreted rule 46A in finding that the
rule was only triggered when a property was the debtor’s primary residence. It was further argued that
the interpretation adopted by the high court was contrary to the value-orientated approach sanctioned
by the Constitutional Court, which demanded that the interpretation must be generous and purposive
and give expression to the values of the Constitution whilst paying due regard to the language used.
The appellants further argued that the high court’s interpretation of rule 46A was inconsistent with s
39(2) of the Constitution and that the restrictive interpretation failed to adequately protect the rights
under s 26, particularly the rights of persons occupying property owned by a trust, as well as vulnerable
farmworkers.
In order for this Court to make a finding under these circumstances, the case of Jaftha v Schoeman and
Others, Van Rooyen v Stoltz and Others (Jaftha) had to be applied. In that case, the Constitutional
Court found that it was unconstitutional for a creditor to execute an indigent debtor’s home as it violated
their section 26 right to housing. The Constitutional Court ordered that the appropriate remedy would
be an order requiring judicial oversight over the execution process of all immovable property. The
construction and the order in Jaftha recognised that the sale in execution of a person’s home limited
the right to housing, and such limitation must be justifiable in terms of s 36 of the Constitution. Thus,
judicial oversight was an essential element of the application for the sale in execution of a residential
home.
The SCA held that, the circumstances in Jaftha were not the same as the ones in this matter. The
circumstances did not involve a mortgage loan taken out to acquire a primary residence but involved a
commercial loan to be employed in the business of the trust, which conducted business as a wine farm.
The question was whether the execution of the immovable property could impair the appellants’ existing
and potential access to adequate accommodation. The Jaftha case was only concerned with cases
where the right to adequate housing was impaired or potentially impaired. Section 26(1) of the
Constitution was not compromised in every case where execution is levied against immovable property.
The SCA agreed with the high court’s finding that the appellants’ rights to adequate housing were not
engaged or compromised. The application to declare the property executable was brought after
numerous attempts by the respondent to obtain payment from the appellants, who did not dispute the
debt and even consented to the judgment. However, the appellants failed to show how their
constitutional rights to adequate housing would be impacted. The Court went on further to state that
rule 46A(2) provided that a court considering an application in which a creditor sought to execute against
the judgment debtor’s immovable property should consider various matters. Given that rule 46A(2)
provided that a court ‘shall not’ authorise execution unless ‘all relevant factors’ had been considered,
the Court saw no reason why the fact that the relevant immovable property was owned by a trust and
occupied as a place of residence by the beneficiaries of that trust should not be one of the factors to be
taken into account. It was clear from a plain reading of the entire text of rule 46A that it was important
to have a preceding enquiry in all cases where the immovable property of the judgment debtor was
used as residential immovable property. This preceding enquiry should be directed at establishing
whether the persons occupying the immovable property in question were of the Jaftha kind. In addition,
the SCA held that a creditor seeking to execute against immovable property owned by a trust would
have to establish whether beneficiaries of that trust occupy the immovable property in question. Once
that had been established, rule 46A would have to be followed and, consequently, rule 33 of the Practice
Directive would have to be complied with. The SCA disagreed with the respondent’s argument that the
person to be protected by rule 46A was, in the tradition of Jaftha, a natural person and not a legal
persona such as a company or a close corporation, nor an institution such as a trust, even if the
immovable property is the shareholder’s, member’s or beneficiary’s only residence. Clearly, a blanket
approach that considered all immovable property held in the name of a juristic person to fall outside the
protection of rule 46A was too narrow. As to the prejudice that the farmworkers would suffer through a
sale in execution, the SCA held that the appellants in their argument go no further than the bald
allegation that they would be seriously affected by the sale in execution, and did not explain the
farmworkers’ tenure, whether it was dependant on a contract of employment, or lease or any other
arrangement. And in any event, the farmworkers in casu already enjoyed the protection in terms of the
Extension of Security of Tenure Act 62 of 1997 (ESTA), in that their rights to adequate housing were
protected should any after-sale developments endanger their tenure. The SCA further held that the
impugned order was granted by agreement between the parties, in circumstances where both parties
were legally represented and they expressly consented to judgment being granted against them,
coupled with an order declaring the trust’s immovable property specially executable. Moreover, the
appellants have failed to disclose any factors which may suggest that, if rule 46A was applied, the
consent order would not have been granted. They have not shown that as a result of indigence, the
beneficiaries will be left vulnerable to homelessness if the farm in question was sold in execution. On
the contrary, the farm was valued between R35 million and R40 million, and the reserve price was fixed
at a minimum of R21 million; therefore the ability to acquire alternative accommodation was
unquestionable. Upon judicial scrutiny based on the facts of this case it was revealed that the
applicability of rule 46A cannot be applied to the appellants because they have failed to show that they
fall under the Jaftha-kind category of the home owner. Thus, there was nothing to show that if rule 46A
was applied, default judgment and an order declaring the immovable property specially executable
would not have been granted. Consequently, the appeal was dismissed with costs.
~~~~ends~~~~
|
1789
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 214/2010
In the matter between:
THE PREMIER OF THE WESTERN CAPE PROVINCE
FIRST APPELLANT
DR K DU PLESSIS
SECOND APPELLANT
v
JOHANNES HENDRIK LOOTS NO
RESPONDENT
Neutral citation:
The Premier of the Western Cape Province v Loots NO
(214/2010) [2011] ZASCA 32 (25 March 2011)
Coram:
Streicher, Brand, Maya, Shongwe and Theron JJA
Heard:
11 March 2011
Delivered:
25 March 2011
Summary:
Medical negligence – unsuccessful sterilisation operation –
unforeseen complications during birth process leaving mother
severely disabled – liability of medical doctor and his employer
– issues relating to negligence and remoteness of damage.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Western Cape High Court (Cape Town) (Traverso DJP sitting as
court of first instance):
The appeal is dismissed with costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
BRAND JA (STREICHER, MAYA, SHONGWE and THERON JJA concurring)
[1] This appeal has its origin in a delictual claim for damages arising from an
unsuccessful sterilisation operation. But the claim is not for child-raising expenses
that ensued from unwanted conception as could be anticipated from precedent in
matters of this kind.1 Instead, it resulted from the harm suffered by the mother
during the subsequent birth process that went terribly wrong.
[2] The respondent brought the claim in the Western Cape High Court as
curator ad litem for Mrs Johanna Cecilia Erasmus. He was appointed in that
capacity because the tragic events giving rise to the claim left Mrs Erasmus brain
damaged and unable to manage her own affairs. The first appellant is the Premier
of the Western Cape who takes delictual responsibility for medical practitioners
employed by the Department of Health in that province. On 21 January 1999 the
second appellant was so employed as a clinical assistant in the Department of
Obstetrics and Gynaecology at the Tygerberg Hospital. On that day he performed
the sterilisation operation on Mrs Erasmus which ultimately led to these
proceedings.
1 See eg Administrator, Natal v Edouard 1990 (3) SA 581 (A); Mukheiber v Raath 1999 (3) SA 1065
(SCA).
[3] In the High Court the matter came before Traverso DJP. By agreement
between the parties she was asked to determine the issues pertaining to the
appellants’ liability first while the quantum of damages allegedly suffered by Mrs
Erasmus, stood over for later determination. At the end of the preliminary
proceedings she decided that the appellants were liable for such damages as the
respondent may prove at the resumed hearing of the matter. The present appeal
against that judgment is with the leave of this court.
[4] The background facts are quite straightforward and largely undisputed. In
fact, the appellants presented no evidence at the trial. At the time of the
sterilisation operation on 21 January 1999, Mrs Erasmus was one month short of
her 38th birthday. She and her husband already had three children and they
decided that they could not financially afford any more. She therefore went to the
Tygerberg Hospital to be sterilised. The operation performed by the second
appellant involved a laparoscopic occlusion of both fallopian tubes. It was later
discovered, however, that the second appellant had mistakenly occluded the round
ligaments of the patient instead of her fallopian tubes. This meant, of course, that
she had not been sterilised at all.
[5] As a result of second appellant’s mistake, the patient fell pregnant soon
thereafter. When this was confirmed in April 1999, Mrs Erasmus was about eight
weeks pregnant. At that time Tygerberg Hospital presented her with the option to
terminate the pregnancy, which she and her husband refused for religious reasons.
[6] The pregnancy was uneventful until 5 November 1999. On that date,
however, the tragic train of events started which left the patient in a permanent
vegetative state, completely unable to care or think for herself. First she was
admitted to Tygerberg Hospital for high blood pressure. Then followed an
emergency Caesarean section because of foetal distress. The baby was severely
compromised and did not survive.
[7] Wisdom of hindsight revealed that either shortly before, during or after the
Caesarean section, Mrs Erasmus must have developed what is known to medical
experts as amniotic fluid embolism (AFE). It occurs when foetal antigens entered
the maternal circulation. It is an unpredictable and unpreventable event which
occurs about one in 8 000 to 30 000 deliveries. Neither the exact mechanism of the
complication nor its clinical presentation requires elaboration, because it is not in
issue that in this case the AFE caused severe haemorrhaging and cardiac arrest,
which in turn led to brain anoxia and eventually to the irreversible brain damage
that Mrs Erasmus suffered.
[8] On behalf of the respondent, three witnesses were called at the trial. They
were Mrs Erasmus’ husband and two medical experts. The one was a neurologist,
Dr Flemming, who testified about the patient’s present condition. What it amounted
to is that among other things, she suffers from dementia with poor memory and
cognitive disability; she is virtually blind; and unable to walk and talk. This evidence
as to her present condition was confirmed in lay terms by her husband. As to the
future, Dr Flemming’s prognosis is that her condition is permanent. The other
medical expert was a specialist obstetrician and gynaecologist, Dr Dalrymple, who
testified about the laparoscopic sterilisation procedure performed by the second
appellant; what he was supposed to have done; and what he actually did.
Ultimately Dr Dalrymple expressed the opinion that the second appellant’s failure
to perform a successful sterilisation must be ascribed to negligence.
[9] Though the appellants also indicated their intention to call a gynaecologist,
Dr Van Helsdingen, by filing a summary of his expert evidence, he was in fact not
called. Neither did the second appellant give evidence himself. In the event, Dr
Dalrymple’s evidence stood largely uncontroverted. It can therefore be conveyed
without elaboration. According to Dr Dalrymple’s testimony, the round ligaments
are organs lying physiologically adjacent to the fallopian tubes. They are
distinguishable from the latter by two features. First, the fallopian tube is free at
one end while the round ligament is not. Secondly, the free end of the fallopian
tube resembles the petals of a flower that are known in medical parlance as
fimbriae.
[10] Dr Dalrymple further testified that one of the potential difficulties that may
confront a surgeon during the performance of a laparoscopic tubal occlusion, is an
obstructed view. But in this case, the second appellant’s contemporaneous notes
indicated that ‘visualisation was good’ and that he was able to identify the ‘fimbrial
end of the fallopian tubes’. Accordingly, so Dr Dalrymple testified, the second
appellant had no reason to place the fallopian rings on the round ligaments. Nor
did he have any reason not to verify, after the procedure, that the occluding rings
were indeed inserted in the right place.
[11] Dr Dalrymple agreed with the diagnosis expressed by Dr Van Helsdingen in
his expert summary that Mrs Erasmus’ condition came about as a result of AFE.
He also agreed with Dr Van Helsdingen that AFE is an extremely rare condition. In
fact, he explained that though he knew about the condition, it was so rare that he
did not consider it as a possible cause when he prepared his own expert report.
That is why he did not at that stage refer to AFE at all, but mistakenly ascribed the
calamity suffered by Mrs Erasmus to maternal hypertension instead. In response to
a direct question in cross-examination he conceded that a doctor in the position of
second appellant would probably not have foreseen the complications of AFE as a
consequence of a failed sterilisation. This concludes the factual narrative.
[12] Of the various defences raised by the appellants in the high court they
persisted in only two on appeal. The first is that the second appellant was not
negligent with regard to the consequences of the failed sterilisation for which the
respondent seeks to hold him liable. The court a quo rejected this defence
essentially on the basis of Dr Dalrymple’s expert opinion that the second appellant
was indeed negligent. If the question posed is confined to whether the second
appellant applied the degree of professional skill and diligence expected of
members of his profession2 the correctness of Dr Dalrymple’s opinion can, on the
facts that he described, hardly be open to doubt.
[13] But the argument relied upon by the appellants in support of this defence
was somewhat more nuanced. For its legal basis the argument rested on the so-
called concrete or relative approach to negligence. According to this approach it
cannot be said that someone acted negligently because harm to others in general
was reasonably foreseeable.3 A person’s conduct can only be described as
negligent with reference to specific consequences. Yet, the relative approach does
not require that the precise nature and extent of the actual harm which occurred
was reasonably foreseeable. Nor does it require reasonable foreseeability of the
exact manner in which the harm actually occurred. What it requires is that the
general nature of the harm that occurred and the general manner in which it
occurred was reasonably foreseeable. At some earlier stage there was a debate as
to whether our courts should follow the relative approach as apposed to the so-
called abstract or absolute approach to negligence. But it now appears to be widely
accepted by academic writers, on good authority, that our courts have adopted the
relative approach to negligence as a broad guideline, without applying that
approach in all its ramifications.4
[14] For the factual basis of their argument the appellants relied on the
proposition that the harm which the patient actually suffered was not of a general
kind reasonably foreseeable. That proposition, in turn, rested mainly on the
concessions by Dr Dalrymple as to the unforeseeability of AFE. The general harm
2 See eg Van Wyk v Lewis 1924 AD 438 at 444; Blyth v Van den Heever 1980 (1) SA 191 (A) at
221A.
3 Which would be sufficient on the so-called abstract or absolute approach. See eg Groenewald v
Groenewald 1998 (2) SA 1106 (SCA) at 1112H-J.
4 See eg Sea Harvest Corporation (Pty) Ltd v Duncan Dock Cold Storage (Pty) Ltd 2000 (1) SA 827
(SCA) paras 21-22; Mkhatswa v Minister of Defence 2000 (1) SA 1104 (SCA) paras 19-22;
Neethling, Potgieter & Visser Law of Delict 5 ed (2006) 126-129; 8(1) Lawsa 2 ed sv ‘Delict’ (J R
Midgley and J C van der Walt) para 117; Jonathan Burchell Principles of Delict 92 et seq; Neethling
& Potgieter ‘Die toets vir deliktuele nalatigheid onder die soeklig’ 2001 THRHR 476 at 483-484; J
Scott ‘The Definition of Delictual Negligence Revisited: Three Recent Judgments of the Supreme
Court of Appeal’ 2000 De Jure 362.
consequent upon a failed sterilisation, so the argument went, was pregnancy and
the general risks associated with that condition. But the harm that actually occurred
resulted from AFE which was not reasonably foreseeable. Consequently, so the
argument concluded, neither the harm suffered by the patient nor the manner in
which it occurred, are included in the category of what can be regarded as
generally foreseeable consequences.
[15] I do not agree with this argument. As the appellants readily conceded,
pregnancy was a generally foreseeable consequence of a failed sterilisation.
According to Dr Dalrymple’s testimony – which remained unchallenged –
pregnancy is a dangerous condition associated with a myriad of potential
complications. One of these complications was AFE. Although the particular
complication is rare, it must be included under the general rubric of complications
which was reasonably foreseeable. It follows that, in my view, the second appellant
was negligent with regard to the harm that Mrs Erasmus had suffered.
[16] The second defence advanced by the appellants was founded on the
contention that the causal link between the second appellant’s negligence and the
harm suffered by Mrs Erasmus was too tenuous to justify the imposition of delictual
liability on them for that harm. In this regard it has by now become well settled that
in the law of delict, causation involves two distinct enquiries. First there is the so-
called factual causation which is generally conducted by applying the ‘but for’ test
as described by Corbett CJ in International Shipping Co (Pty) Ltd v Bentley.5 As to
the harm suffered by Mrs Erasmus, it is common cause that it resulted from her
pregnancy. ‘But for’ the failed sterilisation, the inherent likelihood is that she would
not have fallen pregnant. It follows that ‘but for’ the second appellant’s negligence,
Mrs Erasmus would not have suffered the harm. Factual causation is therefore not
the real issue.
5 1990 (1) SA 680 (A) at 700E-G.
[17] The real issue turns on the second enquiry under the rubric of causation,
namely, whether the second appellant’s negligent conduct is linked sufficiently
closely or directly to the harm suffered by Mrs Erasmus for legal liability to ensue.
This matter is referred to by some as remoteness of damage and by others as
legal causation. Regarding this issue it has been held by this court that the criterion
in our law for determining remoteness is a flexible test, also referred to as a supple
test.6 In accordance with the flexible test, issues of remoteness are ultimately
determined by broad policy considerations as to whether right-minded people,
including judges, would regard the imposition of liability on the defendant for the
consequences concerned as reasonable and fair.
[18] But, as also appears from the authorities to which the flexible approach
owes its origin and development, its adoption did not result in a total discard of the
variety of tests, such as foreseeability, adequate causation or direct consequences
that were applied in the past. These tests still operate as subsidiary tests or
pointers to what is indicated by legal policy. Stated somewhat differently, according
to the flexible test, the existing criteria of foreseeability, directness and so forth
should still be applied, but in a flexible manner so as to avoid a result which most
right-minded people will regard as unjust and unfair.7
[19] In line with this general approach, the appellants first relied on the direct
consequences theory. As developed in English law, a key element of this theory is
the concept of a novus actus interveniens. For this element alone can break the
causal link between cause and consequences.8 By its nature, a novus actus
interveniens or independent intervening event, can take many forms, including
6 See eg International Shipping Co (Pty) Ltd v Bentley supra at 701A-F; S v Mokgethi 1990 (1) SA
32 (A) at 40I-41D; Smit v Abrahams 1994 (4) SA 1 (A) at 15A-G; Sea Harvest Corporation (Pty) Ltd
v Duncan Dock Cold Storage (Pty) Ltd 2000 (1) SA 827 (SCA) at 847D-G; 8(1) Lawsa 2 ed para
132; Neethling, Potgieter and Visser op cit 171 et seq.
7 See eg Fourway Haulage SA (Pty) Ltd v National Roads Agency Ltd 2009 (2) SA 150 (SCA) para
34.
8 See eg P Q R Boberg The Law of Delict 440-442; Neethling Potgieter and Visser op cit 189 et
seq; J C van der Walt & J R Midgley Principles of Delict 3 ed paras 134-135.
conduct on the part of the plaintiff following upon the wrongful act of the defendant.
The independent intervening cause relied upon by the appellants for its argument
was the decision by Mrs Erasmus not to accept the offer of an abortion tendered
by the Tygerberg Hospital when she was about eight weeks into her pregnancy.
[20] The appellants rightly accepted that the decision not to have an abortion
could not eliminate the second defendant’s negligence as a factual cause of the
harm. It has already been determined that, but for that negligence, the harm would
not have ensued. The fact that the refusal of an abortion became another factual
cause of the same consequence does not detract from this reality. Yet it is
recognised in principle that even where the plaintiff’s conduct does not break the
factual chain, it can still interrupt legal causation. But in order to qualify as a novus
actus interveniens in the context of legal causation, the plaintiff’s conduct must be
unreasonable. Reasonable conduct on the part of the plaintiff cannot free the
defendant from the imputation of liability. Even unreasonable conduct on the part
of the plaintiff will not always absolve the defendant. Whether it will do so, depends
on the facts of the particular case.9
[21] The initial question is thus whether the decision by Mrs Erasmus and her
husband to refuse an abortion can be described as unreasonable. The appellants
contended that it was.10 I do not agree with this contention. Because of their
financial position, Mrs Erasmus and her husband tried to prevent another
pregnancy by seeking a sterilisation. As a direct result of the second appellant’s
negligence, they were confronted with an option they tried to avoid. That option
was between having another child that they could no afford or to have an abortion.
For religious reasons they found the latter choice unacceptable, so they opted for
the former. Had Mrs Erasmus been advised that for medical reasons the
9 See eg Mafesa v Parity Versekeringsmaatskappy Bpk (in likwidasie) 1968 (2) SA 603 (O) at
605D-E; S v Mokgethi 1990 (1) SA 32 (A) at 44B-47H; Road Accident Fund v Russell 2001 (2) SA
34 (SCA) paras 20-25; Groenewald v Groenewald 1998 (2) SA 1106 (SCA) at 1114.
10 The appellants sought to find support in the decision of the English Court of Appeal in Emeh v
Kensington and Chelsea and Westminster Area Health Authority [1984] 3 All ER 1044 CA. Save
that the decision also related to the refusal of an abortion – which was incidentally held to be
reasonable – I find very little in common between the two cases on their facts.
continuation of the pregnancy could be dangerous to her own health and that of
her unborn child, the position might have been different. But according to the
evidence of her husband, this was not the case. On the contrary, Mrs Erasmus
experienced no health problems with her previous three pregnancies and she had
been advised of no medical reason to think that this one would be different. In
these circumstances I find nothing unreasonable about the decision of the
Erasmus couple to continue with the pregnancy. It follows that application of the
direct consequences test seems to point to liability on the part of the appellants for
the harm that Mrs Erasmus suffered.
[22] Next, the appellants relied on the reasonable foreseeability test. Their
argument in this regard rested on the concession by Dr Dalrymple that the
complication of AFE that led to the harm was so rare that it would not have been
foreseen by the reasonable surgeon. The respondent’s answer to this argument
was that although the occurrence of AFE was not reasonably foreseeable, it
formed part of a reasonably foreseeable harm of a general kind.
[23] Under the rubric of negligence I have already agreed with the respondent’s
proposition that the occurrence of AFE forms part of the complications associated
with pregnancy that were foreseeable as harm of a general kind. I do not believe,
however, that the foreseeability criterion in the context of legal causation can be
exactly the same. Once we accept, as we must,11 that foreseeability plays a role in
determining both negligence and legal causation, logic dictates that the same
criterion cannot find application in both instances. After all, repetition of exactly the
same tests on two occasions can serve no purpose other than to confuse.
Moreover, the different roles performed by the enquiries into fault, on the one hand
and imputability of harm on the other, are so fundamentally different, that the
appropriate criteria can hardly be the same.12 Unfortunately our law as it stands
does not provide a clear picture of the content of the foreseeability criterion in the
11 See eg Sea Harvest Corporation v Duncan Docks Cold Storage supra paras 21-22.
12 Cf the reasoning by Streicher JA in Sea Harvest Corporation supra para 3.
context of legal causation.13 But as I see it, if it means anything, it must mean
foreseeability of the actual harm as opposed to harm of a general kind.14
[24] On this basis, I accept that because of the unforeseen intervention of AFE,
the actual harm suffered by Mrs Erasmus was not a reasonably foreseeable
consequence of second respondent’s negligence. On the other hand, AFE is not
unknown to the medical science. Although it is rare, it has happened before and
will probably happen again. It is therefore not the kind of ‘freakish occurrence’ that
has never happened before, as was the case, for instance, in S v Bochris
Investments (Pty) Ltd;15 Sea Harvest Corporation16 and Mkhatswa v Minister of
Defence17 where the consequences were held too remote for the imputation of
liability.
[25] A further argument raised by the appellants as to why they should not be
held liable for the harm suffered by Mrs Erasmus, is that even if the sterilisation
operation had been performed without negligence, it was not a failsafe operation.
According to the medical evidence, the risk of pregnancy remained. If Mrs
Erasmus became pregnant under these circumstances the appellants would not
have been liable for the consequences. Accordingly, so the appellants argued, it is
unreasonable and unfair to hold them liable for consequences which might have
occurred in any event. I think there are two answers to this argument. First, the fact
that Mrs Erasmus was not sterilised obviously resulted in a marked increase in the
risk of pregnancy. Second, it hardly lies in the mouth of a defendant whose
wrongful conduct caused a particular harm, to argue that the harm could in any
event have resulted from other causes. If it were otherwise, the defendant who
13 See eg Sea Harvest Corporation (Scott JA) para 22; Neethling Potgieter and Visser supra 188.
14 In this context ADJ van Rensburg, ‘Normatiewe Voorsienbaarheid as aanspreeklikheids-
begrensingsmaatstaf in the Privaatreg’ 1972 THRHR 56 suggests the criterion that, in order to be
imputed to the wrongdoer the actual harm must have been foreseeable with a ‘genoegsame graad
van waarskynlikheid’ ie a sufficient degree of probability.
15 1988 (1) SA 861 (A) at 867D.
16 Supra para 27.
17 2000 (1) SA 1104 (SCA) para 25.
negligently caused a motor vehicle accident could argue that accidents happen
every day.
[26] Despite the arguments to the contrary raised by the appellants, I therefore
conclude that in all the circumstances, considerations of reasonableness, justice
and fairness dictate that they should be held liable for the harm suffered by Mrs
Erasmus. Since that is also the conclusion arrived at by the High Court, the appeal
cannot succeed.
[27] It follows that the appeal is dismissed with costs.
..……………………..
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS:
R T WILLIAMS SC (with her C McDonald)
Instructed by: The State Attorney, Cape Town
The State Attorney, Bloemfontein
RESPONDENTS:
J S SANER
Instructed by: De Vries Shield Chiat, Cape Town
Rosendorf 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:
25 March 2011
Status:
Immediate
THE PREMIER OF THE WESTERN CAPE PROVINCE
FIRST APPELLANT
DR K DU PLESSIS
SECOND APPELLANT
v
JOHANNES HENDRIK LOOTS NO
RESPONDENT
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
1.
On 25 March 2011 the SCA dismissed the appeal of the Premier of the
Western Cape against the judgment of the Cape High Court in favour of the
respondent, Mr J H Loots.
2.
The matter has its origin in a claim for damages arising from an unsuccessful
sterilisation on Mrs Erasmus which was due to the negligence of the operating
surgeon. The failed sterilisation resulted in a pregnancy which in turn led to a
birth process that went terribly wrong and which left the patient, Mrs Erasmus,
brain damaged, mentally disabled, virtually blind and unable to walk or talk.
3.
The operation was performed by a surgeon employed by the Department of
Health in the Western Cape for which the Premier takes legal responsibility. Mr
Loots instituted the action for damages in his capacity as curator ad litem for
Mrs Erasmus. He was appointed in that capacity because Mrs Erasmus was
unable, because of her mental disability, to manage her own affairs.
4.
The main defence raised on appeal was in essence that the causal link
between the unsuccessful operation and the harm suffered by Mrs Erasmus
was too remote to justify the imposition of liability on the doctor and his
employer, the Premier.
5.
In support of this defence it was argued on behalf of the Premier that Mrs
Erasmus could have avoided the pregnancy that eventually gave rise to her
damages, by undergoing an abortion which was offered to her by the hospital
free of charge.
6.
With regard to this argument the court essentially held that since Mrs
Erasmus’ refusal of an abortion was based on her religious and moral beliefs,
the refusal could not be found to be unreasonable. In consequence, the legal
position is that the refusal cannot be regarded as an interruption of the causal
connection between the negligently performed operation and the harm that Mrs
Erasmus eventually suffered.
7.
A further argument raised on behalf of the Premier as to why she should not be
held liable for the harm suffered by Mrs Erasmus, was that even if the
sterilisation operation had been performed without negligence, it was not a
failsafe operation. According to the medical evidence the risk of pregnancy
would remain. If Mrs Erasmus became pregnant under these circumstances,
neither the surgeon nor the Premier would have been liable for the
consequences. Accordingly, so the argument went, it is unreasonable and
unfair to hold them liable for consequences which might have occurred in any
event. But the SCA held that there are two answers to this argument. First, the
fact that Mrs Erasmus was not sterilised obviously resulted in a marked
increase in the risk of pregnancy. Second, that it hardly lies in the mouth of a
defendant whose wrongful conduct caused a particular harm, to argue that the
harm would in any event have resulted from other causes. If it were otherwise,
the defendant who negligently caused a motor vehicle accident could argue
that accidents happen every day.
8.
The final argument on behalf of the Premier and the surgeon was that the
complications suffered by Mrs Erasmus during the birth process were
unforeseen and rare. Though recognising that this was so, the Supreme Court
of Appeal agreed with the High Court that demands of fairness and
reasonableness dictated that the doctor and his employer should be held liable
for the harm that Mrs Erasmus suffered.
|
1243
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case : 247/2007
UNREPORTABLE
In the appeal between:
AMANITA PREMIER OILS LTD
Appellant
(Plaintiff)
and
PRAYSA TRADE 1069 CC t/a JUMBO PEANUTS Respondent
(Defendant)
Before:
Cameron JA, Navsa JA, Cachalia JA, Hurt AJA and
Kgomo AJA
Heard:
Tuesday 13 May 2008
Judgment:
Thursday 29 May 2008
Contract of sale – delivery of groundnuts – terms of contract – court
reversing factual findings of trial court – finding in favour of supplier /
plaintiff
Neutral citation: Amanita Premier Oils v Praysa Trade (247/07)
[2008] ZASCA 59 (29 May 2008)
CAMERON JA:
Introduction
[1] In the High Court in Pretoria Botha J granted the respondent
(defendant) absolution from the instance on a claim the appellant
(plaintiff) brought for payment of an amount outstanding under a
contract for delivery of groundnuts. After concluding an
agreement with the defendant on 6 August 2004, the plaintiff
delivered a total of 926.54 metric tons of nuts at a price of R4 300
per ton. Of this, the defendant used or on-sold 886.54 tons
(mostly processing it for peanut butter). However, against
invoices for R3 984 115.08, the defendant paid only R3 078
215.79, and then stopped paying because of a dispute about
quality. After allowing for the forty-ton remnant the defendant has
not used, and deducting R25 488.72 for bags that were delivered
wet, the plaintiff in this appeal – pursued with leave granted by
Botha J – seeks an order for payment of R708 417.49.
[2] In the negotiation of the contract, the plaintiff (a Zambian-
registered corporation) was represented by a local agent, Mrs
Christie Abrahams (operating through Cypro Consulting CC), and
defendant by its member, Mr Hein Geyser. Abrahams and
Geyser agreed on nuts of Malawian or Zambian origin, and the
written sales contract they signed specified that their ‘quality’
would be ‘hand cleaned farmer’s grade groundnuts’.
[3] At the trial, the primary issues were what terms the parties agreed
and whether the quality of the nuts delivered conformed with
those terms. Abrahams testified for the plaintiff, as well as Mr
Diego Jean Maria Casilli, the director of her principal. Geyser
testified for the defendant, and called two employees of the
Perishable Products Export Control Board (PPECB),1 Mr Wegner
and Mr Bosman, to describe tests they performed on samples of
groundnuts to establish their quality and levels of aflatoxin (a
dangerous fungus-produced toxin that may cause cancer in
humans).
Judgment of the trial court
[4] Botha J found that the plaintiff’s contractual performance was
deficient in that the nuts delivered were of sub-standard quality.
While the contractual specification ‘farmer’s grade’ was to some
extent ambiguous, and did not conform to an officially recognised
1 Perishable Products Export Control Act 9 of 1983, s 2 of which provides that notwithstanding the
repeal of the Perishable Products Export Control Act 53 of 1926, the Board, established in terms
of that Act, continues to exist and to be a juristic person.
grading in South Africa, ‘hand cleaned’ denoted some additional
processing by hand. He endorsed Wegner’s view that this
indicated that the nuts would be standard grade or choice grade.
He accepted Geyser’s evidence that Abrahams had provided a
sample that he found acceptable, but that the nuts later supplied
fell short of its quality. He found that contemporaneous
correspondence undermined Abrahams’s evidence to the
contrary, while corroborating Geyser’s account that during
deliveries he had persistently complained, with justification, about
quality. In addition, he found that PPECB tests established that
the nuts had unacceptable levels of aflatoxin, and that the
plaintiff’s contractual performance therefore did not conform to the
parties’ agreement.
[5] Although the defendant had rejected only two loads out of 36
delivered, and used the bulk of the rest (barring 40 tons), the trial
court found that Geyser had not accepted the nuts as adequate,
but had pressed, as he was entitled to do, for a downward price
adjustment, which the plaintiff had refused to grant. Because of
the deficient quality, the plaintiff had failed to prove that it was
entitled to the stipulated contract price. It had also failed to prove
what it should get instead. On the pleadings and the evidence, it
was all or nothing for the plaintiff. That it got nothing, Botha J
remarked in conclusion, was not unfair: the plaintiff remained free
to tender adequate performance, or to offer the defendant an
adjustment of the contract price to take account of the
deficiencies.
The evidence before the trial court
[6] On appeal, as at the trial, the primary contest was the terms of the
parties’ agreement and the quality of the groundnuts delivered
under it. Since Casilli was out of the country for most of the
period, the plaintiff’s case on these issues rested in large measure
on the evidence of Abrahams. Conversely, since the defendant
did not call any of the staff who received or inspected the
groundnuts, nor the other authors of correspondence directed to
Abrahams and the plaintiff, the defendant’s case on these issues
rested exclusively on the account Geyser gave. Before relating
Abrahams’s and Geyser’s evidence, it may be useful first to
summarise the correspondence, since the judge attributed some
significance to it in determining the probabilities.
[7] It was common cause that the defendant took delivery of all loads
bar two. While there were specific complaints about musty,
mouldy and wet bags (for which allowance was on the whole
made in the invoicing), only two loads were reported as wholly
unacceptable, namely those rejected on 17 September and 13
October 2004. Before the second rejection, Geyser’s staff
complained in writing to Abrahams on 11 October in a fax headed
‘POOR QUALITY AND MUSTY PEANUTS’. That fax referred to
loads delivered on 17 and 20 September. It also itemised 26 wet
bags delivered on 7 September, and musty peanuts delivered on
29 September.
[8] After the second load was rejected on Thursday 14 October,
Abrahams wrote to Casilli, scolding him about quality:
‘I am not sure what is going on, but the truckloads we receive lately are of
VERY bad quality. … This qualifies as crush grade. The stuff is also mouldy
and wet – this is now the 4th truckload we receive of this bad quality. I will
send you truck details, we demand a refund or replacement. This does not
comply with the specifications … NO mouldy kernels allowed. What are you
guys sending us?’
(‘Crush grade’, as emerged at the trial, is the lowest grade of
groundnut, used only for oil extraction.)
[9] On 18 October, Abrahams emailed the transporters, copying
Casilli, recording that ‘in total we received 34 truck loads, you’ll
note load 32 … rejected. Also see the increased number of wet
bags on the last trucks.’
[10] On 26 October, the defendant again wrote complaining to
Abrahams about sixteen musty bags of peanuts delivered the
previous day. On 12 January 2005 the defendant faxed
Abrahams adding mention of a further eleven musty bags
received on 25 October, stating that ‘As we are releasing our
stock, we discover a lot of musty bags’ (making a total of 27).
[11] The defendant made three payments for the nuts delivered: it
paid for the first ten loads (delivered according to Abrahams’s
contemporaneous hand-written notes between 25 August and 13
September) on 14 October; a second payment on 10 November
(for loads delivered from 20 to 28 September); and a third on 22
December 2004 (for loads delivered on 28 and 29 September).
The payments therefore covered what the defendant received
until the end of September. No payments were made for loads
delivered thereafter.
[12] On 1 December 2004, before the defendant’s third payment,
Abrahams wrote to the defendant that Casilli, who was about to
visit South Africa, was ‘not at all happy with the rate of payments
[that] have been received’: ‘He wants a written undertaking from
[the defendant] as to when final payment can be expected’.
Abrahams added: ‘We also need to discuss the two “rejected”
loads. Please advise where you have off-loaded and stored these
two.’
[13] On 24 January 2005, in evident response to increasing
pressure from the plaintiff, relayed through Abrahams, to settle
the
outstanding
amount,
Geyser
directed
a
significant
communication to Casilli:
‘Up to now we never made any promise to anybody about payment and
settlement to you before end of January 2005.
You have not been prejudiced in this relationship as far as we know.
What we did was to make payments to Cypro Consulting who then
distributed the money.
It will be a pity if you take this matter to a legal status, as it will delay the
settlement of the account, which I presume nobody wants.
As I have told your Cypro representative I can’t make a promise of a
settlement date because of unexpected late payments by our customers. I
am prepared to make a promise for a final settlement not later than the 21st
of March 2005.
I hope you will find this in order.’
[14] On 2 February 2005, Geyser wrote to the plaintiff’s attorneys
that there was a ‘quality problem’ which was being investigated,
and that the results would be known shortly: ‘Further I wish to
draw to your attention that your client is indeed aware of the
quality problem and that it was pointed out to him by Cypro.’2 On
the same day, the plaintiff’s attorneys advised Casilli of this
communication. Casilli replied indignantly that ‘There is now no
compromise’, and ‘We have case of FRAUD by Cypro’.
[15] On 4 February 2005, Abrahams, Geyser and Geyser’s wife met
the plaintiff’s attorney at Abrahams’s home. The attorney relayed
to Casilli the defendant’s offer from this meeting:
‘On Monday 7 February 2005 R100 000 will be paid into my trust account.
On 3 February 2005 the peanuts were “smoked” and they have to be kept
under sails for ten days, which means that on 14 February 2005 the peanuts
will be uncovered.
On 15 February ACE [the inspection arm of the bankers financing the
defendant’s transaction] will go to the storing facilities and grade the peanuts.
Apparently 10%-15% of the peanuts cannot be used. Mr Geyser is meeting
with the bank as we speak.
Total losses of peanuts that cannot be used will be given to us via the
grading of ACE and an independent grader and the amount outstanding will
then be reduced with the amount of peanuts that cannot be used. I received
samples of the batches of peanuts delivered, according to ACE the [toxin]
amount is too high.
I am advised that these losses (initially) of peanuts not used by Jumbo can
be recovered by you, according to the contract that you have with your
suppliers … is this correct?
Once the amount is reduced one third of the amount outstanding will be paid
to you (includes the R100 000 on trust), on 18 February 2005.
On 20 March 2005 the rest outstanding will be paid over to us.
This is what is on the table. Is this acceptable to you?’
[16] This offer the plaintiff rejected. An email he directed on 5
February 2005 jointly to Geyser and Abrahams indicated that he
2 ‘Ook dat daar ‘n kwaliteitsprobleem is wat tans ondersoek word en dat die uitslag daarvan
eersdaags bekend sal wees.
Verder wil ek onder u aandag bring dat u klient wel bewus is van die kwaliteitsprobleem en dat dit
deur Cypro aan hom uitgewys is.’
blamed them both for the unacceptable offer, and that he planned
to institute action against both of them. The next day, Sunday 6
February, Abrahams wrote a reproving letter to Casilli:
‘You knew the quality of the product was not as per the contract. It was even
pointed out to Farmer’s World [the plaintiff’s supplier]. Please do yourself a
favour and read the [joint venture] you have with Farmer’s World with
emphasis to quality aspects. They NEVER cleaned the groundnuts, it was
farmer’s grade stuff they supplied and you were made aware of it.’
[17] The next day, the plaintiff’s attorneys sent a letter of demand to
Cypro, rejecting further negotiations, and demanding payment of
the full outstanding amount by the next day. The defendant itself
responded to this letter, through a letter from its attorneys dated 8
February 2005. It claimed that the groundnuts were defective
because they did not conform to the ‘hand picked select’ quality;
instead, ‘the supply delivered to our client was “farmer’s stock”’.
The latter term was novel to the parties’ interactions. In evidence,
Geyser explained that it denoted peanuts merely shelled by the
farmer, but not cleaned, nor cleared of broken or halved kernels,
skins, shells, sticks, stones; so ‘any thing’ (‘enige ding’) could be
inside the bags. The letter proposed that the disputed stock be
sifted and sorted, and that an accounting be done thereafter.
[18] The plaintiff found this unacceptable. Summons was issued
and served just over two weeks later. The defendant pleaded that
the parties had agreed that the nuts would be hand-selected and
choice grade, that they would conform to specified sizes, and be
fit for human consumption. (The defendant initially counter-
claimed for a price reduction of 20%, plus labour costs of R894
250 incurred because of the disputed deficiencies, but abandoned
this on the first day of trial.)
[19] Against this background of written evidence, I now return to the
parties’ conflicting accounts of what occurred when the contract
was concluded and while the nuts were being delivered.
Abrahams testified that ‘farmer’s grade’ groundnuts emanated
from small-scale farmers in Malawi or the bordering areas of
Zambia who produced cash crops on farms smaller than a
hectare. The relevance of this lay in the quality of the nuts, and
the state in which they were shipped. The producers hand-
shelled the nuts, and separated foreign matter from them. Later,
the product was again hand cleaned by women workers at central
collecting depots, who removed twigs, shells, leaves, stones.
Casilli testified that these were hand-shelled nuts, sorted and
cleaned by hand to the minimum specification, ‘as low as you can
get from the field’; it was not a graded, sorted product. Farmer’s
grade, Abrahams emphasised, was to be distinguished from other
grades such as crush and choice, and grades that specified
different sizes. She was emphatic that it was not equivalent to
choice grade.
[20] She explained that she negotiated price, grade, quality and
delivery with Geyser for a first, near-identical, supply contract that
she concluded with him in Cypro’s own name. When Geyser said
he needed more nuts, she concluded a second contract with him
– the one in issue – on behalf of the plaintiff. She was adamant
that though she knew that the defendant wanted the nuts to
process into peanut butter, there was no agreement that they
would be choice grade, or ‘hand picked select’. The nuts had
been hand cleaned, but not sorted – that remained to be done
after delivery. ‘Farmer’s grade’ was all that the plaintiff undertook
to deliver, and that was what it did indeed deliver.
[21] Abrahams insisted that to Geyser’s knowledge it was
impossible to determine or control aflatoxin levels in groundnuts
imported from Africa: it was for this reason that the written
agreement made no reference to it.
[22] Geyser testified that he needed groundnuts during mid-2004,
which was a time of great shortage (‘… ’n baie groot skaarste aan
grondbone. Die oes daardie jaar was nie na wense nie’). He
expressly ordered edible grade (‘eetgraad’) nuts. This entailed
that they would be choice grade. He also specified that aflatoxin
levels had to be acceptable: Abrahams assured him this would
not be a problem. He showed her exactly what ‘choice grade’
was, and she brought him samples that were excellent, top-grade.
He was prepared to pay R4 300 per ton because no cent would
be required for further cleaning.
[23] Yet, Geyser recounted, he realised at the time of the very first
deliveries (‘van meet af’, that is from 25 August 2004) that the
nuts delivered were quite different from those previously supplied
under the contract with Cypro: they were much smaller, with many
shrunken kernels and a tremendous level of impurities such as
sticks, stones, insects and other objects. He telephoned
Abrahams to object. On various occasions he told her that he
was extremely unhappy with the quality – the nuts were at face
value (‘op sigwaarde’) not what had been agreed. He told her that
the product delivered must be removed (‘die goed moet weg’); he
declined her request to store them for her, but she responded that
she had no place to do so, and the delivery trucks were now being
used elsewhere.
[24] Geyser recounted that Abrahams visited his plant to inspect
samples of the unsatisfactory nuts (he mentioned 11 September
as the date of the first such visit, which, as the cross-examiner
pointed out to him, was early, after the first nine deliveries; though
the samples are first mentioned in defendant’s fax of 11 October).
Abrahams repeatedly assured him that she would sort out the
quality issue and that he could trust her. He should first process
the previous contract’s nuts; they would then negotiate when he
needed to process the unsatisfactory nuts and put the matter right
(‘en dit regstel’). However, he made no payments after the
December payment because of the quality objections.
[25] He refused to accept the two expressly rejected loads because
their standard was of an ‘extremely clear, obvious, terribly bad
quality’ (‘uiters duidelik, ooglopende, verskriklike swak kwaliteit’).
Their rejection was designed to make a ‘statement’ because
Abrahams had disregarded his previous complaints.
[26] Geyser testified that apart from the 40 tons still extant, he
processed about half of the nuts delivered, mixing them with
‘clean’ nuts sourced elsewhere to bring down aflatoxin levels.
The remainder (420 tons) he sold to a farmer for R200 000 (barely
one-tenth of the purchase price). His financing bankers, to whom
Abrahams (acting for Casilli) had introduced him, had advanced
the (discounted) financing for all 36 loads received, bar the two
expressly rejected.
Assessment of the evidence
[27] The onus rested on the plaintiff to establish the terms of the
contract it sought to enforce – that is, the written contract Geyser
and Abrahams signed. The first question is thus whether, as the
defendant sought to establish, the parties’ agreement in fact
provided that the nuts would be hand-selected and choice grade.
Geyser testified that his express stipulation with Abrahams was
for first-grade, top-grade, choice nuts of ‘hand-picked select’
quality. The major obstacle to this version lies in the express
written terms: ‘hand cleaned farmer’s grade groundnuts’. Geyser
stated in cross-examination that he was a careful businessman:
‘Normally we would have set out every jot and tittle, because that
is how I normally do my business’.3 On this occasion, however,
he did not: ‘The conditions from my side, these are not written
here, like many things are not written here’.4 The reason, he
testified, was that ‘I said to her, shouldn’t we rather set out
everything, and she said to me, but then you make it very
complicated and later that will cause problems … she assured me
that I did not need to worry because after all we would not have
problems’.5
[28] This highly damaging detail – which, as counsel rightly
conceded, essentially entailed that Abrahams lied to Geyser and
cheated him – was never put to Abrahams during an extensive
cross-examination. That is the first obstacle to its acceptance.
The second is that it is inherently improbable. The basis on which
Geyser claimed Abrahams persuaded him not to record his
express stipulation for ‘choice’ nuts – that it would ‘complicate’
matters – is hard to credit. Geyser was a sound and self-reliant
3 ‘Normaalweg sou ons beskryf het elke jota en tittel want dit is hoe ek normaalweg my besigheid
doen’.
4 ‘Die voorwaardes van my kant af, dit is nou nie hier geskryf soos baie dinge nie hier geskryf is
nie’.
5 ‘Die voorwaardes van my kant af, dit is nou nie hier geskryf nie, soos baie dinge nie hier geskryf
is nie, want ek het vir haar gesê moet ons nie maar alles beskryf nie toe se sy dan maak jy dit
nou baie ingewikkeld en later gaan dit probleme veroorsaak … maar sy het my verseker ek hoef
businessman. That he would defer to Abrahams on such an
important issue, for such a flimsy reason, is difficult to accept.
[29] In short, if securing choice grade nuts was as vital to Geyser as
he claimed, and he told Abrahams this, the likelihood is that the
written agreement would have reflected it. Instead, it contained
something very different. It is therefore probable that the parties
agreed only, as the contract recorded, that the nuts were to be
‘hand cleaned, farmer’s grade’ quality.
[30] What did this demand of the supplier? As Botha J rightly
observed, the description contains some ambiguity, predictably
reflected in the parties’ differing accounts at the trial. Abrahams
insisted that it meant something different from, and inferior to,
choice grade, or ‘hand-picked select’ (the category familiar to the
PPECB): they would be something less than the best.
[31] Wegner’s evidence in this regard was that ‘hand cleaned
farmer’s grade’ was not a known term within the grading
regulations the PPECB applies. The weight his evidence can
carry in relation to the parties’ own characterisation of their
contractual specification is thus limited. However, he regarded
nie bekommerd te wees nie want ons gaan mos nou nie probleme hê nie’.
the specification as ‘a little misleading’ (‘’n bietjie misleidend’)
since ‘farmer’s grade’ would refer to a product that was not
necessarily selected into classes or grades. He added however
that ‘hand cleaned’ would suggest to him (‘sou weer vir my vat
na’) a product that was not merely machine cleaned, but hand
cleaned, thus suggesting choice or standard grade (‘wat dus op
die keur of standaard graad spesifikasies ‘n aanduiding sou gee’).
[32] A factor bearing considerably on the probabilities here is
Geyser’s own account that there was a severe shortage of
groundnuts in mid-2004 because of crop shortages. This explains
why the nuts were sourced from central Africa (and not from
Geyser’s previous suppliers, all of whom seem to have been
South African), and it points to his being willing to accept a
contract embodying what Abrahams was able to supply, on the
terms she offered, and at the price Casilli quoted. It also points
away from Geyser’s insistence that the agreed price (R4 300 per
ton) necessarily denoted top-grade nuts.
[33] Also significant is Geyser’s own conversance with what he
termed ‘farmer’s stock’, a grade he explained included impurities
along with shelled nuts. The terminological resonance between
‘farmer’s grade’ and ‘farmer’s stock’ does not appear incidental. It
seems likely that Geyser must have known when terms were
agreed that ‘farmer’s grade’ entailed less than choice grade.
‘Hand cleaned’ suggests an additional process of manual
cleansing, as Abrahams described in her evidence. But it does
not mean ‘hand selected’, which necessarily connotes a measure
of sorting, since it was common cause at the trial that the nuts
were not expected to be sorted.
[34] The crucial question is to what extent the nuts delivered
conformed with what the plaintiff undertook to supply. Two things
are beyond contest. First, at least two loads did not conform:
those Geyser rejected on 17 September and 13 October.
Second, Geyser’s staff expressly complained in writing, on more
than one occasion, about wet bags and mouldy peanuts: but each
time they did so they specified precisely the details of the loads
and numbers of affected bags.
[35] The written details bear on whose testimony is more probable.
Geyser testified that from the outset he complained repeatedly
about the quality of the nuts that were delivered. A difficulty is
that this account did not square with what defendant’s counsel put
to Abrahams. She was told in cross-examination that Geyser
would testify that he had complained continually from about the
end of September (‘van ongeveer einde September af
deurlopend’). This suggests not only that the complaints started
later, but that they were more isolated, than Geyser’s evidence
sought to portray, and thus that he coloured his account with
some measure of overstatement.
[36] Abrahams confirmed that she visited Geyser’s plant north of
Pretoria to inspect samples of deficient nuts, though she was not
present when they were drawn. She linked her recollection of this
visit to receipt of the defendant’s letter of 11 October, where the
samples are first mentioned, and which complained about ‘poor
quality and musty peanuts’. Abrahams testified that she accepted
that the complaints and samples were related to the specific loads
itemised in that letter, namely the expressly rejected load of 17
September, and the load delivered three days later on 20
November. As she bluntly stated, ‘There was no reason not to
accept this.’6 As against this, it is difficult to accept Geyser’s
6 ‘Daar was geen rede om dit nie te aanvaar nie.’
evidence, lacking entirely in documentary back-up, that his
complaints were insistent from the first delivery.
[37] A further difficulty with Geyser’s evidence is that, while he
insisted that there were pronounced differences between the
loads previously supplied under Cypro’s direct contract, and those
supplied on behalf of the plaintiff, he had difficulty in articulating
what his problem was:
‘I can only tell you that samples were in fact drawn [from every load] and that
I saw … here is a problem with the quality and I could not say how big the
problem was and I could not tell you what the problem was. I showed them
to Mrs Abrahams, each sample. My people were there, we looked at them,
we talked about it and then she promised to get something done and that it
all I can say to you, but I do not know what is in the loads before I have put
them through the [processing] machines.’7
[38] Geyser’s inability to specify the problems with the loads other
than those he rejected outright (and the specific complaints about
wet and mouldy bags) suggests that quality problems, as
Abrahams indeed inferred, related only to those.
[39] The evidence thus established that at least two of the loads and
some bags in addition did not conform with the parties’ contractual
7 ‘Ja, ek kan net vir u se dat daar wel monsters getrek was [van al die vragte] en dat ek gesien
het dat die kwaliteit, hier is fout met die kwaliteit en ek kon nie se hoe groot die fout is nie en ek
kon nie vir u se wat die probleem is nie. Ek het dit vir Mev Abrahams gewys, die monsters apart.
My mense was by, ons het daarna gekyk, ons het daaroor gepraat en toe het sy belowe om werk
te maak daarvan en dit is al wat ek vir u kan se maar ek weet nie wat is in die vragte voor ek dit
nie deur die masjiene gegooi het nie.’
specification; but Geyser’s evidence that virtually all the nuts, from
the outset, so deviated, cannot in my view be accepted.
[40] Botha J rightly considered that two of Abrahams’s written
communications to Casilli – both of which she supplied to the
defendant when she thought the plaintiff planned to sue her – lent
support to Geyser’s complaint about the general standard of the
nuts. These were her scolding message of 14 October 2004, in
which she claimed that Casilli had sent ‘crush grade’ nuts; and her
message of 6 February 2005 in which she stated ‘They NEVER
cleaned the groundnuts, it was farmer’s grade stuff they supplied
and you were made aware of it’.
[41] Of the first, Abrahams said that she was referring to the
rejected loads (given substance by the reference to ‘the
truckloads we receive lately’), and was in any event intended to
exhort the plaintiff’s suppliers do their best amidst possible quality
variances. She pointed out moreover that she could speak with
authority only about the samples she herself had inspected (which
she believed came from the rejected loads) – she had not been
present when all the deliveries were off-loaded, and could
therefore not pronounce on them.
[42] Regarding the January message. Abrahams reiterated that it
referred only to the rejected consignments, and that she had no
personal experience of the loads delivered, adding that she
wished to get Casilli off her back (given substance by the fact that
the previous day Casilli threatened her with legal action).
[43] The insufficiencies in these explanations must be weighed
against the documents that undermine Geyser’s own account.
That evidence is in my view even weightier. First, it is notable that
on 8 October, in finalising the financing deal with the bank, the
defendant described the nuts that were then being delivered as
‘choice’ (the warehouse documentation records: ‘”Said to be”
Ground Nuts (choice grade)’). Though he blamed Abrahams for
this description, the fact is that at a time when he later claimed
there were wholesale quality deficiencies he was happy to nail
down a substantial (R4.3 million) credit deal on the basis that the
overall quality being delivered was good.
[44] Particularly destructive of Geyser’s account of long-standing
and severe quality problems is his willingness on 24 January to
offer the plaintiff ‘final settlement’ of the amounts owed by 21
March (with no word of complaint about quality). Eleven days
later, on 4 February, the stakes having been raised, Geyser put
less on the table: but he was still offering an immediate R100 000
plus the rest after a price adjustment based on quality testing; this
letter recorded that ’10-15% of the peanuts cannot be used’ – with
no suggestion that from the outset the shipment had been
deficient in its totality. In the midst of this, it must be remembered,
the defendant on 2 February alluded only to a ‘quality problem
that is currently being investigated’ (‘’n kwaliteitsprobleem … wat
tans ondersoek word’). It was only on 8 February, after open
hostilities had commenced, that the defendant recorded for the
first time that the nuts were defective because they did not
conform to the ‘hand picked select’ grade. This was also at a time
when Geyser’s own correspondence indicated that he was
experiencing cash flow problems.
[45] Geyser’s explanation of his 24 January message – that he was
merely coming to the aid of Abrahams because she begged him
(‘my kom soebat’) to make a (necessarily false) promise in order
to get Casilli off her back – reeks of improvisation. His
explanation of the R100 000 offer – that he was amenable to
settlement – is plainly true; and perhaps the matter might have
reached a juster resolution had the plaintiff also been amenable;
but the fact that he was willing to make this offer at all is a further
indication against his account of general and pronounced
deficiencies.
[46] It is in my view not possible to accept Geyser’s account that he
was on the verge of rejecting all the loads all along, and wanted to
do so, but was diverted from this intention by the repeated
blandishments of Abrahams. The likelihood is that as a strong-
minded businessman he would, on the contrary, have rejected
product unacceptable to his needs, and that he in fact did so
when the product fell short – though only on the occasions
recorded in the written exchanges with Abrahams. His inability to
explain under cross-examination why, in the light of his detailed
descriptions of poor quality, he had not rejected subsequent
loads, bears this out.
[47] Geyser testified that for practical reasons relating to his store-
room layout he used the Cypro-supplied nuts first, and started
using those supplied on behalf of the plaintiff after they had been
depleted: it was only then that he realised the extent of the
problem. This, as already indicated, is difficult to square with his
evidence that he was aware of the problem, and complained
insistently, from the outset. It is also difficult to square with the
fact that some loads and bags were at an earlier stage expressly
rejected. This, again, points away from the conclusion that there
was a general and acute quality deficiency.
[48] These considerations lead to the conclusion that it is not
possible to accept Botha J’s findings on the probabilities. These
were based on the trial judge’s view of the inherent probabilities in
the contesting versions, with strong reliance on the written
evidence. In my respectful view, this court is in as good a position
as the trial judge to assess these.
[49] It follows in my view that the trial court should have found that:
(i)
the plaintiff established that the sole terms relating to the
product to be delivered were those contained in the parties’
written agreement of 6 August 2004;
(ii)
those terms entailed that the plaintiff would deliver farmer’s
grade nuts that were hand cleaned, but which were less than
choice grade or hand picked select;
(iii)
there was no specification regarding aflatoxin levels;
(iv)
barring the rejected loads and the expressly specified wet
and mouldy bags, the plaintiff in fact delivered according to
specification.
[50] These findings make it unnecessary to consider the parties’
submissions on the difficult questions that may have arisen
regarding the exceptio non adimpleti contractus and the attendant
possibility of price-reduction.
[51] There is an order in the following terms:
1. The appeal succeeds with costs.
2. The order of absolution from the instance is set aside and in its
place there is substituted:
‘(a) The claim succeeds with costs.
(b) There is judgment for the plaintiff in the amount of R708 417.49
plus interest at the rate of 15.5% on this amount from the date of
judgment to date of payment.’
E CAMERON
JUDGE OF APPEAL
CONCUR:
NAVSA JA
CACHALIA JA
HURT AJA
KGOMO AJA
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: Thursday 29 May 2008
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
Amanita Premier Oils v Praysa Trade (247/07) [2008] ZASCA 59 (29 May 2008)
In a judgment delivered today, the Supreme Court of Appeal has reversed the factual
findings of the Pretoria High Court in a case in which a Zambian-registered
corporation, the appellant (plaintiff), sued the defendant for the rest of the purchase
price for more than 900 metric tons of groundnuts delivered under an agreement of
sale concluded in August 2004.
After analysing the parties’ transactions and the oral and documentary evidence, the
SCA concluded that the High Court should have found that:
(i)
the plaintiff established that the sole terms relating to the product to be
delivered were those the parties recorded in their written agreement of 6 August
2004;
(ii)
those terms entailed that the plaintiff would deliver ‘farmer’s grade’ nuts that
were hand cleaned, but which were of lower quality than choice grade or ‘hand
picked select’;
(iii)
there was no specification regarding aflatoxin levels;
(iv)
barring the loads the defendant rejected, and excepting the wet and mouldy
bags the defendant expressly specified, the plaintiff in fact delivered according to
specification.
The SCA accordingly upheld the appeal with costs, and set aside the order of the
High Court. In its place, the defendant was ordered to pay the plaintiff R708 417.49
plus interest.
|
2256
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 296/08
In the matter between:
M L JOUBERT FIRST APPELLANT
M L JOUBERT N.O. SECOND APPELLANT
(In her capacity as trustee of Sanwild Wildlife Trust)
A H GROBLER N.O. THIRD APPELLANT
(In his capacity as trustee of Sanwild Wildlife Trust)
R SAVORY N.O. FOURTH APPELLANT
(In her capacity as trustee of Sanwild Wildlife Trust)
THE MURRAY FOUNDATION CONSERVATION FIFTH APPELLANT
HOLDINGS (PTY) LTD
v
MARANDA MINING COMPANY (PTY) LTD RESPONDENT
Neutral citation:
Joubert v Maranda Mining Company (296/2008) [2009]
ZASCA 68 (29 May 2009).
Coram:
Nugent, Van Heerden, Mlambo JJA, Kroon et Leach AJJA
Heard:
11 May 2009
Delivered:
29 May 2009
Summary:
Right of access to land in terms of Mineral and Petroleum Resources
Development Act 28 of 2002 – unreasonable refusal by land owner and
occupier to allow mining permit holder access to land – held that when
permit holder has complied with all requirements in terms of the Act it has
a right to enter the land to exercise its rights.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: High Court, Pretoria (Claassen J sitting as court of first
instance).
The following order is made:
‘The appeal is dismissed with costs including the costs occasioned by the
employment of two counsel.’
________________________________________________________________
JUDGMENT
________________________________________________________________
MLAMBO JA (Nugent, Van Heerden JJA, Kroon, Leach AJJA concurring)
[1] On 11 April 2008 the North Gauteng High Court (Claassen J) granted the
respondent final relief on an urgent basis, inter alia interdicting and restraining
the appellants from refusing the respondent access to a piece of land described
in the relevant title deed as the remaining portion of portion 7 of the farm
Leydsdorp Township 779, Registration Division LT, Northern Province (now
Limpopo), size 2604,0827 hectares (the land). This appeal is against the order
and judgment of the court a quo with the leave of that court.
[2] The matter revolves around a goldmine on the land that was originally
worked in the 1890s, after which all mining activities ceased. However, mineral
sampling reports conducted subsequently indicate that the land remains mineral-
rich. The title deed records that, subject to certain conditions, the mineral rights
on the land vested in the State. In any event, when the Mineral and Petroleum
Resources Development Act 28 of 2002 (the Act) came into effect on 1 May 2004
the State became the custodian of all minerals in the whole of the Republic of
South Africa.1 The portion on which the mineral rights are found cover 0,03 per
cent or 1.5 hectares of the land. For convenience I refer to this portion of the land
as the mineral rights area.
[3] The respondent acquired the mineral rights in February 2005 from
Dynamic Mineral Development (Pty) Ltd whose predecessor in title had acquired
them in 2002 from the Department of Minerals and Energy (DME) representing
the State. At the time the respondent acquired the mineral rights, Come Lucky
(Pty) Ltd (Come Lucky) was the owner of the land. The deed of transfer in terms
of which the DME alienated the mineral rights defined these as certain 20
unnumbered base mineral claims.
[4] Come Lucky did not participate in the proceedings in the court a quo even
though it was cited as the first respondent. It also does not feature in this appeal,
having sold the land in the interim to the fifth appellant who took transfer in
February 2008. The first to fourth appellants are the trustees of Sanwild Wildlife
Trust (Sanwild). Sanwild conducts a wildlife sanctuary as well as eco-tourism
operations on the land and appears to have occupied the land since about
September 2006. It has a 26 per cent shareholding in the fifth appellant.
[5] On acquisition of the mineral rights the respondent applied to the Minister
of Minerals and Energy (the Minister) in April 2005 for a prospecting right2 and a
mining permit.3 On the acceptance of the application for a mining permit by the
regional manager of the DME, the respondent lodged an environmental
management plan in July 2005. In June 2005 the respondent notified Come
1 In terms of s 3(1) which provides: ‘Mineral and petroleum resources are the common heritage of
all the people of South Africa and the State is the custodian thereof for the benefit of all South
Africans.’
2 Section 16(1).
3 Section 27(2).
Lucky, as owner of the land, and its attorneys that it had made the applications
and invited the latter to lodge objections, if any, against the grant thereof. This
notification mentioned that the respondent intended to opencast a section of the
mineral rights area and also referred to its obligation to compensate Come
Lucky. In this regard it offered a once-off payment of R 5 000 per hectare.
[6] Come Lucky lodged an objection4 against the applications alleging inter
alia that:
‘The proposed mining operations will undoubtedly have a deleterious impact on the eco-
tourist and environmentally orientated activities of our client and the nature of its
business. Without in any way limiting the effects of the proposed mining activities, the
deleterious impact and ecologically degrading result include, but are not limited to inter
alia,
1.
the disturbance of game and game breeding operations arising from the noise
and blasting associated with the mining operation;
2.
the cancellation of safaris as a result of the noise and disturbance of drilling and
mining operations; and
3.
the general degradation and pollution of the environment arising from the open
cast mining operations.’
The Minister, however, granted the respondent the mining permit on
21 September 2006 and approved the environmental management plan on
19 December 2006. These decisions were never challenged by Come Lucky.
[7] Having been granted the mining permit and with its environmental
management plan approved, the respondent informed Come Lucky in
March 2007 of these developments. The respondent also informed Come Lucky
that it intended to exploit its mining rights in terms of the permit and consequently
raised the issue of access to the land as well as compensation. This approach
elicited no favourable response, save that Come Lucky’s attorneys requested
4 Per letter from attorneys Andrew Miller & Associates dated 29 June 2005.
copies of the applications for prospecting and mining permits and ultimately
indicated that they had instructions to oppose any application that may be
brought in the high court. The respondent thereafter notified the regional
manager of DME that it was being denied access to the land. This prompted the
regional manager to write to Come Lucky recording the respondent’s complaint
and warning the former that steps could be taken against it in terms of the Act
regarding its refusal to allow the respondent access to the land. The letter (dated
11 July 2007) also invited Come Lucky to make representations in respect of the
respondent’s complaint and invited it to show cause why the respondent should
not be allowed access to the land. This also evoked no response from Come
Lucky, whereupon the respondent notified the latter that it intended to enter the
land with immediate effect to exercise its mining rights.
[8] In October and November 2007 the respondent attempted to gain access
to the land but was prevented from doing so by a representative of the
appellants. On the latter occasion the respondent was informed that it should
contact the first appellant who, on being so contacted, informed the respondent
that under no circumstances would it be granted access to the land.
[9] A few days later the respondent removed a lock at a gate some seven
kilometres from the mineral rights area and replaced it with another lock. This
was another attempt by it to gain access to the land. On the same day a
representative of Sanwild informed the respondent that Sanwild had been in
occupation of the land since September 2006. On being appraised of Sanwild’s
occupation, the respondent’s attorneys initiated a meeting with the appellants’
attorneys to discuss the respondent’s need for access to the mining rights area,
as well as the issue of compensation. It was agreed at the conclusion of that
meeting that the appellants’ attorneys would revert to the respondent’s attorneys
with an indication of the appellants’ attitude to the respondent’s request for
access. This did not materialise and the respondent launched its application in
the court a quo seeking inter alia the following relief:
(a)
Interdicting and restraining Come Lucky and the appellants (then first to
fifth respondents) from refusing the respondent (then applicant) access to
the land; and
(b)
authorising the respondent to enter onto the land together with its
employees and to bring onto the land any plant, machinery or equipment
and build, construct or lay down any surface or underground infrastructure
which may be required for purposes of mining on the property as defined
in the mining permit.
[10] The court found:
‘Dit is duidelik dat die applikant het ‘n duidelike reg. “A clear right” soos die geykte
uitdrukking bestaan, en sy permit se geldigheid is nog nie aangeveg nie . . .’
and further:
‘In al die omstandighede is ek tevrede dat die applikant ‘n reg uitgemaak het vir die
regshulp wat hy vra.’
[11] The crisp issue therefore in this appeal is whether the court a quo was
correct in finding that the respondent had established a clear right to access. The
case made out on appeal is that the respondent has not established this. Simply
put, the argument before us was that the respondent sought access to the entire
parcel of land from a gate envisaging a seven kilometre route to the mineral
rights area. In this regard it was submitted that a clear restriction, apparent from
the respondent’s environmental management plan, was that the respondent’s
access to the mineral rights area was to be on a route of no longer than 1.5 km. It
was submitted that access to the land over a seven kilometres route would be
tantamount to the commission of an offence within the contemplation of the Act.
This, I understood, was the appellants’ main argument. I propose to deal with it
before I consider the other submissions advanced.
[12] Perhaps it is prudent briefly to consider the scheme of the Act relevant to
the issue before us. It is apparent from s 27(5)(b) that, once an application for a
mining permit is accepted by the regional manager, the latter must notify the
applicant for the permit to submit an environmental management plan and to
consult with the owner of the land or occupier or any other affected parties, and
submit the results of this consultation to him within 30 days. This envisages
consultation after the lodging of an application for and before the grant of a
mining permit. Furthermore, in terms of s 5(4)(c), once the permit is granted no
mining activities may be commenced by the permit holder unless it has notified
and consulted with the owner or occupier of the land in question. In Meepo v
Kotze & others 2008 (1) SA 104 (NC) at 114D-E, the view was expressed that
the legislature provided for due consultations between a landowner and the
holder of or applicant for a permit in order to alleviate possible serious inroads
being made on the property right of the landowner. Consultation is the means
whereby a landowner is apprised of the impact that prospecting (or, I would add,
mining) activities may have on his land. I am in respectful agreement in this
regard with this view, even though that case was concerned with access in
relation to a prospecting right.
[13] Furthermore s 27(7)(a) provides:
‘(7)
The holder of a mining permit–
(a)
may enter the land to which such permit relates together with his or her
employees, and may bring onto that land any plant, machinery or equipment and
build, construct or lay down any surface or underground infrastructure which may
be required for purposes of mining;
. . .’
Clearly in terms of this section the holder of a mining permit has a right to enter
the land in respect of which the mining rights have been granted for purposes of
exploiting its rights. The right to enter the land solidifies, in my view, once the
mining permit holder has complied with the provisions regarding notification and
consultation with the owner of the land, or occupier and/or other parties affected
by the permit.
[14] In the present case there is no dispute that the respondent had complied
with all the requirements set out in s 27(1)-(5)5 before the grant of a mining
permit and in s 5(4)6 after the grant of the permit.
[15] The appellants’ submission that the respondent has not established a
clear right to access must be viewed in the context of the case made out in the
papers by the respondent (Director of Hospital Services v Mistry 1979 (1) SA
626(A) at 635H).7 Scrutiny of the notice of motion, as well as the founding
affidavit, reveals that the respondent did not seek access to the entire land and
neither did it seek access encompassing a seven kilometre route. What it sought
5 Section 27(1)-(5): ‘(1) A mining permit may only be issued if –
(a)
the mineral in question can be mined optimally within a period of two years; and
(b)
the mining area in question does not exceed 1,5 hectares in extent.
(2)
Any person who wishes to apply to the Minister for a mining permit must lodge the
application –
(a)
at the office of the Regional Manager in whose region the land is situated;
(b)
in the prescribed manner; and
(c)
together with the prescribed non-refundable application fee.
(3)
The Regional Manager must accept an application for a mining permit if –
(a)
the requirements contemplated in subsection (2) are met;
(b)
no other person holds a prospecting right, mining right, mining permit or retention permit
for the same mineral and land.
(4)
If the application does not comply with the requirements of this section, the Regional
Manager must notify the applicant in writing of that fact within 14 days of the receipt of the
application and return the application to the applicant.
(5)
If the Regional Manager accepts the application, the Regional Manager must, within 14
days from the date of acceptance, notify the applicant in writing –
(a)
to submit an environmental management plan; and
(b)
to notify in writing and consult with the land owner and lawful occupier and any other
affected parties and submit the result of the said consultation within 30 days from the
date of the notice.’
6 Section 5(4): ‘No person may prospect for or remove, mine, conduct technical co-operation
operations, reconnaissance operations, explore for and produce any mineral or petroleum or
commence with any work incidental thereto on any area without –
(a)
an approved environmental management programme or approved environmental
management plan, as the case may be:
(b)
a reconnaissance permission, prospecting right, permission to remove, mining right,
mining permit, retention permit, technical co-operation permit, reconnaissance permit,
exploration right or production right, as the case may be; and
(c)
Notifying and consulting with the land owner or lawful occupier of the land in question.’
7 ‘When, as in this case, the proceedings are launched by way of notice of motion, it is to the
founding affidavit to which a judge will look to determine what the complaint is.’
was access in principle to the mineral rights area. This much is also clear from
correspondence exchanged between the parties and their respective attorneys.
This is what the court a quo decided and this cannot be criticized on any basis.
Strictly speaking the appeal is susceptible to be dismissed on this basis alone.
[16] However, counsel for the appellants also submitted in the alternative that
the impasse created by the appellants’ blanket refusal to allow the respondent
access to the land, meant that the regional manager had to initiate the process
aimed at the expropriation of the land as envisaged in s 54(5). The implication of
this submission is that the jurisdiction of the high court and this court to resolve
that impasse is not countenanced by the Act. That there is no merit to this
submission is borne out by the fact that it was made without much conviction,
and rightly so. No provision in the Act could be pointed out in support of this line
of reasoning. Furthermore, it would be absurd for the Act to permit an
unreasonable refusal for access based on a clear objective to frustrate the
legitimate endeavours of a permit holder.
[17] Furthermore, it is clear that expropriation is an option that may be adopted
by the regional manager to advance the objects of the Act in s 2(d), (e), (f), (g)
and (h).8 Here the appellants simply, and in an unreasonable fashion, refused to
allow the respondent access to the land and as a result it is unclear on what
conceivable basis the regional manager could be expected to initiate an
expropriation process. No basis for expropriation based on this provision was
8 ‘The objects of this Act are to –
. . .
(d)
substantially and meaningfully expand opportunities for historically disadvantaged
persons, including women, to enter the mineral and petroleum industries and to benefit
from the exploitation of the nation’s mineral and petroleum resources;
(e)
promote economic growth and mineral and petroleum resources development in the
Republic;
(f)
promote employment and advance the social and economic welfare of all South Africans;
(g)
provide for security of tenure in respect of prospecting, exploration, mining and
production operations;
(h)
give effect to s 24 of the Constitution by ensuring that the nation’s mineral and petroleum
resources are developed in an orderly and ecologically sustainable manner while
promoting justifiable social and economic development; and
. . .’
advanced by the appellants’ counsel. The submission is in my view clearly
misconceived.
[18] Finally, whilst this is strictly speaking unnecessary but because the
appellants’ counsel invited us to do so, I consider the appellants’ argument that,
properly considered, the environmental management plan and its accompanying
documentation did not envisage the construction of a new road. This submission
is reliant on certain portions of a form completed by the respondent when it
submitted the environmental management plan for approval. In this regard the
appellants’ counsel submitted that by ticking the ‘no’ option in respect of the
question: ‘would it be necessary to construct roads to access the proposed
operations’ in portion C2.14 of the form, that must mean that no new roads were
to be constructed.
[19] However, one cannot consider just that one part of the form in isolation. It
is one of a number of questions relating to access roads. In this regard the
indication in C2.15 that the access road will not be longer than 1.5 km, in C2.16
that ‘no trees would be uprooted when constructing access roads’, as well as the
indication in C2.17 that ‘foreign material like crushed stone, limestone or any
material other than the naturally occurring top soil would be placed on the road
surface’ show clearly that the ‘no’ tick in C2.14 (ostensibly indicating that no new
roads would be constructed), is simply a mistake as pointed out by the
respondent’s counsel. I cannot also fathom a situation where the permit holder
can be regarded bound by a clearly mistaken tick on the form. I am of the view
that, when all the questions and answers are considered in that portion of the
form, it is clear that the construction of a new road was envisaged when the
environmental management plan was submitted.
[20] Furthermore, there is no indication on the papers that there are any
existing roads from any public road to the mineral rights area. This can only
mean that the Minister and officials of the DME, when granting the permit, and
approving the environmental management plan, were alive to that fact.
Therefore, when the permit was granted and the environmental management
plan approved, the respondent was also granted the right to construct a new road
to the mineral rights area. In the absence of any access road to the mineral rights
area, it remains a mystery how, in the appellants’ mind, the respondent is to
exploit its mining rights. In the final analysis it remains for us to clarify that the
relief granted by the court a quo does not authorise or permit the respondent to
contravene any of the provisions of the Act or commit an offence.
[21] The appeal must therefore fail. The following order is made:
‘The appeal is dismissed with costs including the costs occasioned by the
employment of two counsel.’
_____________
D MLAMBO
JUDGE OF APPEAL
APPEARANCES:
COUNSEL FOR APPELLANTS: R J Raath SC; S A Visser
INSTRUCTED BY:
Stewart Maritz Basson; Pretoria
CORRESPONDENT:
Claude Reid Inc; Bloemfontein
COUNSEL FOR RESPONDENT: S J Grobler SC; L G F Putter
INSTRUCTED BY:
Vezi De Beer Inc; Pretoria
CORRESPONDENT:
Azar & Havenga 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 May 2009
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court
of Appeal.
M L JOUBERT & OTHERS v MARANDA MINING COMPANY (PTY) LTD
The Supreme Court of Appeal (SCA) today confirmed the decision of the South
Gauteng High Court which had ruled in favour of Maranda Mining Company
(PTY) LTD (Maranda).
The high court had granted Maranda an order, amongst others, interdicting and
restraining the appellants from refusing to allow Maranda access to a portion of a
farm in Leydsdorp, Limpopo Province in respect of which the latter had
purchased certain mineral rights. Maranda had subsequently been granted a
mining permit by the Minister of Minerals and Energy in accordance with the
Mineral and Petroleum Resources Development Act 28 of 2002. The Minister
had also approved an environmental management plan submitted by Maranda
regarding the intended mining activities on the affected portion of the farm.
The appellants are trustees of Sanwild Wildlife Trust who is the lawful occupier
and part owner of the farm and operates a wildlife sanctuary and an eco-tourism
enterprise on the farm. Sanwild The appellants had thwarted several attempts by
Maranda to gain access to the farm informing it that under no circumstances
would it be allowed access. The impasse persisted even after Maranda had
formally consulted the appellants as required by the Act.
The SCA rejected the appellant’s argument that Maranda had sought access in
contravention of its environmental management plan as well as that the only
solution of the impasse was expropriation of the farm in terms of the Act. The
SCA found that the unreasonable conduct of the appellants was not
countenanced by the Act and ruled that, having complied with all the
requirements of the Act, Maranda had acquired the right to enter the farm for
purposes of exploiting its mineral rights.
|
460
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 279/2015
In the matter between:
BSB INTERNATIONAL LINK CC
APPELLANT
and
READAM SOUTH AFRICA (PTY) LTD
FIRST RESPONDENT
CITY OF JOHANNESBURG
METROPOLITAN MUNICIPALITY
SECOND RESPONDENT
Neutral citation:
BSB International Link CC v Readam South Africa (Pty) Ltd
(279/2015) [2016] ZASCA 58 (13 April 2016)
Coram:
Ponnan, Majiedt and Swain JJA and Victor and Kathree-
Setiloane AJJA
Heard:
3 March 2016
Delivered:
13 April 2016
Summary: Review – municipality – illegal building – sections 7 and 21 National
Building Regulations and Building Standards Act 103 of 1977 (the NBSA) – adjacent
property owner – locus standi at common law – demolition order – exercise of
discretion – stark dichotomy between discretion at common law and discretion in
terms of s 21 of the NBSA.
ORDER
On appeal from: Gauteng Local Division of the High Court, Johannesburg (Mayat J
sitting as court of first instance).
The order of the court a quo is amended in the following respects:
(a)
Paragraph 1 is deleted and replaced by:
„The purported decision taken by the first respondent on or about 5 March 2013 in
terms of s 7 of the National Building Regulations and Building Standards Act 103 of
1977 (the NBSA) to approve the building plan or plans submitted to it under
Reference No 2012/12/0397 in respect of Erf 426, Parkmore Township, Registration
Division IR, Province of Gauteng, measuring 991m² is reviewed and set aside.‟
(b)
Paragraph 4 is amended by the addition of:
„and a suitably qualified engineer has certified that the partial demolition of the
building will not compromise the structural integrity and safety of the building or
adjacent buildings.‟
2. Save to the extent set out above the appeal is dismissed with costs.
JUDGMENT
Ponnan and Swain JJA (Victor and Kathree-Setiloane AJJA concurring):
[1] This is an appeal against an order granted by the Gauteng Local Division,
Johannesburg (Mayat J) at the instance of the first respondent, Readam South Africa
(Pty) Ltd (Readam), directing that a building owned and constructed by the appellant,
BSB International Link CC (BSB), be demolished to the extent necessary to ensure
compliance with the Sandton Town Planning Scheme (the scheme). The order
granted reads as follows:
„1.
It is declared that the building erected on ERF 426, PARKMORE TOWNSHIP,
REGISTRATION DIVISION IR, PROVINCE OF GAUTENG, measuring 991 metres
square (“the property”), has been erected and continues to be erected without the
prior approval of building plans by the First Respondent [the City of Johannesburg
Metropolitan Municipality] in terms of section 7 of the National Building Regulations
and Building Standards Act 103 of 1977 (“the NBSA”), as required by section 4 of
the NBSA, and is accordingly unlawful.
2.
It is further declared that the building erected on the property and presently being
erected on the property, has been erected and continues to be erected in
contravention of the provisions of the Sandton Town Planning Scheme, 1980 (“the
Scheme”), and is accordingly unlawful.
3.
The Second Respondent [BSB] and / or its successors in title to the property is / are
directed to partially demolish the building erected on the property so as to ensure
that such building shall be fully compliant with
3.1
the coverage limit of 60% imposed by the Scheme;
3.2
the parking requirements imposed by the Scheme; and
3.3
the remaining provisions of the Scheme.
4.
It is declared that no such partial demolition of the building on the property in terms
of paragraph 3 above shall take place unless and until building plans have been
approved by the First Respondent in terms of section 7 of the NBSA.
5.
It is declared that no such partial demolition of the building on the property in terms
of paragraph 3 above shall take place unless and until the First Respondent has
satisfied itself that the building plans and all buildings depicted therein are compliant
with the 60% maximum coverage limitation imposed by the Scheme, and also
compliant with the requirements of the Scheme relating to on-site parking for motor
cars as well as other applicable provisions of the Scheme.
6.
Irrespective of whether or not the building on the property has been partially
demolished and modified in terms of 3 above, the building on the property shall not
be used in contravention of the Scheme, nor shall the property be occupied until a
valid certificate of occupancy has been issued by the First Respondent in terms of
section 14(1)(a) of the NBSA.
7.
The Second Respondent is interdicted from occupying or permitting occupation of
any building on the property until such time as a valid certificate of occupancy in
terms of section 14(1)(a) of the NBSA has been issued by the First Respondent in
respect of such building.
8.
The Second Respondent is directed to pay the Applicant‟s costs.‟
[2] Although the City of Johannesburg Metropolitan Municipality (the
municipality) was cited as the first respondent, it filed no answering affidavit and took
no part in the proceedings. This was despite the fact that the primary relief sought by
Readam in terms of Rule 53 of the Uniform Rules of Court, was directed at reviewing
and setting aside the building plans approved by the municipality in terms of s 7 of
the National Building Regulations and Building Standards Act 103 of 1977 (the
NBSA).
[3] The supine and uncooperative attitude of the municipality made the task of
the court a quo in resolving the dispute between BSB and Readam all the more
difficult. It also resulted in an incomplete record being produced by the municipality
as required in terms of Rule 53.
[4] It is clear from the evidence that BSB has also played no small part in
frustrating Readam‟s attempts to obtain details of the approval of the building plans
by the municipality. It also exploited the ineptitude of the municipality, with the clear
objective of obfuscating and delaying matters to enable the building to be completed
prior to the court adjudicating the dispute between the parties. The goal being, no
doubt, to present the court with a fait accompli, in the form of a completed building.
Against this background it comes as no surprise that BSB, in response to Readam‟s
application, launched a counter-application founded on the complaint that it was
prejudiced in its defence of the main application, by the inadequate record furnished
by the municipality. BSB also sought orders against Readam and the municipality
directing Readam to itemise all documents and other information which Readam
contended were missing from the record filed by the municipality. Unsurprisingly, an
order was also sought staying the review proceedings pending the municipality‟s
furnishing of the missing portions of the record.
[5] In support of its counter-application BSB also relied upon an agreement
reached between BSB and Readam at a case management meeting held before
Claassen J, where the learned judge directed that the provisions of Rule 35 relating
to discovery, inspection and the production of documents, would serve as the basis
for obtaining the missing portions of the record allegedly required by BSB.
[6] The counter-application was correctly dismissed on the facts. Somewhat
surprisingly BSB thereafter sought leave to appeal primarily on the basis that the
court a quo had erred in dismissing its counter-application (for discovery of the full
record). BSB asserted that it had accordingly been denied a proper opportunity to be
heard and defend itself against the challenges made by Readam. The present
appeal is with the leave of this court.
[7] The relief sought by BSB on appeal is that as a consequence of the
inadequate record the order of the court a quo falls to be set aside in its entirety and
replaced with one compelling discovery by the municipality. According to BSB, the
matter should thereafter only be enrolled when the municipality has complied with
that order. Assuming in favour of BSB (without deciding) that the dismissal of the
counter-application is appealable,1 as we shall show it is clearly without merit.
[8] BSB submits that there is a dispute of fact on the papers as to whether the
requirements of the scheme have been contravened as regards: (a) the permissible
coverage of the building on the site and (b) the provision of adequate parking. Each
of those requirements will be considered in turn.
Coverage
1 Zweni v Minister of Law and Order [1992] ZASCA 197; 1993 (1) SA 523 (A) at 532I-533B; Absa
Bank Ltd v Mkhize & two similar cases [2013] ZASCA 139; 2014 (5) SA 16 (SCA) paras 17-19;
National Director of Public Prosecutions v King [2010] ZASCA 8; 2010 (2) SACR 646 (SCA) paras 50-
52.
[9] In terms of the scheme, the property is zoned business 1 and is situated in
Height Zone 0. The building comprises new retail and/or office space. Clause 25 of
the scheme regulates coverage by reference to Table H. It is clear in respect of a
development such as this, that the maximum coverage of a property by a building
cannot exceed 60 per cent.
[10] As correctly submitted in Readam‟s heads of argument, the initial allegation
made by Readam in its founding affidavit, based upon the evidence of Mr Kevin
Wilkens, a town planner, was that the coverage of the property by the building as at
April 2013 was at least 80 per cent. The response by BSB in its answering affidavit
was:
„The allegations herein made are denied. The evidence is in any event inadmissible‟.
No basis was given as to why it was contended that the evidence, which was
confirmed by Wilkens in a supporting affidavit, was inadmissible.
[11] As pointed out by Readam in a supplementary affidavit filed in terms of Rule
53(4), if BSB genuinely held the view that there was no contravention of the
maximum coverage limitation of 60 per cent, it was open to it to adduce evidence
from its architect or some other suitably qualified expert, who could have
authoritatively stated the precise area of the property covered by the building.
[12] Readam, had engaged the services of a land surveyor, Mr Kevin Meluish,
who measured the coverage of the site by the building as at October 2013 and found
this to be 853,58 m² or 86.13 per cent of the total area of the property which is
991m². The following response of BSB is revealing:
„This appears to be a gratuitous précis and restatement of allegations and arguments and
interpretations thereof already made in earlier affidavits. This is primarily a matter for
submission and I repeat what has been stated in the earlier affidavits filed in this matter. The
argument herein contained will be dealt with at the hearing of this application.‟
[13] The direct expert evidence of Mr Meluish, which addresses a central issue in
the dispute between the parties, ought not to have been simply glossed over by the
deponent to BSB‟s affidavit, Mr Mike Slim, its sole member. What had been stated in
the earlier affidavit by Mr Kevin Wilkens was simply denied by Mr Slim. When
counsel for BSB was asked why the measurements made by Mr Meluish were not
disputed he submitted somewhat faintly that the coverage of the site had already
been denied and it was not necessary to do so again. It is quite clear that BSB in not
countering Mr Meluish‟s evidence failed to raise a genuine and bona fide dispute of
fact in this regard. As stated in Wightman t/a JW Construction v Headfour (Pty) Ltd &
another [2008] ZASCA 6; 2008 (3) SA 371 (SCA) at 375H-I:
„When the facts averred are such that the disputing party must necessarily possess
knowledge of them and be able to provide an answer (or countervailing evidence) if they be
not true or accurate but, instead of doing so rests his case on a bare or ambiguous denial
the court will generally have difficulty in finding that the test is satisfied.‟
[14] That there was no foundation for BSB‟s denial of the extent of the coverage
of the property is illustrated by the fact that BSB admitted in a later supplementary
affidavit, that it had made application to amend the scheme to permit an increased
coverage of 85 per cent. This, however, was refused in April 2014. Counsel for BSB
made the startling submission that it was the intention of BSB to continue building
and if it eventually transpired that the building exceeded that permitted in terms of
the scheme, the offending portion of the building would be demolished. This
submission ignores the requirement that the building would have to proceed in terms
of lawfully approved building plans in the first place, which self-evidently did not
happen here.
Parking
[15] Clause 18 of the scheme read with Table F provides that effective and paved
parking for motor vehicles together with the necessary manoeuvring space shall be
provided to the satisfaction of the municipality, for shops, six parking bays per 100m²
of gross lettable shopping area and for offices, four parking bays per 100m² of office
area.
[16] Readam submits that if the building was built in conformity with the coverage
permitted of 60 per cent of the site and if the ground floor was utilised for retail
purposes, this would require 35 parking bays. It is undisputed that BSB has provided
no additional parking over and above the present 10 parallel bays located in the road
widening servitude. It is clear that the building as erected makes no provision for the
requisite number of parking bays required by the scheme.
[17] BSB submits that it did have approved building plans. But, if the municipality
had purported to approve the plans despite the fact that the scheme had not been
complied with in respect of either coverage or parking, the approval would
contravene s 7(1)(a) of the NBSA and Readam would have been entitled to an order
reviewing and setting aside the approval.2 It follows that the court a quo ought to
have granted the primary relief sought by Readam to review and set aside the
purported approval of the plans by the municipality and not an order (as per
paragraph 1 of the high court‟s order) declaring that the building was erected without
the prior approval of the municipality. This order granted by the court a quo was
based upon a finding that the building plans had been cancelled by the municipality
arising out of a document included in the record filed by the municipality. This
document which on the face of it contained the approval notification of the plans in
question, had two transverse lines drawn across it with the word „cancelled‟ written in
manuscript. No other evidence was furnished to explain the document or its
significance. The court a quo accordingly erred in finding that this document standing
alone proved that the municipality had cancelled the building plans. The order
granted will accordingly be amended by the deletion of paragraph 1 of the high
court‟s order. It will be replaced with an order as originally sought by Readam,
reviewing and setting aside the unlawfully approved building plans.
[18] Tellingly, the evidence adduced by Readam that insofar as the permissible
coverage and parking were concerned, BSB had contravened the scheme, became
either common cause or undisputed. In those circumstances the possible relevance
of the content of the record to either of these issues remains unexplained. In any
2 JDJ Properties CC & another v Umngeni Local Municipality & another [2012] ZASCA 186; 2013 (2)
SA 395 (SCA) para 22.
event, BSB had been aware since April 2013 that the complaint by Readam was that
it (BSB) was building in contravention of the scheme and without building plans. BSB
as the owner and developer was accordingly entitled at any time to documentation in
the possession of the municipality, most of which would have emanated from its
architects and other consultants. Nothing prevented BSB from accessing and placing
the record before the court. In reality, the record such as it was must have been
available to it, consisting, as it must have, in the main, of documents that it would
have supplied to the municipality. In this context the relief sought was nothing short
of audacious and may well have constituted an abuse. It would thus amount to an
exercise in futility to accede to BSB‟s request that the order of the high court be set
aside and that the municipality be compelled to make discovery.
[19] The primary contention of BSB having been disposed of, what remains is to
consider the correctness of certain of the orders of the high court, which were sought
to be assailed on appeal by BSB.
The partial demolition order
[20] The court a quo in dealing with the relevant legal framework examined the
provisions of the scheme, the Town Planning and Townships Ordinance 15 of 1986,
as well as the provisions of the NBSA.3 It held: (i) . . . „our courts have always
recognized that there is a duty on the relevant local authority to enforce the
provisions of the relevant town-planning schemes‟4; (ii) „In the present case, the
applicant has presented undisputed evidence demonstrating that the municipality
has in any event dismally failed to take any measures against clear contraventions of
the applicable Scheme. As such, the applicant effectively has no alternative
adequate remedy other than a final interdict . . .‟5; (iii) . . . „there is no basis for this
3 Paragraph 14 to 25 of the judgment.
4 Paragraph 62.
5 Paragraph 63.
court to exercise its general discretion against the granting of a final interdict‟6 and
(iv) „. . . the applicant has satisfied the requirements of mandatory interdict sought in
paragraph 6 of the amended notice of motion7‟.
[21] Where the court a quo sourced a power of demolition from was not
explained. The only power to be found in the NBSA to order the demolition of a
building is that in s 21 of the NBSA, which provides:
„Order in respect of erection and demolition of buildings
Notwithstanding anything to the contrary contained in any law relating to magistrates‟ courts,
a magistrate shall have jurisdiction, on the application of any local authority or the Minister,
to make an order prohibiting any person from commencing or proceeding with the erection of
any building or authorising such local authority to demolish such building if such magistrate
is satisfied that such erection is contrary to or does not comply with the provisions of this Act
or any approval or authorisation granted thereunder.‟
[22] In Lester v Ndlambe Municipality and another [2013] ZASCA 95; 2015 (6) SA
283 (SCA) it was decided that a court hearing an application in terms of s 21 of the
NBSA, had no latitude not to order the complete demolition of a building once the
jurisdictional fact, namely that the building was erected contrary to the NBSA, was
established. It was held that the conclusion that s 21 did not lend itself to an
interpretation other than that there was no discretion not to order demolition of the
building, was unassailable. The law could not and did not countenance an ongoing
illegality which was also a criminal offence. To do so would be to subvert the doctrine
of legality and to undermine the rule of law. It was for this reason that a partial
demolition order could not be granted.
6 Paragraph 64.
7 Paragraph 65.
[23] If s 21 found application here then on the authority of Lester the partial
demolition order issued by the court a quo may not have been competent. However,
it is clear that only a local authority or the Minister has locus standi to bring an
application in terms of s 21 before a magistrate. The statutory right to seek the
remedies provided for in s 21 is clearly intended to enable local authorities and the
Minister, to ensure compliance with the provisions of the NBSA in relation to town
planning schemes. Consequently, an individual with standing to bring an application
to review and set aside the unlawful approval of building plans by a local authority
would not have locus standi to pursue the remedies provided for in s 21. Such an
individual would be restricted to seeking a mandamus in appropriate circumstances
to compel the municipality or the Minister to act in terms of s 21 of the NBSA, should
the municipality or Minister have failed so to act.
[24] That, however, could hardly mean that Readam was without a remedy. For,
it is „of the essence of a town-planning scheme that it is conceived in the general
interests of the community‟ (The Administrator, Transvaal and The Firs Investments
(Pty) Ltd v Johannesburg City Council 1971 (1) SA 56 (A) at 70D). And, as the high
court observed, „. . . the contravention of the Scheme by BSB, at least in relation to
parking in the vicinity, has a direct adverse (and harmful) impact on the applicant‟.8
At common law the power to order the demolition of a building ordinarily finds
application in the case of an encroachment by a building onto a neighbour‟s
property. The relevant principles are clearly expressed in the title on „Things‟ by C G
Van der Merwe in 27 LAWSA (2 ed) para 158 in the following terms:
„When a land owner erects a structure on his or her land he or she must take care that he or
she does not encroach on his or her neighbour‟s land. This rule of neighbour law is not only
applicable in cases where the building itself or its foundations encroach on neighbouring
land, but also where roofs, balconies or other projections encroach on the air space above a
neighbour‟s.
8 Paragraph 61.
In the case of encroaching structures the owner of the land which is encroached upon can
approach the court for an order compelling his or her neighbour to remove the
encroachment. . . Despite the above rule the court can, in its discretion, in order to reach an
equitable and reasonable solution, order the payment of compensation rather than the
removal of the structure. This discretion is usually exercised in cases where the cost of
removal would be disproportionate to the benefit derived from the removal. If the court
considers it equitable it can order that the encroaching owner take transfer of the portion of
the land which has been encroached on. In such circumstances the aggrieved party is
entitled to payment for that portion of land, costs in respect of the transfer of the land as well
as a solatium on account of trespass and involuntary deprivation of portion of his or her
land.‟
[25] Importantly, here we are not concerned with an encroachment on Readam‟s
land. In De Villiers v Kalson 1928 EDL 217, Graham JP embarked upon a detailed
discussion of the prior authorities on this point. He said (at 229-230):
„[i]t will be observed that in none of the South African cases were the facts quite similar to
the facts disclosed in this case, for in the present case there has been no encroachment
upon the ground of another, but an encroachment upon his rights . . . I am inclined to think
that this difference makes little or no change in the plaintiff's rights for many of the same
arguments used in favour of the view that the Court has no discretion but must grant an
order for the removal, apply equally well to encroachment on land and encroachment on
rights, such as exist in the present case.‟
In concluding that there was a discretion vested in the Court the learned judge
president added (at 231):
„After all there must surely be some discretion vested in a Court even in cases involving
breaches of what are termed negative covenants in the English Law, and I can find no
authority in our law which states that under no circumstances can the Court exercise such a
discretion. It is quite clear that for the reasons stated in so many of the English cases, the
wrongdoer who encroaches on another's rights cannot be heard to say, unless there are
some very special circumstances, that a monetary compensation is sufficient, for that would
be tantamount to compelling the plaintiff to consent to expropriation, but on the other hand it
would be equally inequitable to place the plaintiff in a position to extort wholly excessive
completion from the defendant by granting an order for the removal of the buildings in cases
in which the facts disclose that a remedy in damages would fully meet the justice of the
case. . .
I have therefore come to the conclusion that I have a discretion in this case to grant an order
giving the defendant an option of paying damages in place of removing his building if the
plaintiff has satisfied me that he has sustained damages.‟
[26] The high court appeared not to appreciate that it was possessed of the kind
of discretion alluded to by Graham JP. What tips the scales against BSB is that it
was warned that it was acting illegally and in spite of such warning, it deliberately
persisted. If anything, it engaged in obfuscatory behaviour to delay finalisation of this
litigation whilst pressing ahead with its illegal conduct. Such conduct can hardly be
countenanced by a court. To do so will make a mockery of ordered town planning
and by extension the law. The order granted by the court a quo which directed that
the property be demolished to the extent necessary to ensure compliance with the
scheme, can accordingly not be faulted.
[27] That conclusion notwithstanding, it is nonetheless necessary to observe that
if the municipality had properly performed its functions and approached the court in
terms of s 21 of the NBSA, the court would, on the strength of Lester, have been
obliged to grant an order of total demolition. If Lester is correct a stark dichotomy
would exist between our common law and our statutory law in respect of
substantially the same remedy. For, in terms of the former, a court would have a
broad general discretion, whilst in terms of the latter, a court would have no
discretion. Several important factors appear not to have received due consideration
in the interpretive exercise undertaken by Lester. First, given the draconian nature of
the power (namely to order demolition) the purpose of s 21 must obviously be to
ensure judicial oversight. Judicial oversight without a judicial discretion seems, on
the face of it, to be a contradiction in terms. The absence of a discretion would in
those circumstances run counter to the proper exercise of judicial oversight. Second,
if the magistrates‟ court is merely to perform a rubber-stamping function then a
review can hardly lie to the high court at the instance of anyone aggrieved by that
decision. Third, in terms of s 21 of the NBSA a court has the power „to make an
order prohibiting any person from commencing or proceeding with the erection of
any building or authorising such local authority to demolish such building‟.
Consequently, after the commencement of the erection of the building, but before
completion of its erection, a court can grant an order either prohibiting the person
from „proceeding with the erection‟ or an order of demolition. If a court possesses
such a discretion then it is difficult to see why, once erection of the building is
complete, a court no longer possesses a discretion to even grant a partial demolition
of the building to the extent of its illegality. Fourth, irrespective of the extent of the
illegality a demolition order must follow. Thus, even a fairly trivial illegality must elicit
the rather disproportionate sanction of total demolition. Whether our Constitution
would countenance that has to be debateable. Fifth, in terms of s 26(3) of the
Constitution no one may have their home demolished „without an order of court
made after considering all of the relevant circumstances‟. That plainly envisages the
exercise of a broad general discretion. Thus certainly insofar as a home is
concerned, with which we are admittedly not concerned here, an interpretation of s
21 that there is no discretion appears not to square with the Constitution. Sixth, the
definition of „building‟ in s 1(d) of the NBSA includes „any part of a building‟ which
suggests that any relief granted in terms of s 21, may be directed at part of a
building. That, it goes without saying, will entail the exercise of a discretion.
[28] It thus seems incongruous to require judicial oversight over the grant of a
demolition order in terms of s 21 of the NBSA but then remove any discretion from a
court whether to grant a partial or total demolition order. The exercise of a discretion
to order the partial demolition of a building to the extent of its illegality, accords with
the principle of legality, because in granting such an order a court in no way
abrogates its duty to enforce the law. For, these reasons, which are probably by no
means exhaustive, it may well be that the interpretation placed on s 21 by Lester
does not survive careful scrutiny. But, it is not necessary for now to express any firm
view on its correctness.
[29] In a case such as this a court is possessed of a broad general discretion to
be exercised after affording due consideration to all the relevant circumstances.
Obviously, before granting a partial demolition order a court would have to be
satisfied that the illegality complained of is capable of being addressed by such an
order and that it is practically possible to do so. Depending on the circumstances this
may require evidence to be given by experts such as engineers and architects to
ensure that the structural integrity and safety of the building is not compromised
when partially demolished. Accordingly, paragraph 4 of the order of the court a quo
which declares that no partial demolition of the building shall take place unless and
until building plans have been approved by the municipality, will be amended to
include a further requirement that an engineer must certify that partial demolition will
not impair the structural integrity and safety of the building, or adjacent buildings.
The certificate of occupancy
[30] BSB alleges that it was originally granted a temporary certificate of
occupancy of the building dated 15 May 2013, which was due to lapse on 31 May
2014. In anticipation of this a new temporary certificate was issued dated 15 May
2014.
[31] In the amended notice of motion dated 31 October 2013, Readam sought
the review and setting aside of the temporary certificate of occupancy dated 15 May
2013. BSB therefore submits that although the court made no order in this regard, it
erred in holding that the second temporary certificate of occupancy expiring in May
2015 was susceptible to be set aside, because the issue of the second certificate
rendered the relief sought against the first certificate moot. It is however clear that
the grounds upon which the first certificate was challenged - namely that because
the approval of the plans was unlawful, any issue of a temporary certificate of
occupation in reliance upon the legal validity of the plans, would itself be unlawful –
is logically unassailable.
The interdict preventing occupation of the building pending the issue of a valid
certificate of occupancy in terms of s 14(1)(a) of the NBSA
[32] The court a quo granted an order directing BSB not to permit the occupation
of the building until such time as a valid certificate of occupancy was issued. BSB
submits that in the absence of any joinder of the occupants it was not permissible for
the court to grant such an order. Importantly, the order that issued in this respect
operates only as against BSB and no one else.
[33] It is ordered that:
The order of the court a quo is amended in the following respects:
(a)
Paragraph 1 is deleted and replaced by:
„The purported decision taken by the first respondent on or about 5 March 2013 in
terms of s 7 of the National Building Regulations and Building Standards Act 103 of
1977 (the NBSA) to approve the building plan or plans submitted to it under
Reference No 2012/12/0397 in respect of Erf 426, Parkmore Township, Registration
Division IR, Province of Gauteng, measuring 991m² is reviewed and set aside.‟
(b)
Paragraph 4 is amended by the addition of:
„and a suitably qualified engineer has certified that the partial demolition of the
building will not compromise the structural integrity and safety of the building or
adjacent buildings.‟
2. Save to the extent set out above the appeal is dismissed with costs.
V M Ponnan
Judge of Appeal
K G B Swain
Judge of Appeal
MAJIEDT JA:
[34] I have read the judgment of my colleagues, Ponnan and Swain JJA. I agree
with its outcome and the underlying ratio decidendi. I write separately because I
respectfully disagree with their obiter dictum relating to this court‟s approach and
finding in Lester v Ndlambe Municipality & another.9 On the facts and issues that
arose in this case, it was unnecessary to deal with this issue.
[35] The obiter dictum seeks to examine the „stark dichotomy . . . between our
common law and our statutory law in respect of substantially the same remedy‟ as
far as a court‟s discretion is concerned.10 It concludes that „. . . it may well be that the
interpretation placed on s 21 by Lester does not survive careful scrutiny. But it is not
necessary, for now, to express any firm view on its correctness‟.11 As I see the
matter, the reason my colleagues did not deem it necessary to decide the
correctness or otherwise of Lester is precisely because this case has nothing to do
at all with demolitions under statutory law, as was the case in Lester.
[36] As an adjoining landowner whose rights were adversely affected by the
unlawful construction of the building, Readam South Africa (Pty) Ltd (Readam)
approached the court below for a common law remedy, as it was entitled to do.12
Demolition in terms of s 21 of the National Building Regulations and Building
Standards Act 103 of 1977 (the Act) did not feature in the affidavits, the judgment of
the court below or the written submissions in this court. So when it was raised by
members of the court during the course of counsel‟s argument, they were
unsurprisingly not prepared to deal meaningfully with this aspect when pressed to do
so. Counsel for Readam therefore filed supplementary heads of argument after the
hearing in which he pertinently pointed out that Lester had no bearing on the basis
upon which Readam sought relief in the court below or upon the competency of that
court to order a partial demolition (under the common law). I agree with that
submission.
9 Lester v Ndlambe Municipality & another (514/12) [2013] ZASCA 95; 2015 (6) SA 283 (SCA).
10 Paragraph 26.
11 Paragraph 27.
12 JDJ Properties CC & another v Umngeni Local Municipality & another (873/11) [2012] ZASCA 186;
2013 (2) SA 395 (SCA) paras 34-35.
[37] My colleagues have provided a detailed analysis of the different remedies
under the common law (neighbour law) and the statutory law (s 21 of the Act) insofar
as demolition is concerned. This court did the same in Lester and it is not necessary
to regurgitate the principles. It is self-evident that a land owner who complains about
the encroachment of its rights by an adjoining land owner has no right to approach a
magistrate‟s court for a demolition order in terms of s 21, which my colleagues have
cited in full in para 20. That right is expressly reserved for the Minister of Economic
Affairs and a local authority. An affected land owner can only seek a remedy in
common law. My colleagues appear to recognise this in para 23. It is necessary to
advert briefly to the papers to demonstrate why Lester has no bearing on this case.
[38] Readam approached the court below on the basis that the encroaching BSB
structure contravened the Sandton Town Planning Scheme (the Scheme). It made
no mention of s 21 anywhere in its papers. There was no need to. Section 4(1) of the
Act13 was mentioned in Readam‟s papers only in the context that any purported
approval by the second respondent (the municipality) would have been a nullity by
virtue of the contraventions of the scheme in terms of s 7(1)(a) of the Act.14 Section
21 of the Act and Lester feature nowhere in the papers or in the comprehensive, well
reasoned judgment of Mayat J. The reason is not hard to find: this case had nothing
to do with it.
[39] A useful comparison can be drawn (as Readam‟s counsel has done in its
supplementary heads) between Readam‟s position here and that of Mr Haslam, one
of the shareholders and directors of the second respondent company (High Dune) in
Lester. His holiday home, registered in the name of the company, adjoined the home
13 Section 4(1) reads as follows:
„(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.‟
14 Section 7(1)(a) reads:
„(1) If a local authority, having considered a recommendation referred to in section 6(1)(a) – (a) is
satisfied that the application in question complies with the requirements of this Act and any other
applicable law, it shall grant its approval in respect thereof.‟
of Professor Lester, which was the offending structure in that case. The municipality
sought a demolition order in respect of Lester‟s unlawfully erected home (this was
common cause) in terms of s 21 of the Act. The second respondent was initially cited
by the municipality as a respondent with a direct interest in the matter. The second
respondent, however, successfully applied on an unopposed basis to be joined as a
co-applicant with the municipality. It made common cause with and supported the
relief claimed by the municipality. As stated (in Lester para 21), the second
respondent did not seek any common law remedies, nor did it rely on the common
law (neighbour law) principles – it supported the municipality‟s claim for a public law
remedy under s 21. A detailed discussion ensued in Lester (in paras 22 and 23) on
the differences between a s 21 demolition and one based on neighbour law. That
was necessary in view of the high court‟s erroneous approach in Lester that that was
a neighbour law case. In the present instance the converse applies – this is a
neighbour law case, based on the private law remedy of partial demolition available
to an affected land owner. Readam could not and did not seek a public law remedy
under s 21 of the Act, nor did it rely on any of the provisions of the Act at all.
Hypothetically, absent the municipality‟s participation in Lester, the second
respondent there had a neighbour law remedy available to it. That would have
entailed an order for either partial or total demolition in the discretion of the court.
[40] I do not propose traversing afresh the ratio decidendi in Lester – the
judgment speaks for itself. An attempt to appeal to this court‟s unanimous judgment
was unsuccessful – the Constitutional Court dismissed Professor Lester‟s application
for leave to appeal with costs on 10 September 2013.15 While an obiter dictum is not
binding authority, it does have some persuasive value, particularly coming from this
court. In Turnbull-Jackson v Hibiscus Coast Municipality16 Madlanga J explained it
thus:
15 Matthew Robert Michael Lester v Ndlambe Municipality & another CCT 115/13.
16 Turnbull-Jackson v Hibiscus Coast Municipality & others (CCT/04/13) [2014] ZACC 24; 2014 (6) SA
592 (CC) para 61 (footnotes omitted).
„Literally, obiter dicta are things said by the way or in passing by a court. They are not pivotal
to the determination of the issue or issues at hand and are not binding precedent. They are
to be contrasted with the ratio decidendi of a judgment, which is binding.‟
But the learned Judge adds:
„Only that which is truly obiter may not be followed. But depending on the source, even obiter
dicta may be of potent persuasive force and only departed from after due and careful
consideration.‟17
[41] Our courts have on many occasions emphasized the need to observe the
doctrine of precedent. The rationale for it was explained as follows by Brand AJ in
Camps Bay Ratepayers’ and Residents’ Association & another v Harrison &
another:18
„Observance of the doctrine has been insisted upon, both by this court and by the Supreme
Court of Appeal. And I believe rightly so. The doctrine of precedent not only binds lower
courts, but also binds courts of final jurisdiction to their own decisions. These courts can
depart from a previous decision of their own only when satisfied that the decision is clearly
wrong. Stare decisis is therefore not simply a matter of respect for courts of higher authority.
It is a manifestation of the rule of law itself, which in turn is a founding value of our
Constitution. To deviate from this rule is to invite legal chaos.‟
Hahlo and Kahn19 state that:
„In the legal system the calls of justice are paramount. The maintenance of the certainty of
the law and of equality before it, the satisfaction of legitimate expectations, entail a general
duty of judges to follow the legal rulings in previous judicial decisions. The individual litigant
would feel himself unjustly treated if a past ruling applicable to his case were not followed
where the material facts were the same.‟
17 Paragraph 56.
18 Camps Bay Ratepayers’ and Residents’ Association & another v Harrison & another (CCT//8/10)
[2010] ZASCA 19; 2011 (4) SA 42 (CC) para 28 (footnotes omitted).
19 HR Hahlo and Ellison Kahn The South African Legal System and Its Background (1968) at 214.
[42] Given the centrality of the doctrine of judicial precedent in our legal system,
and of the strong persuasive force of obiter dicta from this court, I do not consider it
correct or appropriate for this court to call into question a prior judgment of this court
in regard to an issue that has no bearing on the outcome of the present matter.
[43] To conclude: this matter was litigated as a private (neighbour) law case by
an aggrieved and affected land owner with legal standing to pursue the remedy
available to it. The court below correctly decided the matter on that basis. The order
for a partial demolition of the unlawful structure was, in the exercise of the court‟s
discretion, properly made as the appropriate remedy in the circumstances. Section
21 of the Act, and the issues in Lester, have no bearing whatsoever on this case.
Lester concerned a public law statutory remedy in an instance where the unlawful
erection of the offending structure constituted a criminal offence. It remains binding
authority, notwithstanding the reservations expressed obiter by my colleagues.
S A Majiedt
Judge of Appeal
Appearances:
For the Appellant:
D J Vetten
Instructed by:
Martini Patlansky Attorneys, Johannesburg
Lovius Block, Bloemfontein
For the First and Second Respondent: G F Porteous
Instructed by:
Strauss Scher Attorneys, Sandton
Webbers, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
13 April 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
BSB International Link CC v Readam South Africa (Pty) Ltd (279/2015) [2016]
ZASCA 58 (13 April 2016)
Media Statement
The SCA dismissed an appeal against an order directing that an unlawfully erected
building be demolished to the extent that it failed to comply with a Town Planning
Scheme. It held that the owner of an adjacent property, whose rights in terms of the
Town Planning Scheme had been encroached upon, was entitled at common law to
the order. A court was possessed of a broad discretion whether to order the partial or
total demolition of the offending structure. This discretion was in sharp contrast to the
absence of any discretion on the part of a court, in the same circumstances, not to
order the total demolition of the building at the behest of the local authority or the
Minister of Economic Affairs, in terms of s 21 of the National Building Regulations
and Building Standards Act 103 of 1977.
--- Ends ---
|
1259
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
Case Number : 553 / 07
In the matter between
HERMANUS FRANCOIS ENSLIN
APPELLANT
and
NGKAKA JACOB NHLAPO
RESPONDENT
Coram :
FARLAM, PONNAN JJA et SNYDERS AJA
Date of hearing :
22 MAY 2008
Date of delivery : 30 MAY 2008
SUMMARY
Liability of property owner – cattle straying onto a public road – legal duty - negligence.
Neutral citation: This judgment may be referred to as :
Enslin v Nhlapo
(553/2007) [2008] ZASCA 75 ( 30 May 2008)
___________________________________________________________________
PONNAN JA
[1] At approximately 7pm on 9 February 2002, the present respondent (‘the
plaintiff’) was driving his Toyota Venture, when he came upon a small herd of cattle
alongside the farm Holfontein on the R26, the main tarred road between Petrus
Steyn and Heilbron. He was unable to avoid them and collided into one, a young
Brahman bull. The plaintiff sued the present appellant, the owner of the farm (’the
defendant’) for the damages he sustained in consequence of the collision. He
averred that the cattle belonged to the defendant, alternatively, that the cattle were
under the latter’s control. The alleged grounds of negligence were that the
defendant had failed to: ensure that the cattle were properly fenced in; prevent the
cattle from straying onto a public road; and warn approaching motorists of the
presence of the cattle on the public road although he could have done so. The plea
denied ownership or control of the cattle, as also negligence. At the conclusion of the
case, the issue of liability having been separated from that of quantum and the trial
proceeding solely on the former, the plaintiff’s claim was dismissed with costs by the
Petrus Steyn Magistrate’s Court.
[2] On appeal, the Bloemfontein High Court (per Ebrahim J, Molamela AJ
concurring) reversed the decision of the trial court and altered the order to one of
judgment in favour of the plaintiff for such damages as may be proved with costs.
Persuaded that there were prospects that another court might well come to a
different conclusion in the matter, the high court, on application to it, granted leave to
appeal to the full court (three judges) of that division. The appeal succeeded before
the full court. In terms of the Supreme Court Act, however, such further appeal on a
judgment or order given on appeal to it lay to this court and not to the full court. (See
LTC Harms Civil Procedure in the Superior Courts para C1.23; S v McMillan 2001
(1) SACR 148 (W); Derby-Lewis v Chairman, Amnesty Committee of the TRC 2002
(3) SA 485 (C).) That part of the order of the high court referring the matter to the full
court was therefore a nullity as was the order of the full court, which had no
jurisdiction to hear the appeal.
[3] The defendant testified that the Brahman bull with which the plaintiff collided
belonged to Mr Rondekop Mkwanazi. In that, there was corroboration in the
evidence of his erstwhile employee, Mr Sahela Moloi. It follows that the conclusion
by the trial court that the bull in question did not belong to the defendant can hardly
be faulted. Although the defendant initially suggested in his evidence that Mr
Mkwanazi had hired the camp in which his cattle had been grazing and whence they
had strayed onto the public road, he later clarified: ‘Dit is nou nie dat hy ‘n kamp huur
en die kamp kaal eet vir jaar in en jaar uit nie. Ek meen dit is my eiendom, ek
bestuur die plek, maar vir daardie tyd het hulle in die kamp geloop. …’ The bull was,
thus, on the defendant’s farm with the knowledge and consent of the latter. It was the
defendant who decided where on the farm the cattle would graze and, for the right to
graze his cattle on the defendant’s farm, Mr Mkwanazi paid the defendant R15 per
head per month. On his own version therefore it would appear that the defendant
exercised a measure of control over the bull. But it may well be unnecessary to go
that far, for he clearly exercised control over the grazing camp in which the bull had
been allowed to roam freely unsupervised. (See Jamneck v Wagener 1993 (2) SA 55
(C).)
[4] It must be accepted, it seems to me, that the defendant had to have been
aware of the fact that, if the cattle on his farm were to stray onto the adjoining public
road, they could endanger the lives of road users. A reasonable person in the
position of the defendant would thus have taken steps to prevent the cattle from
straying onto the public road particularly at night. It is common cause that the
defendant had indeed taken certain steps. The grazing camp was separated by a
fence from an access road that ran from the public road to a neighbouring property.
Two gates had been installed. The first, a wire gate, led from the camp to the access
road. The second, a steel gate, led from the access road to the public road. For the
cattle to have strayed onto the public road both gates had therefore of necessity to
have been open. According to the defendant he had instructed his employees to
keep both gates closed. That, Mr Moloi testified, he had done on the evening in
question. The gates had probably been opened thereafter - by whom and in what
circumstances, does not emerge on the evidence.
[5] The real question in this case is whether a reasonable person would have
taken further precautions to prevent the cattle from straying onto the public road. It
is unfortunately a fact of life that, even though most people act with reasonable care
most of the time, a normal degree of negligence is an everyday occurrence (see
Mkwanazi v Van der Walt 1995 (4) SA 589 (A) at 594A-B). The leaving open of one
or more farm gates falls into that category of negligence. Indeed, when it was
suggested to the defendant that there was a real likelihood of visitors leaving the
gate open, he replied:
‘Dit is dan so, dit is dan so, maar dit is nie die plaasboer se moeilikheid om agter elke kuiermens,
veral na ’n buurman toe se gat af te ry en te kyk, ekskuus die woord, agter hulle te gaan kyk dat hulle
die hek toemaak nie’.
Of his arrangement with his neighbour in respect of the shared steel gate, the
defendant stated:
‘Omdat die buurman … het reg om die grond te gebruik deur na sy eiendom toe, en as daar geen vee
links en regs is nie, het hy die reg om die hek oop te los. Soos ek met hom ooreengekom het, want hy
het die draad voorsien om die gang te span juis vir daardie rede. Vroeëre jare was daar nie ‘n gang
gewees nie, dit was ‘n enkeldraad gewees toe moes hy elke keer die hek oop en toe maak’.
It was thus a reasonably foreseeable possibility that both gates might have been left
open, particularly as the one was utilised by a neighbour and his visitors to gain
access to the adjoining property. Moreover, on the defendant’s own version, his
cattle had strayed onto the public road on a prior occasion. In those circumstances,
it seems to me, that a reasonable person would not have shrugged his/her shoulders
in unconcern, as the defendant appears to have done, but would definitely have
considered further precautionary measures over and above those taken by the
defendant in this case.
[6] In response to the suggestion that a cattle grid could have been installed or a
padlock utilised, the defendant stated:
‘Daar is geen wet wat ‘n grondeienaar verplig om ‘n slot of ‘n motorhek te sit nie, en ek kan u net sê
ter inligting by my plot het ek ‘n motorhek gehad, die vorige eienaar en, sy perd het sy bene gebreek
in die motor hek, so ‘n motorhek keer ook nie vee nie. . . .
. . . So moenie vir my kom sê ek moet ‘n motorhek en slotte aansit as anders dit, mense wat ook vee
eienaar is, se beeste loop waar hulle wil, wanneer hulle wil by enige Vrystaatse dorpie.
U kan nou saam met my ry, ek belowe vir u ek gaan beeste vir u … wys wat loop waar daar
nie ‘n draad is nie. So moenie vir my sê ek moet motorhekke insit, ek het gedoen wat van my verwag
is en geen eienaar van ‘n bees of geen eienaar nie, as ek my buurman se bees kry, hoeveel keer het
ek al in die nag gery om my buurman se bees uit die pad uitgejaag.’
[7] The use of a padlock to secure the steel gate or the installation of a cattle grid
on the access road shortly before it joined the public road would have been easy,
inexpensive and effective measures to prevent the cattle straying onto the public
road. The defendant’s objection to the use of a padlock was that the one gate was
shared by his neighbour as well. The employment of a padlock however, could quite
easily have occurred in consultation with his neighbour who could have been
furnished with a key. Considering the respective interests of the defendant on the
one hand and the road users of the public road on the other, the use of a padlock or
a cattle grid as precautions were so easy and relatively inexpensive to take, that a
reasonable person would have taken at least one if not both of them. The
defendant’s failure to take either precaution meant that he had been causally
negligent in relation to such damage as may in due course be proved by the plaintiff.
[8] There remains the question of the wasted costs incurred in respect of the full
bench appeal. Plainly the legal representatives on both sides, who ought to have
known that a further appeal to the full court was incompetent, should be disentitled to
recover those costs from their clients. It follows that no legal fees may be debited
against either party by their legal representatives in respect of those proceedings
and such fees as may have been debited must be refunded.
[9] In the result the appeal is dismissed with costs.
V M PONNAN
JUDGE OF APPEAL
CONCUR:
FARLAM 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
30 May 2008
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
HERMANUS FRANCOIS ENSLIN
v
NGKAKA JACOB NHLAPO
(Case No 533 / 07)
Media Statement
Today the Supreme Court of Appeal (‘SCA’) dismissed an appeal by Mr Hermanus Enslin, the
owner of the farm Holfontein, against a judgment of the Bloemfontein High Court holding him
liable to Mr Ngkaka Nhlapo for such damages, as may in due course be proved, arising out of
a collision between the latter’s motor vehicle and a Brahman bull. During the course of the
evening of 9 February 2002, Mr Ngaka Nhlapo was driving his Toyota Venture when he came
upon a small herd of cattle alongside Holfontein on the R26, the main tarred road between
Petrus Steyn and Heilbron. He was unable to avoid them and collided into a young Brahman
bull. He sued Mr Enslin in the Petrus Steyn Magistrate’s Court for the damages he had
sustained in consequence of the collission. He alleged that the cattle belonged to Mr Enslin,
alternatively, that they were under his control. The alleged grounds of negligence were,
amongst others, that Mr Enslin had failed to prevent the cattle from straying onto the public
road.
The issues of liability and quantum were separated and the matter proceeded to trial solely on
the former. The plaintiff’s claim was dismissed by the trial court. It succeeded on appeal to
the Bloemfontein High Court. The SCA accepted that the bull in question did not belong to Mr
Enslin. It found however that he had exercised control over the grazing camp in which the
bull had been allowed to roam freely unsupervised. According to the SCA, in addition to the
two gates which had been erected, but had obviously been left open by unknown persons, Mr
Enslin should have utilised a padlock to secure one of the gates or installed a cattle grid.
Those easy and relatively inexpensive measures would have prevented the cattle from
straying onto the public road. It followed, according to the SCA, that Mr Enslin had been
negligent.
--- ends ---
|
3298
|
non-electoral
|
2006
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case No 173/05
REPORTABLE
In the matter between
THE NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS APPELLANT
and
KUMARNATH MOHUNRAM FIRST RESPONDENT
SHELGATE INVESTMENTS CC SECOND RESPONDENT
BOE BANK LIMITED THIRD RESPONDENT
Coram: Harms, Mthiyane, Conradie, Jafta JJA and Maya AJA
Heard:
7 March 2006
Delivered: 17 March 2006
Summary:
Prevention of Organised Crime Act 121 of 1998 – forfeiture –
gambling
premises
–
instrumentality
of
an
offence
–
proportionality.
Neutral citation: National Director of Public Prosecutions v
Mohunram [2006] SCA 11 (RSA)
JUDGMENT
_____________________________________________________
HARMS JA:
[1] The Prevention of Organised Crime Act 121 of 1998 (to which I intend
to refer as ‘POCA’) provides, inter alia, for forfeiture of property which, in civil
proceedings, is found on a balance of probabilities to have been ‘an
instrumentality of an offence referred to in Schedule 1’ (s 50(1)(a)). An
‘instrumentality of an offence’ is defined to mean any property which ‘is
concerned in the commission’ of an offence (s 1). Listed in the schedule is
‘any offence under any legislation dealing with gambling, gaming or lotteries’.
Casinos and gambling fall within the legislative competence of both national
and provincial legislatures (Schedule 4 of the Constitution). In KwaZulu-Natal
these matters are regulated by the KwaZulu-Natal Gambling Act 10 of 1996.
Since it is common cause that the respondents have contravened the
Gambling Act, the appellant, the National Director of Public Prosecutions,
sought to have immovable property (a sectional title unit in the town Vryheid
together with an undivided share in the common property in accordance with
the applicable participation quota) belonging to the second respondent,
Shelgate Investments CC, declared forfeited. (The first respondent, Mr
Mohunram, is the only member of Shelgate.) C N Patel J, in the Natal
Provincial Division, dismissed the application with costs on the basis that the
property had not been an ‘instrumentality’ of any offence under the Gambling
Act. He refused leave to appeal but this Court subsequently granted the
necessary leave.
[2] POCA has been the subject of a number of leading judgments and the
forfeiture provisions, more particularly, have been considered by this Court in
recent times. This judgment does not raise any novel issues of interpretation
and is more concerned with the application of the Act to the particular facts of
the case. There are usually three main issues in a case such as this to decide
and they are (a) whether the property concerned was an instrumentality; (b)
whether any interests should be excluded from the forfeiture order; and (c)
whether the forfeiture sought would be disproportionate. In the present
circumstances issue (b) will be referred to at the end of the judgment because
it is not an issue between the parties to the appeal.
[3] It is common cause that Mohunram used part of the property as a
casino: he operated 57 gambling machines on the property in contravention of
s 44 of the Gambling Act, which states that no person may operate a casino
unless validly licensed. (The word ‘casino’ is defined in s 1 as ‘any premises
upon which . . . gaming machines may be played.’) In terms of s 3(3)(a) of this
Act, the owner of a building may not allow any other person to conduct any
gambling activity therein or thereon unless that person has been duly
licensed. Shelgate as owner did just that, having permitted Mohunram to
conduct the casino.
[4] It will immediately be apparent that in both instances use of premises is
of the essence of the crimes as defined. Without use of premises there are no
crimes. The complications that arose in cases such as Cook,1 Parker2 or
Prophet3 do not arise in the present instance. It follows in my view ineluctably
that the particular premises were an instrumentality of the crimes; they were
intimately concerned in their commission. The High Court, on the other hand,
held that the premises were, in this case, merely a venue for the commission
of these crimes. It held that the gambling machines were the means or
instruments of the crime and not the premises. This finding, in my judgment,
does not take into account the definitions of the crimes involved. If the
Gambling Act had only provided for the criminalisation of the possession or
use of gambling machines, the finding might have had some merit but even
then it would have been necessary to conduct, in the light of all the facts, an
inquiry along the lines suggested in Prophet (at para 27). Another
consideration relied on by the High Court was the fact that part of the property
only had been used for a casino. The High Court found that the provision does
not apply if part of a property is used in the commission of a crime and not the
whole. There is no justification for this interpretation. ‘Property’ is defined in
POCA to include any ‘immovable’ thing and immovable property is identified
with reference to its cadastral description, ie, it is the property as described in
1 National Director of Public Prosecutions v R O Cook Properties (Pty) Ltd 2004 (2) SACR 208
(SCA).
2 National Director of Public Prosecutions v Parker SCA judgment of 1 December 2005 case 624/04.
3 Prophet v National Director of Public Prosecutions 2005 (2) SACR 670 (SCA).
the deeds office.4 It is highly unlikely that the whole of an immovable property
can ever be used in the commission of a crime and the restriction would make
the provision meaningless. The fact that part of a property was used in the
commission of a crime generally does not determine whether or not the
property was an ‘instrumentality’, although it may be relevant in considering
proportionality.
[5] Proceeding then to the proportionality issue, ie, whether forfeiture was
constitutionally justified in the light of especially the property clause and the
protection against double jeopardy, it has been held that forfeiture may not be
ordered if the forfeiture would be significantly disproportionate to the crime
concerned. Although the respondents did not raise this issue pertinently, as
was their duty, and although the High Court did not pronounce thereon in the
light of its conclusion on ‘instrumentality’, the matter was properly argued and
requires consideration.
[6] The respondents’ main complaint is that Mohunram had paid admission
of guilt fines amounting to R88 500,00 in respect of the illegal casino
operation; under the provisions of the Gambling Act he forfeited R2 102,10,
being monies that were found on the premises during a police raid; and his
gaming machines (which he valued at R285 000) were, also in terms of the
Gambling Act, seized. See s 94(4). This, they say, was enough punishment
(as if punishment were the object of forfeiture). They again raise the fact that
part only of the property had been used for gambling and not the whole
property. And they argue that the loss of the value of the property would be
disproportionate.
[7] As far as the first point is concerned, it should be borne in mind that the
property of Shelgate is the subject of the forfeiture application and not the
property of Mohunram. And these are business premises, not residential.
Shelgate, to date, has lost nothing due to its own illegal actions. Admittedly,
Mohunram is the ultimate beneficiary of Shelgate but that should not conceal
4 Cf Dlamini v Joosten unreported SCA judgment 30/05 of 30 November 2005.
the fact that one has to respect the separate corporate personality of
Shelgate. Mohunram and Shelgate have had the advantages of their separate
legal personalities and they have to bear the consequences thereof. In
addition, the argument loses sight of Mohunram’s illicit income from the
operation which, on the available evidence, amounted to about R360 000
during the one year when he ran the operation after an amendment to the
Gambling Act that made it clearly illegal. It also does not take into account the
seriousness of the crime as reflected in the penalties and forfeitures provided
for by the Gambling Act (s 94). As first offenders Mohunram risked
imprisonment of ten years and Shelgate a fine of R2m.
[8] The other two points can be dealt with as one. The area of the
sectional title property is 542 sq metres. Although Mohunram did conduct a
legitimate business on part of the property, we have not been informed as to
the respective sizes of the two areas. Taking into account that he had 57
gaming machines and a gambling booth, the area occupied by his casino
operation could not have been insignificant. One can get some indication of
the size of the gambling area if one considers that after the casino was closed
down he subdivided the casino area and let the two portions. Turning then to
the value of the property, at least one thing is clear and that is (bearing in
mind the bond of the third respondent (BOE Bank Ltd)) that the equity of
Shelgate, is far less than the value of the property. The figures are in dispute,
the appellant believing that there is value for the state in a forfeiture order
while the respondents think not. However, since the appellant utilised motion
proceedings, he is generally bound by the version of the respondents.
According to Mohunram, the property market in Vryheid at the relevant time
was ‘severely depressed’ and he thought that it was unlikely that the
outstanding bond would be realised should the property be sold. (We are not
concerned with the present value or the present state of the market, matters
about which we in any event do not have any knowledge.) Accepting this
evidence, as we must, there does not appear to be any merit in the argument
that forfeiture would have been disproportionate to the crimes involved.
[9] The appeal has, consequently, to succeed. The order that is about to
issue reflects the interests of the bondholder and that prior to the proceedings
before Patel J a curator bonis had been appointed as part of a preservation
order in terms of s 38 of POCA.
ORDER:
1.
The appeal is upheld with costs including costs consequent upon the
employment of two counsel.
2.
The order of the court a quo is to be replaced with the following: -
(a)
An order is granted under s 50(1) of the Prevention of Organised
Crime Act, No 121 of 1998 declaring forfeit to the state the property
described as:
(i) Section 2 as shown and more fully described on sectional
plan no SS 577/96 in the scheme known as the Malapin Centre
in respect of the land and building or building situate at 244
Utrecht Street, VRYHEID, in the Transitional Local Council Area,
Vryheid; and
(ii) an undivided share in the common property in the scheme
apportioned to the said section in accordance with the
participation quota as endorsed on the said sectional plan;
(b)
the curator bonis appointed in terms of the preservation order
made on 19 October 2001 will continue to act in such capacity;
(c)
the interest of the third respondent is hereby excluded from the
operation of this order;
(d)
the curator bonis, as of the date on which the forfeiture order
takes effect, shall be empowered to perform the following:
(i)
subject to consultation with the third respondent, to
dispose of the property by sale or other means;
(ii)
deduct the fees and expenditure associated with his
function as a curator bonis;
(iii)
settle the outstanding balance on the home loan bond
account number 8350103059 held by the second
respondent at a branch of the third respondent;
(iv)
deposit the balance of the proceeds into the Criminal
Asset Recovery Account;
(e)
the Registrar of the High Court, Natal Provincial Division, is
directed to publish a notice of this order in the Government Gazette as
soon as possible; and
(f)
the first and second respondents are directed to pay the
applicant’s costs jointly and severally.
____________
LTC HARMS
JUDGE OF APPEAL
CONCUR:
MTHIYANE JA
CONRADIE JA
JAFTA JA
MAYA AJA
|
Supreme Court of Appeal of South Africa
MEDIA SUMMARY – JUDGMENT DELIVERED IN SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
17 March 2006
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 NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
v
K MOHUNRAM & 2 OTHERS
The SCA today upheld an appeal by the National Director of Public
Prosecutions with costs. The effect of the judgment is that the
property (a sectional title unit in Vryheid) of Shelgate Investments
CC was forfeited in favour of the Criminal Asset Recovery Account.
The first respondent, Mr Kumarnath Mohunram, the only member of
the CC, conducted an unlawful casino on part of the property,
operating 57 gaming machines. These had been confiscated and he
had paid an admission of guilt fine of R88 500. The High Court,
Pietermaritzburg, refused to declare the sectional title unit forfeited
because the casino had been conducted on part of the property only
and because, so it held, the property was not ‘an instrumentality of
the crime’ (a requirement for forfeiture of a specific asset). The SCA
disagreed, holding that the property was indeed an instrumentality of
the crimes defined in the relevant Gambling Act. The fact that part of
the property had been used, it held, was relevant in determining
whether forfeiture was disproportionate or not. The SCA found, on
the facts, that it was not disproportionate and made the order as
mentioned.
|
3728
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no. 827/2020
Reportable
In the matter between:
EASTERN CAPE RURAL DEVELOPMENT AGENCY FIRST APPELLANT
MEMBER OF THE EXECUTIVE COUNCIL FOR
RURAL DEVELOPMENT AND AGRARIAN
REFORM, PROVINCE OF THE EASTERN CAPE
SECOND APPELLANT
and
AGRIBEE BEEF FUND (PTY) LTD
FIRST RESPONDENT
BERLIN BEEF (PTY) LTD
SECOND RESPONDENT
THE RESPONDENTS LISTED ON
SCHEDULE 1 HERETO THIRD TO TWENTY EIGHTH RESPONDENTS
Neutral citation:
Eastern Cape Rural Development Agency and Another v Agribee
Beef Fund (Pty) Ltd and Others (Case no. 827/2020) [2022] ZASCA 2 (6 January
2022)
Coram:
Saldulker ADP, Dambuza, Mathopo, Mocumie and Plasket JJA
Heard:
22 November 2021
Delivered:
This judgment was handed down electronically by circulation to the
parties’ representative via email, publication on the Supreme Court of Appeal website
and release to SAFLII. The date and time of hand-down is deemed to be 10:00 am on
6 January 2022.
Summary:
Procurement – Section 217(1) of the Constitution – whether a tripartite
agreement between two organs of state and a private entity was one that
contemplated contracting for goods or services – the agreement, in furtherance of the
objects of the organs of state, required the private entity to provide smallholder farmers
with cattle, paid for with public funds, veterinary kits and feed supplements, and to
provide training and mentorship – the agreement was for the provision of goods and
services as contemplated by s 217(1) – no procurement process complying with s
217(1) preceded the agreement – the agreement was declared to be invalid.
ORDER
On appeal from: Eastern Cape Division of the High Court, Grahamstown (Brooks J
sitting as court of first instance):
The appeal is upheld with costs.
The order of the court below is set aside and replaced with the following order.
‘1
It is declared that the agreement concluded on 16 July 2018 between the
Department of Rural Development and Agrarian Reform in the Eastern Cape provincial
government, the Eastern Cape Rural Development Agency and the Eastern Cape
Beef Fund is invalid.
The first respondent is directed to pay the applicants’ costs.’
JUDGMENT
Plasket JA (Saldulker ADP, Dambuza, Mathopo and Mocumie JJA concurring)
[1] On 16 July 2018, a tripartite agreement was concluded by the Department of
Rural Development and Agrarian Reform of the Eastern Cape provincial government
(the Department), the Eastern Cape Rural Development Agency (the Agency) and a
private entity referred to as the Eastern Cape Beef Fund (the ECBF). This is the trading
name of Agribee Beef Fund (Pty) Ltd (Agribee), the first respondent. The agreement
was to endure for a period of a few months short of three years, terminating on 31
March 2021. By notice of motion dated 19 March 2019, the Agency and the MEC of
the Department applied, in the Eastern Cape Division of the High Court, Grahamstown
for an order setting aside the agreement. Brooks J dismissed the application with costs
but later granted the Agency and the Department leave to appeal to this court.
[2] One issue arises for determination. It is whether the agreement was one that
contemplated the provision of goods or services. As the Department and the Agency
are both organs of state as defined in s 239 of the Constitution, if the agreement is of
this character, it may be set aside if its conclusion was not preceded by a procurement
process that met the requirements of s 217(1) of the Constitution. This section
provides:
‘When an organ of state in the national, provincial or local spheres of government, or any other
institution identified in national legislation, contracts for goods or services, it must do so in
accordance with a system that is fair, equitable, transparent, competitive and cost-effective.’
That system is provided for by primary legislation such as the Preferential
Procurement Policy Framework Act 5 of 2000 and the Public Finance Management
Act 1 of 1999, subordinate legislation such as Treasury Regulations, and other
instruments such as Supply Chain Management Policies.1
Background
[3] Baxter, writing in 1984 of a different constitutional arrangement to the present,
said that the public service constituted ‘the largest grouping of central government
institutions’ consisting at the time, inter alia, of ‘departments of State as well as four
provincial administrations’.2 The departments of state were confined to the central
government and it is probably true to say that they were the principal vehicles for state
administration in the centralized system then in existence. Now, departments of state
1 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African
Social Security Agency and Others [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC)
paras 31-40; Joubert Galpin Searle Inc and Others v Road Accident Fund and Others 2014 (4) SA 148
(ECP) para 57.
2 Lawrence Baxter Administrative Law (1984) at 112.
have a wider meaning because of the federal character of our present constitutional
arrangement, with significant, original and autonomous governmental power in the
hands of the nine provincial governments.
[4] The Department of Rural Development and Agrarian Reform in the Eastern
Cape provincial government is a ‘department’ as defined in s 1 of the Public Service
Act, 1994.3 Section 7(2) provides that, for purposes of the administration of the public
service, there are national departments and national components, as well as provincial
departments and provincial components. All are set out by name in schedules to the
Act. The Department is listed in column 1 of Schedule 2 as one of the departments of
the Eastern Cape provincial government.
[5] The Department’s principal mandate, according to the deponent to the founding
affidavit, Mr Nhlanganiso Dladla, the chief executive officer of the Agency, is to
‘support and grow the Eastern Cape agricultural sector’. It is also the department in
the provincial government that is responsible for the administration of the Eastern
Cape Rural Development Agency Act 9 of 1999 (EC) (the ECRDA Act). More will be
said of this, and particularly of the ECRDA Act below.
[6] As part of fulfilling its mandate, the department had, in 2016, adopted a strategy
which it called the Eastern Cape Agricultural Economic Transformation Strategy. Its
focus was, to quote Dladla, on the support of ‘smallholders, subsistence/communal
and commercial farmers and/or investors from all sectors in their partnerships and
which sought through investment to turn smallholders into [agri]-entrepreneurs and
subsistence and communal farms into profitable businesses’. Part of the strategy dealt
with beef production in the province and, in particular, mentioned a project initiated by
‘Berlin Beef’, apparently a reference to Agribee.
[7] Provision was made in the Department’s budget for 2018/2019 for funding for
what was termed ‘beef commercialisation’. An amount of R15 million was earmarked
for red meat development in respect of smallholder farmers for that year. (A total
amount of R67 535 000 was budgeted for a three-year period.) The idea, Dladla said,
3 Proclamation 103 of 1994, Government Gazette 15791 of 3 June 1994.
was for this amount to be transferred to the Agency for it to use appropriately in terms
of a service level agreement between the Department and the Agency. That
agreement was in fact concluded.
[8] The Agency was, in its original form, known as the Eastern Cape Rural Finance
Corporation. That entity was created by the Eastern Cape Rural Finance Corporation
Act 9 of 1999 (EC). In terms of the Eastern Cape Rural Development Agency
Amendment Act 1 of 2012 (EC), the short title of the 1999 Act was changed to the
Eastern Cape Rural Development Agency Act 9 of 1999, and the name of the body
created and empowered by the Act was changed to the Eastern Cape Rural
Development Agency.
[9] Section 2 of the ECRDA Act established the Agency as a statutory body with
juristic personality. It has limited liability and perpetual succession. It is capable of
suing and being sued in its own name. The Eastern Cape provincial government is the
Agency’s sole shareholder, although it may transfer shares to other entities, but may
not transfer them to natural persons.4
[10] Section 3 sets out the objects of the Agency. This section states:
‘The objects of the corporation are to promote, support and facilitate rural development in the
Province by-
(1) mobilising financial resources and providing financial and supportive services to persons
domiciled, ordinarily resident or carrying on business within the Province;
(2) promoting and encouraging private sector investment in the Province and the participation
of the private sector in contributing to economic growth;
(3) promoting, assisting and encouraging the development of the Province's human resources
and financial infrastructure, in association with other institutions having similar or related
objects;
(4) acting as the governments agent for performing any development-related tasks and
responsibilities that the government considers may be more efficiently or effectively performed
by a corporate entity;
(5) driving and coordinating integrated programmes of rural development, land reform and
agrarian transformation in the Province;
4 Section 7.
(6) project managing rural development interventions in the Province;
(7) promoting applied research and innovative technologies for rural development in the
Province;
(8) planning, monitoring, implementing and evaluating rural development in the Province;
(9) facilitating the participation of the private sector and community organizations in rural
development programmes.’
[11] Section 4 arms the Agency with the powers necessary to achieve its objects. It
may, for instance, in order to attain its objects: raise funds from both the public and
private sectors through loans, grants and donations; lend or advance money and
recover debt owed to it; acquire, hold and deal with ‘movable or immovable property,
whether corporeal or incorporeal’; charge for services that it renders, including to the
government; establish a fund to support rural development programs; and ‘generally,
do all things necessary for the attainment of its objects, the exercise of its powers, or
the management and administration of its affairs, whether or not expressly provided
for in this section’.
[12] Section 5 is concerned with the Agency’s method of operation and area of
operation. It may operate anywhere in the Eastern Cape province5 but, if it considers
it necessary in order to attain its objects, it may ‘become involved in projects and
programmes and enter into transactions with persons outside the Province’.6 In terms
of s 5(1), the Agency must, as far as possible and consistently with good business
practice, conduct its activities in order to:
‘(a) raise and apply its funds and other resources in a responsible manner and in such a way
that the corporation's activities are sustainable;
(b) support the government's agricultural, land reform and rural development strategies;
(c) maximise and spread the development impact of such activities;
(d) develop synergistic relationships with other agencies for the delivery of development in the
Province and avoid duplicating functions and resources;
(e) promote and encourage private sector participation in economic growth and employment
creation;
(f) reinforce and promote values consistent with the Constitution.’
5 Section 5(2).
6 Section 5(3).
The agreement
[13] There are a number of factual disputes concerning how the agreement came
about and how it was signed, purportedly on behalf of the Department and the Agency,
by senior officials. It is not necessary to traverse the evidence in this regard or to make
findings concerning these issues. They are irrelevant to the job at hand, which entails
an interpretive exercise aimed at determining whether the agreement was one for the
provision of goods or services.
[14] The agreement appears to have had its genesis in an unsolicited approach
made by Agribee to the Department in which it proposed a project aimed at developing
black smallholder beef farmers into commercial farmers. It is not in dispute that no
procurement process that complied with the requirements of s 217(1) of the
Constitution occurred before the agreement was concluded.
[15] The agreement’s preamble noted that the Department, the Agency and the
ECBF wished to implement a project to support beef production and contribute to rural
development; that the Department had a budget for three years of R67 535 0007 which
it would transfer to the Agency ‘for the project by ECBF in support of 200 black farmers
in beef value chain production’; that the Agency was authorised to receive the funds
for the project, to administer them and to transfer them to the ECBF; and that the ECBF
would function as ‘the operating company to implement and manage the project’.
[16] Clause 1 contains definitions. It defines the ‘Implementing agent’ as the ECBF
and ‘The Project’ as ‘the Eastern Cape Beef Value Chain Development Program’. The
term ‘The Fund’ is defined to mean ‘any transfer of funding from [the Department] to
[the Agency] for onward transfer to ECBF, the purpose of which is to implement,
administer and or support the Project’.
[17] Clause 2 summarises the object of the agreement and defines the roles of the
parties. It notes that the ECBF ‘has been identified as the suitable partner for
commercialization of 200 black smallholder beef cattle farmers in the Eastern Cape’.
7 This total amount was made up of R15 million in the first year, R21 308 000 in the second year and
R31 227 000 in the third year.
It notes too that in terms of the Department’s Agriculture Transformation Strategy, it
‘strives to expand beef production in the Eastern Cape by tapping into the underutilized
40% cattle population that are in the hands of smallholder farmers’. The Agency,
clause 2 asserts, was established, as an ‘entity’ of the Department, to ‘champion rural
development’ in the Eastern Cape and is able to receive and administer the project’s
funds.
[18] Clause 3 defines the purpose of the agreement as follows:
‘Develop, promote commercial cattle production and marketing of appropriate products to
promote rural economic development through establishment of economically sustainable
cattle production in the Eastern Cape that create jobs, empowerment, promote value addition
and increase agricultural contribution to provincial [GDP].’
[19] The objectives of the agreement are listed in clause 4. First, the project aimed
to transform the beef production value chain by ‘introducing 200 smallholder black
farmers into local and international markets’. Secondly, the project aimed to
background and finish 18 000 steers over a three year period. Thirdly, the project was
intended to introduce ‘superior genetic material’ to 25 of the identified farms. Fourthly,
it sought to facilitate ‘market access for the finished steers in the local and international
markets’. Finally, it was aimed at facilitating ‘[agri]-processing and value-adding of the
finished steers to create broad-based BEE participating in the beef value chain’ and
to create ‘new sustainable jobs in the beef value chain’.
[20] In order to achieve these objects, in terms of clause 5, the Department
appointed the Agency to receive and administer the project’s funds on behalf of the
Department. The ECBF was appointed ‘to be the agricultural and business developer
for the Project accountable to [the Agency]’. In terms of clause 6, the agreement was
to endure from the date of the last signature, which was 16 July 2018, until 31 March
2021. Its budget, according to clause 7.1, was R67 535 000, which would be utilized
in accordance with a business plan and administered by the Agency.
[21] Clause 8 lists the duties of the ECBF. They include using the funds ‘for the
purposes set out in the business plan, implementation plan and budget of the project,
which have been approved by the Department’; putting in place ‘appropriate internal
procurement and financial controls to ensure effective, efficient and transparent
financial management’ and the keeping of ‘proper books of account’; drafting annual
implementation plans and submitting them timeously to the Department; and
submitting reports to the Department.
[22] In terms of clause 9, the duties of the Department include the transfer of the
project’s funds to the Agency; the evaluation of business plans; the monitoring and
evaluation of the project; the verification of reports and invoices; and the maintenance
of records relating to the project.
[23] The duties of the Agency are listed in clause 10. They include the
implementation of the project; receiving and administering the project’s funds;
maintaining accurate records of all project transactions; the monitoring and evaluation
of the implementation of the project; and reporting to the Department on a quarterly
and annual basis.
[24] It will be noted that the agreement is rather sparse on the detail of how the
project will in fact operate. That is to be found in the business plan. Essentially, the
Department’s funds were to be utilized by the ECBF, after having been channeled
through the Agency, to purchase beef weaners8 and to supply them, at cost, to the
farmers identified as beneficiaries of the project. The farmers were then required to
background9 these cattle. When they were ready to be placed in feedlots,10 the farmers
would then sell them, hopefully at a profit. The ECBF was required to provide the
feedlots, abattoirs and access to markets. In addition, the ECBF was to supply the
farmers with veterinary packs, supplementary feed, accredited training, mentorship
and support.
The nature of the agreement
[25] In order to answer the question that this appeal raises – whether the agreement
was one that required, for its validity, the completion of a public procurement process
8 A weaner is a calf that has been weaned during the current year.
9 The term ‘backgrounding’ refers to the optimal use of pasture and forages for the weaners until they
are ready to be placed in a feedlot.
10 A feedlot is a feeding facility for the ‘finishing’ of beef cattle prior to slaughter.
that met the requirements of s 217(1) of the Constitution – it is necessary to consider
the obligations that are imposed by it on the parties within the broader context of its
purpose. This, it seems to me, is far more likely of producing a correct result than an
attempt to pigeon-hole the agreement, as the court below did. In other words, it does
not matter what descriptor is given to the agreement. What is important is whether it
is an agreement relating to the procurement of goods or services. This approach is in
harmony with the approach taken by this court in Airports Company South Africa SOC
Ltd v Imperial Group Ltd and Others,11 in which the reach of s 217(1) of the
Constitution, and the meaning of the terms in dispute before us, were dealt with.
[26] The Airports Company SOC Ltd (ACSA) is a state-owned company – and an
organ of state – that manages airports. It issued a request for bids (RFB) in respect of
the granting of concessions for car-rental facilities at the airports it managed. It
intended to make available to the successful bidders the use of car-rental kiosks and
parking bays, in return for payment. The RFB was challenged by the Imperial Group
Ltd on the ground, inter alia, that it was in conflict with s 217(1) of the Constitution.
[27] As in this case, the central issue was whether the RFB related to the
procurement of goods or services as envisaged by s 217(1). It was argued on behalf
of ACSA that it would simply be granting concessions to successful bidders at a price
and so goods or services were not procured by it.
[28] Two judgments were delivered that differed in emphasis, perhaps, but not in
the result. Both held that the terms of s 217(1) were clear and unambiguous. Molemela
JA, with whom Tshiqi JA concurred, held that s 217(1) does not limit the meaning of
procuring goods or services to state expenditure and it ‘does not restrict the means by
which goods and services are acquired’.12 She held that the RFB envisaged the
successful bidders ‘performing a service on behalf of ACSA’ by promoting the interests
and needs of airport-users in accordance with ACSA’s objects.13 Section 217(1) was,
accordingly, applicable.
11 Airports Company South Africa SOC Ltd v Imperial Group Ltd and Others [2020] ZASCA 2; 2020 (4)
SA 17 (SCA).
12 Para 22.
13 Para 26.
[29] In this process, Molemela JA held, the objects of the legislation that created
ACSA were ‘helpful in ascertaining whether the RFB amounted to contracting for
goods or services’. Among ACSA's objects was 'the acquisition, establishment,
development, provision, maintenance, management, control or operation of any
airport, any part of any airport or any facility or service at any airport normally related
to the functioning of an airport'. It was evident, she held, that ‘the concessions
envisaged in the RFB are aligned to ACSA's objects and key to ACSA's operations’,
and that by inviting bids, ACSA ‘considered itself to be contracting for services’.14 She
concluded, on this issue, as follows:15
‘ACSA's contention that it was effectively leasing its property to successful bidders so that
those bidders could engage in a direct relationship with members of the public fails to take
into account the assertions set out in the extracts above. Bearing those assertions and ACSA's
strategy in mind, as well as the presentation ACSA made to prospective bidders as part of the
pre-tender roadshow, it cannot be gainsaid that the essence of the transaction is that ACSA
contracts with car-rental companies to complete and enhance the services available to its
customers at its airports in accordance with its own mandate as contemplated in the ACSA
Act. In this case the focus falls on what constitutes services in s 217 of the Constitution. The
successful operation of a modern airport is heavily dependent upon passengers on arrival
being able to secure transport to their ultimate destination, and the ability to hire a car for
onward travel is essential. In order to ensure the availability of that service for its passengers,
ACSA had to contract with car-hire firms to provide it. The RFB proposes to do that by leasing
facilities at airports to car-rental firms. ACSA's suggestion that the granting of concessions to
car-rental firms as envisaged in the RFB did not equate to it contracting for services with those
bidders within the meaning of s 217 of the Constitution thus amounts to the elevation of form
over substance.’
[30] In similar vein, Ponnan JA, with whom Cachalia and Wallis JJA concurred, said
the following of s 217(1) and its scope:16
‘The language of s 217(1) is clear. It applies whenever an organ of state “contracts for goods
or services”. These words are plain and unqualified. They make it clear that the section applies
whenever an organ of state contracts for goods or services, whether for itself or for somebody
else. ACSA's restrictive reading thus finds no support in the plain language of the section.
14 Para 24.
15 Para 25.
16 Para 63.
ACSA suggests that the ambit of the section is limited by the reference to the word
“procurement” in the heading and in s 217(2). The ordinary meaning of “procure” is “obtain”.
In any event, s 217(1) spells out what the section means when it speaks of “procurement”,
which is “to contract for goods or services”. It thus places the meaning of the word beyond
doubt. ACSA suggests that the RFB is not directed at procurement but only at contracts for
the lease of premises to car-rental companies, who provide their services directly to the public.
But, that is to elevate form above substance. The substance of the transaction is that ACSA
contracts with car-rental companies to provide a public service at its airports. That is how
ACSA itself described the transaction in the RFB.’
[31] Before I turn to an application of the principles set out in Airports Company
South Africa to the facts of this case, it is necessary to say something of another
argument made on behalf of Agribee. It was that this court, in Auditor-General of SA v
MEC for Economic Opportunities, Western Cape and Another,17 held, in
circumstances similar to those in this case, that payments made in respect of an entity
that performed a similar role to the ECBF were classified as transfers, and not
payments for goods and services, because that body was the agent of the provincial
government. From this, it followed, according to the argument, that the procurement
of goods and services did not arise in this case, with the result that s 217(1) was not
implicated.
[32] Agribee reads too much into Auditor-General of SA. It concerned the
interpretation of an accounting standard issued by the National Treasury that had its
origin in s 216(1) of the Constitution. It had nothing to do with procurement and the
applicability of s 217(1). Indeed, the court made the point specifically that procurement
issues were not even alluded to in the papers and may have been of interest to the
Auditor-General ‘down the line, as it were’.18 The case is thus distinguishable from the
present matter and no authority for the proposition that s 217(1) is of no application to
the agreement with which we are concerned.
[33] It is clear from the terms of the agreement that the project pursued by the
Department, the Agency and the ECBF fell within the core functions of both the
17 Auditor-General of SA v MEC for Economic Opportunities, Western Cape and Another [2021] ZASCA
133.
18 Para 34.
Department and the Agency. In respect of the objects of the Department, it was aimed
at support for, and the growth of, a part of the agricultural sector in the Eastern Cape,
in line with its strategy to focus, inter alia, on the commercialization of smallholder beef
production. From the Agency’s point of view, the agreement was aimed at promoting,
supporting and facilitating rural development, in relation to beef production in
particular, in the province.
[34] In order to achieve these objects, public money – more than R67. 5 million over
three years – was budgeted. The funds were to be used to pay for the ECBF’s
acquisition of beef weaners, which it was required to deliver, at cost, to the project’s
beneficiaries. It was also required to provide veterinary kits, supplementary feed and
so on. After the cattle had been backgrounded by the beneficiaries, the ECBF was
required to step in again to deliver them to feedlots, to arrange for their slaughter and
to market the product.
[35] The agreement, therefore, contemplated that goods, in the form of beef
weaners, would be delivered to beneficiaries by the ECBF, together with veterinary
kits and feed supplements. In addition certain services, such as training and
mentorship, would be provided to beneficiaries by the ECBF.
[36] While the direct beneficiaries of the goods and services were the smallholder
farmers who had been identified as participants in the project, the Department and the
Agency also benefited from the services provided by the ECBF. They contracted with
the ECBF to provide the goods and services that, otherwise, they would have had to
provide in order to fulfil their mandates. If the ECBF had not undertaken the task, the
Department and the Agency would have had to acquire the beef weaners, care for
them prior to delivery, arrange for their delivery to feedlots when they were ready,
arrange for their slaughter and arrange for the marketing of the product. These were
services the ECBF provided to the Department and the Agency in terms of the
agreement.
[37] The conclusion is, in my view, inescapable that s 217(1) applied to the
agreement. The absence of any procurement process, let alone one that met the
requirements of the section, prior to the conclusion of the agreement renders it
invalid.19 It follows that the court below erred in its characterization of the agreement
as one that did not require compliance with s 217(1). In the result, the appeal must
succeed.
The order
[38] Mr Rorke, who appeared for the appellants no longer sought the review and
setting aside of the agreement but, rather, a declaratory order to the effect that it was
invalid. He submitted that this was the appropriate remedy in the light of the
Constitutional Court’s finding as to the effect of such an order in Buffalo City
Metropolitan Municipality v Asla Construction (Pty) Ltd.20 In that case, Theron J held
that the effect of a declarator, rather than an order setting aside the agreement, was
to preserve the accrued rights of the parties but not ‘further rights under the invalid
agreement’.21 I propose to make an order in those terms.
[39] I make the following order.
The appeal is upheld with costs.
The order of the court below is set aside and replaced with the following order.
‘1
It is declared that the agreement concluded on 16 July 2018 between the
Department of Rural Development and Agrarian Reform in the Eastern Cape provincial
government, the Eastern Cape Rural Development Agency and the Eastern Cape
Beef Fund is invalid.
The first respondent is directed to pay the applicants’ costs.’
____________________
C Plasket
Judge of Appeal
19 Premier, Free State and Others v Firechem Free State (Pty) Ltd [2000] ZASCA 28; 2000 (4) SA 413
(SCA) para 30; Metro Projects CC and Another v Klerksdorp Municipality [2003] ZASCA 91; 2004 (1)
SA 16 (SCA) para 14.
20 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (4) SA 331
(CC); 2019 (6) BCLR 661 (CC).
21 Para 105.
APPEARANCES
For the appellants:
S Rorke SC
Instructed by:
Wesley Pretorius and Associates Inc,
East London
Honey Attorneys, Bloemfontein
For the first respondent:
C J Pammenter SC and J Y Thobela-
Mkhulisi
Instructed by:
Garlicke & Bousfield Inc, Durban
Webbers Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
6 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.
Eastern Cape Rural Development Agency and Another v Agribee Beef Fund (Pty)
Ltd (827/2020) [2022] ZASCA 2 (6 January 2022)
MEDIA STATEMENT
The Supreme Court of Appeal (SCA) today upheld the appeal of the Eastern Cape
Rural Development Agency (the ECRDA) and the MEC for Rural Development and
Agrarian Reform in the Eastern Cape provincial government against Agribee Beef
Fund (Pty) Ltd (Agribee).
On 16 July 2018, a tripartite agreement was concluded by the ECRDA, the
Department of Rural Development and Agrarian Reform in the Eastern Cape provincial
government (the Department) and the Eastern Cape Beef Fund (the ECBF), the
trading name of Agribee. The purpose of the agreement was to support and develop
smallholder beef farmers in the Eastern Cape.
For this purpose, the Department had a three-year budget of R67 535 000.
These funds would be transferred to the Agency which, in turn, would disburse funds
to the ECBF when required. The ECBF’s role was to acquire a large number of recently
weaned beef cattle and to deliver them to the smallholder farmers who had been
identified as beneficiaries of the project. The ECBF was also to provide veterinary
packs, feed supplements, training and mentorship to the beneficiaries. They, in turn,
would rear the cattle to the point when they were ready to be moved to feedlots. The
ECBF would deliver the cattle to feedlots, arrange for their slaughter and the marketing
of the meat.
Before the agreement had run its three-year course, the Agency and the MEC
of the Department applied to the Eastern Cape High Court, Grahamstown for an order
setting the agreement aside. The basis for the application was that the agreement was
invalid because its conclusion had not been preceded by a procurement process that
met the requirements of s 217(1) of the Constitution. This section requires that, when
organs of state contract for goods or services, they must do so in accordance with a
system that is ‘fair, equitable, transparent, competitive and cost-effective’. While it was
common cause that no such process was followed, Agribee argued that s 217(1) was
of no application because the agreement was not one for goods or services. The high
court upheld Agribee’s argument and dismissed the application to set aside the
agreement.
On appeal, the SCA arrived at a different conclusion. It found that the
agreement, when considered within the wider context of its purpose and the mandates
of the Agency and the Department, was indeed one for the provision of goods or
services. The ECBF provided goods to the beneficiaries in the form of the cattle, the
veterinary packs and the feed supplements. It provided services to the beneficiaries in
the form of training, mentorship, delivering the cattle to feedlots, arranging for their
slaughter and attending to the marketing of the meat. It provided services to the
Agency and the Department by providing goods and services to the beneficiaries
which the Agency and the Department would otherwise have had to provide
themselves.
As a result, the appeal was upheld. The high court’s order was set aside and
replaced with an order declaring the agreement to be invalid.
|
69
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 245/2016
In the matter between:
BRAYTON CARLSWALD (PTY) LTD
FIRST APPELLANT
MARTINA BREWS
SECOND APPELLANT
and
GORDON DONALD BREWS
RESPONDENT
Neutral citation: Carlswald & another v Brews (245/2016) [2017] ZASCA 68
(31 May 2017)
Coram:
Theron, Majiedt, Dambuza and Mathopo JJA and Coppin AJA
Heard:
9 May 2017
Delivered: 31 May 2017
Summary: Contract: cession: may be oral: where parties agree to reduce
contract to writing there will be no contract until terms have been reduced to
writing: once cession reduced to writing parties bound by the terms of the deed of
cession and cannot rely on oral negotiations.
At time of execution of deed of cession the judgment debt had been extinguished
by payment: cession is a nullity: a non-existent debt cannot be transferred.
______________________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Makume, Makhanya and Mokgoatlheng JJ sitting as court of appeal):
1 The appeal is upheld with costs.
2 The order of the court a quo is set aside and replaced with the following:
„The appeal is dismissed with costs.‟
______________________________________________________________________________
JUDGMENT
______________________________________________________________________________
Theron JA (Majiedt, Dambuza, Mathopo JJA and Coppin AJA concurring):
[1] The issue on appeal is whether, as a matter of law, it is competent to effect
cession of a claim after the underlying obligation has been extinguished by
payment.
[2] The facts giving rise to this matter are largely common cause. On 18
October 2004, judgment under case number 21149/2002, was granted in favour of
Firstrand Bank Limited t/a Origin (the bank) against Brayton Carlswald (Pty) Ltd
(the first defendant in that matter and the first appellant in this appeal) and Mr
Jonathan Paul Brews (the second defendant) (hereinafter referred to as the
defendants) for, inter alia, payment of the sum of R3 227 582,44.
[3] In execution of this judgment, the bank caused certain immovable properties
owned by the first appellant, to be attached. In order to avoid a sale in execution of
the immovable properties, the defendants approached the respondent, Mr Gordon
Donald Brews, with a request that he pay their indebtedness to the bank. On 26
April 2005, the respondent and the defendants concluded a loan agreement in terms
of which the respondent agreed to pay the full debt due to the bank. The
defendants agreed, as security for the loan, to procure a pledge of shares in the
company, KGM 74 Investments (Pty) Ltd, in favour of the respondent, to pass a
covering mortgage bond over the properties attached pursuant to the judgment and
that the respondent would take cession of the judgment from the bank.
[4] Prior to payment, there had been a series of discussions between the
respondent and the bank relating to the cession of the judgment debt to the
respondent. The bank agreed to cede the judgment debt to the respondent once the
latter had made full payment of the debt. On 3 May 2005 and 10 August 2005, the
respondent paid a total amount of R4 439 675,80 to the bank in settlement of the
defendants‟ indebtedness to it, which comprised the judgment debt and an
additional claim.
[5] The Deeds Office refused to register a covering mortgage bond as the bank‟s
attachment in respect of the properties had not been uplifted. On 29 June 2007 and
after the upliftment of the attachment, the mortgage bond was again lodged for
registration in the Deeds Office. The registration could not proceed as there was an
amount of R234 320,29 owing to the City of Johannesburg in respect of rates and
municipal charges. The defendants sought and were granted further financial
assistance from the respondent. By then, their indebtedness to the respondent had
increased to more than R10 million. On 29 August 2008, the bank, in writing,
ceded its rights to the judgment and any additional claims against the defendants,
to the respondent.
[6] On 23 February 2011, the respondent brought an ex-parte application in the
South Gauteng High Court, Johannesburg (the high court) for an order directing
that he be substituted as execution creditor in all execution documentation issued
or re-issued in the action between the bank and the defendants under case number
21149/2002. The second appellant, Mrs Martina Brews (the former wife of Mr
Jonathan Brews), applied for leave to intervene in the application. The basis for her
intervention was set out as follows in her affidavit filed in support of the
application to intervene:
„4.
I am a beneficiary of the Narica Trust, which trust is the sole shareholder of the First
Defendant in this matter. The Second Defendant was the previous sole director of the First
Defendant and he was removed there from in terms of an application brought before this
Honourable Court. The Second Defendant is also a cousin of Gordon and they have undertaken
many business ventures between them. I believe that the Second Defendant deliberately, and
knowing the effect on the First Defendant, colluded with Gordon in obtaining this judgment for
Gordon's benefit. I believe that the First Defendant has been the victim of a fraudulent plot by
Gordon and the Second Defendant. These allegations and many more will be more fully dealt
with in my answering affidavit should I be granted leave to intervene.
5.
I currently reside on the property 267 Papenfus Road, Beaulieu, which property is owned
by the First Defendant. Furthermore the property is the sole asset of the First Defendant and the
Narica trust.
6.
I am financially dependent on the abovementioned property, as I earn a living from the
property by keeping an equestrian training academy thereon which academy is and has been for
the past 7 (seven) years my sole and only source of income. Furthermore at all times the property
was intended to be mine and my two daughter's source of financial security in the future. Should
I be deprived of this it will effectively leave me indigent and homeless.
7.
In the circumstances, I stand to suffer direct and severe financial loss should the ex parte
Application be granted. However as will become more apparent from my Answering Affidavit,
Gordon has no right to be substituted instead of First Rand Bank Limited (Plaintiff).
8.
Not only will I suffer direct and severe financial loss, I will not be able to provide for my
minor daughter and older daughter who are both financially dependant on me. However in the
event of me being granted leave to intervene, no other party, including Gordon, will suffer any
prejudice of any nature whatsoever.‟
The application to intervene was opposed by the respondent.
[7] The high court (Kades AJ) dismissed the respondent‟s application with
costs. An appeal by the respondent to the full court (court a quo), was upheld and
an order of substitution, together with costs, was granted in favour of the
respondent. The appellants‟ appeal against this judgment is with special leave
from this court.
[8] It was common cause that the high court had made no order in respect of the
application to intervene. Similarly, the court a quo also did not pronounce upon
this matter, save to record in its judgment that:
„The appellant filed a notice to appeal and set out lengthy grounds of appeal which included an
attack on the right of the intervening party to be heard. However, this challenge was not pursued
in the Heads of Argument, correctly so‟.
At the hearing of this appeal, the respondent accepted, for purposes of this
judgment and to prevent any further delay, that the second appellant was a party to
these proceedings.
[9] Cession has been defined as a bilateral juristic act in terms of which a right
is transferred by agreement between the transferor (cedent) and transferee
(cessionary).1 Generally, no formalities are required for the antecedent obligatory
agreement or the act of cession.2 The parties may agree on the formalities with
which the cession is to comply.3 A cession may thus be either express or tacit, or
may be inferred from the conduct of the parties.4 While the cession does not have
to be reduced to writing, the parties may agree that the cession will only be valid if
reduced to writing.5
[10] The deed of cession in this matter contains both the antecedent obligatory
agreement (the agreement to cede) as well as the act of cession. The Preamble of
the Cession records in relevant part:
„1.2
On 3 May 2005 the CESSIONARY settled the JUDGMENT on behalf of the DEBTOR.
1.3
After the JUDGMENT was settled, there remained an additional claim in favour of the
BANK against the DEBTOR in the amount of R238 891,51, together with interest on the amount
of R209 882,48 at the rate of 8,25% per annum from 3 June 2005 to date of payment, calculated
daily an[d] compounded monthly, both days inclusive, (“the ADDITIONAL CLAIM”)
1.4
On 10 August 2005, the CESSIONARY made a final payment to the BANK on behalf of
the DEBTOR in settlement of the ADDITIONAL CLAIM.
1.5
In return for the payments made by the CESSIONARY on behalf of the DEBTOR, the
BANK agreed to cede the JUDGMENT and the ADDITIONAL CLAIM to the CESSIONARY.‟
[11] The act of cession reads:
„2.1
The BANK hereby cedes, transfers and makes over unto and in favour of the
CESSIONARY, all of the BANK‟S right, title and interest in and to the JUDGMENT and the
ADDITIONAL CLAIM.‟
The cession is accepted by the respondent in the following terms:
1 P M Nienaber in the title on „Cession‟ 3 Lawsa 3ed para 128; LTA Engineering Co Ltd v Seacat Investments (Pty)
Ltd 1974 (1) SA 747 (A) at 762A; 1974 (2) ALL SA 6 (A).
2 National Sorghum Breweries Ltd v Corpcapital Bank Ltd 2006 (6) SA 208 (SCA); [2006] 2 ALL SA 376 (SCA)
para 1.
3 National Sorghum Breweries supra para 1.
4 Botha v Fick 1995 (2) SA 750 (A) at 762B-H and 778F-G.
5 S Scott, The Law of Cession 2ed (1991) at 26 fn 16.
„The CESSIONARY hereby accepts the cession upon and subject to the terms of this
Agreement.‟
[12] In this court and in the court a quo, it was contended, on behalf of the
appellants, that at the time when the deed of cession was executed and fulfilled on
9 September 2008, there was nothing to cede because the debt had been
extinguished by payment. This argument was rejected by the court a quo which
reasoned as follows:
„[25] In my view the first respondent‟s argument is without merit because shortly before the
appellant paid the judgment debt the respondents acknowledged their indebtedness to the
appellant and agreed on the 26th April 2005 that the appellant should take cession of the
judgment debt. This was before the appellant settled the judgment debt on the 3rd May 2005.
[26] It is clear from the ratio of the above cited cases that the appellant stepped in as a form of
surety for the respondents‟ debt at a time when the respondents‟ immovable property was under
judicial attachment and was due to be sold. The fact that the deed of cession between plaintiff
and the appellant was only executed three years later and after payment of the judgment debt,
does not in my view divest the appellant of the right to the judgment debt which was ceded to
him prior to payment.
[27] Transfer of the right to the judgment debt was achieved by the interactive meeting of the
minds of the respondents and the appellant. By their mere agreements when the loan was
advanced transfer of the right to the judgment was effected irrespective of the date of signing of
the deed of cession which was a mere formality confirming what had been agreed upon on the
26th April 2005 prior to payment of the debt.‟
[13] The reasoning of the court a quo is flawed in a number of respects. The
defendants could not transfer a right in the judgment debt to the respondent. They
could not cede something that did not belong to them and to which they had no
right. This is in accordance with the common law adage that nobody can transfer
more rights to another than he himself has (nemo plus iuris ad alium transferre
potest quam ipse haberet).6 The right could only be transferred from and by the
bank to the respondent or any other party it chose. There could therefore not have
been a „transfer of the right to the judgment debt . . . by the interactive meeting of
the minds‟ of the appellants and the respondent as the court a quo found.7
[14] The cession was not a „mere formality‟ as found by the court a quo. The
deed of cession was a juristic act in terms of which the cession was executed.
Whatever happened prior to the execution of the cession was of an obligatory
nature and a duty to cede arose on account of a promise made by the Bank. That
duty was fulfilled by the execution of the deed of cession.
[15] The court a quo failed to distinguish between the agreement to cede (the
obligatory agreement whereby an obligation is created) also referred to as the
pactum de cedendo and the cession itself (the real agreement whereby rights are
bilaterally transferred) also known as the pactum cessionis. In Grobbelaar &
others v Shoprite Checkers Ltd,8 Brand JA explained that „[a] cession is an abstract
legal act that is independent of the underlying, obligationary, agreement‟.9 Justice
P M Nienaber puts it well in his contribution to the Law of South Africa, aptly
distinguishing between these two types of agreements:
„The undertaking to cede and the actual cession will often coincide and be consolidated in a
single document, yet they remain discrete juristic acts. However, because they are frequently
merged into one transaction the clear distinction between the obligatory agreement to cede and
6 Oriental Products (Pty) Ltd v Pegma 178 Investments Trading CC & others (2011 (2) SA 508 (SCA); [2011] 3 All
SA 173 (SCA)) [2010] ZASCA 166; 126/2010 (1 December 2010) para 26.
7 Para 12 above.
8 Grobbelaar & others v Shoprite Checkers Ltd (710/2008) [2011] ZASCA 11 (11 March 2011).
9 Ibid, para 18.
the actual cession sometimes tend to be smudged. They are nevertheless distinct in function and
can be so in time: by the former a duty to cede is created, by the latter it is discharged.‟10
[16] It has already been stated that while a cession does not have to be reduced to
writing, the parties may agree that the cession will only be valid if reduced to
writing.11 The leading judgment on this point is that of Innes CJ in Goldblatt v
Fremantle12 where the learned Chief Justice said that the question in each case is
one of construction.13 He stated, in a passage that is often referred to with
approval:14
„Subject to certain exceptions, mostly statutory, any contract may be verbally entered into;
writing is not essential to contractual validity. And if during negotiations mention is made of a
written document, the Court will assume that the object was merely to afford facility of proof of
the verbal agreement, unless it is clear that the parties intended that the writing should embody
the contract. (Grotius 3.14.26 etc.). At the same time it is always open to parties to agree that
their contract shall be a written one (see Voet 5.1.73. V. Leeuwen 4.2., sec. 2, Decker's note); and
in that case there will be no binding obligation until the terms have been reduced to writing and
signed‟.15
[17] The deed of cession, far from being a „mere formality‟, as found by the court
a quo, is critical in determining the intention of the parties. When interpreting
documents, words must be read in their context and in application of the subject
10 2 Lawsa 2ed Part 2 para 8; Botha supra fn 4 at 765A-B.
11 S Scott, The Law of Cession 2ed (1991) at 26 fn 16.
12 Goldblatt v Fremantle 1920 AD 123.
13 Ibid at 129.
14 See Weinerlevin v Goch Buildings Ltd 1925 AD 282; Sapro v Schlinkman 1948 (2) SA 637 (A); Morgan &
another v Brittan Boustred Ltd 1992 (2) SA 775 (A); Lambons (Edms) Bpk v BMW (Suid-Afrika) (Edms) Bpk 1997
(4) SA 141 (SCA); Pillay & another v Shaik & others [2008] ZASCA 159; 2009(4) SA 74 (SCA) ; [2009] 2 All SA
435 (SCA).
15 Goldblatt supra fn 10 at 128-129.
matter to which they relate.16 The ordinary meaning of the words must be
determined in the context of the document, read as a whole.17
[18] It is clear from the deed of cession that the parties intended that the written
document embody their contract. The words of clause 2.1, „The BANK hereby
cedes, transfers and makes over‟ make plain what was intended by the bank and
the respondent. In terms of the deed of cession, the respondent accepted the
„cession upon and subject to the terms of this [a]greement.‟ The parties intended
that upon signature thereof, transfer of the right would take effect.
[19] When the deed of cession was executed and fulfilled, there was nothing to
cede because the debt had been extinguished by payment. Payment usually serves
to extinguish a debt. The author JC Sonnekus in Unjustified Enrichment in South
African Law states that „a debt is after all fulfilled and extinguished through
payment.‟18 Brand JA in Grobler v Oosthuizen19 held that a cession cannot stand
without a principal debt and „it matters not whether the principal debt is
extinguished or never existed at all‟.20 The learned judge quoted and found support
for this view in the following dictum by Watermeyer J in Standard Bank of SA Ltd
v Neethling NO:21
16 Consolidated Diamond Mines of South West Africa Ltd v Administrator, SWA & another 1958 (4) SA 572 (A) at
599A-C.
17 Liebenberg NO & others v Bergrivier Municipality [2013] ZACC 16; 2013 (5) SA 246 (CC); 2013 (8) BCLR 863
(CC) para 39. See Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA
593 (SCA) paras 17-26; Air Traffic and Navigation Services Company v Esterhuizen (668/2013) [2014] ZASCA
138 (25 September 2014) para 22; Nelson Mandela Bay Municipality v Amber Mountain Investments 3 (Pty) Ltd
(576/2016) [2017] ZASCA 36 (29 March 2017) para 14.
18 J C Sonnekus, Unjustified Enrichment in South African Law, (2008) at 237.
19Grobler v Oosthuizen [2009] ZASCA 51; 2009 (5) SA 500 (SCA); [2009] 3 All SA 508 (SCA).
20 Ibid para 21.
21 Standard Bank of SA v Neethling NO 1958 (2) SA 25 (C).
„. . . [T]he next point which arises is whether the cession of the policy and the security created
thereby was rendered null and void on the extinction of the principal debt. In this regard I refer
first to Kilburn v Estate Kilburn, 1931 AD 501 at p. 506, where WESSELS, A.C.J., said:
“It is therefore clear that by our law there must be a legal or natural obligation to which the
hypothecation is accessory. If there is no obligation whatever there can be no hypothecation
giving rise to a substantive claim.”
Kilburn’s case was not a case where a principal obligation subsequently became extinguished. It
was a case where there never had been a principal obligation. It seems to me however that there
is no distinction in principle between the two cases . . . After . . . the principal debt was
extinguished . . . there remained no obligation to support the cession by way of security.‟22
[20] It follows that when „transfer‟ of the real right was effected, there was no
right which could be transferred. The respondent had paid the bank all that was
due to it. Transfer of a „right‟ which has been extinguished is a nullity as there is
nothing which can be transferred. I agree with the principle that as a matter of
logic, a non-existent right can never in law be transferred as the subject matter of a
cession.23 The respondent, the bank and their legal representatives, ought to have
considered the effect of the payment of a debt, which had been ceded where the
cessionary was not a surety.
[21] The court a quo relied on and applied principles of the law of suretyship
(para 26 of the judgment quoted above). The respondent was not a surety for the
debt of the defendants. It was common cause that they had not concluded a
suretyship agreement. The court a quo‟s reasoning in this regard is thus based on
an incorrect premise.
22 Ibid, at 30A-D.
23 See Joubert JA in First National Bank of SA Ltd v Lynn NO & others 1996 (2) SA 339 (A) at 346C (minority
judgment).
[22] Cession of an action is an ex lege benefit afforded to a surety who pays a
creditor and that entitles a surety to claim cession of action from the creditor. This
is a clear exception to the principle that once a liability has been extinguished by
payment, the right to payment is extinguished and cannot be transferred.24
[23] It was contended, on behalf of the respondent, that the correspondence
exchanged between the legal representatives of the respondent and the bank,
contains the cession itself and is not merely an intention to cede. It was further
contended that the intention of the parties should be ascertained with regard to such
correspondence and that the deed of cession was merely a recordal of their
previous agreement.
[24] It would appear that negotiations between the aforementioned legal
representatives commenced during April 2005. On 3 May 2005 the respondent‟s
attorneys, Stanley Brasg & Associates, wrote a letter to Routledge Modise Moss
Morris, who acted on behalf of the bank, in which they recorded that they had paid
an amount of R4,2 million into the bank account nominated by the respondent. The
concluding sentence of that letter reads:
„Kindly confirm that your client will sign the required Cession of Judgment in favour of our
client‟
The reply from Routledge Modise, reads, in relevant part:
„We confirm that your Mr Brasg will draft the cession of the judgments obtained by our client on
a basis suitable to your client and which will be signed by our client once the balance of the
monies owing to our client, have been paid‟.
This exchange of correspondence is not without significance. Despite the fact that
the respondent had paid R4,2 million to the bank, the latter still refused to sign the
24 S Scott, The Law of Cession 2ed (1991) at 218 and C F Forsyth and J T Pretorius Caney’s The Law of Suretyship
in South Africa, 6ed (2010) at 154 fn 69.
draft deed of cession on the basis that further monies were owed to it by the
defendants.
[25] On 1 June 2005 Stanley Brasg wrote a letter to Routledge Modise in which
they recorded that they had been placed in funds, they were in a position to make
payment and requested details of the final amount due. They attached a draft
Agreement of Cession of the judgment in favour of the bank, to the respondent.
The response to that letter, dated 6 June 2005, recorded the amount due and stated:
„Upon receipt of payment of the aforesaid amount into our client‟s account . . . we will arrange
for our client to sign the agreement of cession attached to your telefax of 1 June 2005.‟
[26] The contention advanced on behalf of the respondent cannot be sustained. It
is clear from the correspondence that the deed of cession would be executed after
payment was made by the respondent and was not to be contemporaneous with
payment. The correspondence between the parties is consistent with an intention
on the part of the bank to execute the deed of cession after payment of the
judgment debt.
[27] In his Founding Affidavit, the respondent relied on the written deed of
cession for the relief of substitution. He made the following averment in support of
his application:
„In settlement of the Defendants‟ total indebtedness to the Plaintiff, I made payment to the
Plaintiff's attorneys of the sum of R4 439 675,80. Against such payment, the Plaintiff, on 29
August 2008, signed an Agreement ceding its rights to the Judgment and its additional claims
against the Defendants, to me. I attach hereto marked “FA6”, a copy of the Agreement of
Cession‟.
A copy of the deed of cession was attached to his affidavit.
[28] In his Replying Affidavit, the respondent‟s version was altered to encompass
a contemporaneous cession upon payment of the judgment debt. He stated that:
„The condition precedent to my paying the Plaintiff the amount of the judgment, was that I take
cession of the judgment from the Plaintiff. Only after the Plaintiff had agreed to my condition
and had agreed to cede the judgment to me, was payment made. I effectively purchased the
Plaintiff‟s rights in and to the judgment.‟
[29] In my view, there are two insurmountable hurdles in the „new‟ version being
accepted. First, the general rule in motion proceedings is that an applicant must
stand or fall by the averments made out in its founding affidavit.25 It is not
permissible to make out a new case in the replying affidavit.26 Secondly, the terms
of the deed of cession are inconsistent with the „new‟ version. The parties thereto,
having elected to reduce their agreement to writing, are bound by such election and
the resultant agreement.
[30] For these reasons the following order is made.
1 The appeal is upheld with costs.
2 The order of the court a quo is set aside and replaced with the following:
„The appeal is dismissed with costs.‟
_________________
LV Theron
Judge of Appeal
25 Betlane v Shelly Court CC [2010] ZACC 23; 2011(1) SA 388 (CC) para 29; 2011 (3) BCLR 264 (CC); National
Council of Societies for the Prevention of Cruelty to Animals v Openshaw [2008] ZASCA 78; 2008 (5) SA 339
(SCA) paras 29-30.
26 Betlane supra ibid; Director of Hospital Services v Mistry 1979 (1) SA 626 (A) at 636A-B.
APPEARANCES:
For the Appellants:
P Pauw SC
Instructed by:
Botoulas Krause & Da Silva Inc, Johannesburg
McIntre & Van der Post, Bloemfontein
For the Respondent:
S M Katzew
Instructed by:
Stanley Brasg & Associates, Johannesburg
Lovius Block, Bloemfontein
|
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
BRAYTON CARLSWALD (PTY) LTD & ANOTHER V GORDON DONALD BREWS
From: The Registrar, Supreme Court of Appeal
Date: 30 May 2017
Status: Immediate
Please note that the media summary is for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.
The Supreme Court of Appeal (SCA) today dismissed an appeal by the appellants.
This issue on appeal was whether, as a matter of law, it is competent to effect
cession of a claim after the underlying obligation has been extinguished by payment.
Judgment was granted in the court a quo, in favour of Firstrand Bank Limited t/a
Origin (the bank) against Brayton Carlswald (Pty) Ltd (the first defendant in that
matter and the first appellant in this appeal) and Mr Jonathan Paul Brews (the
second defendant) (hereinafter referred to as the defendants) for payment of R
3 227 582,44. In order to avoid a sale of execution of the immovable properties, the
defendants approached the respondent, Mr Gordon Donald Brews with a request
that he pay the indebtedness to the bank. On 26 April 2005, the respondent and the
defendants concluded a loan agreement in terms of which the respondent agreed to
pay the full debt due to the bank. On 29 August 2008, the bank in writing, ceded its
rights to the judgment and any additional claims against the defendants to the
respondent.
The SCA held that the cession was not a ‘mere formality’ as found by the court a
quo. The deed of cession was a juristic act in terms of which the cession was
executed. Whatever happened prior to the execution of the cession was of an
obligatory nature and a duty to cede arose on account of a promise made by the
bank. That duty was fulfilled by the execution of the deed of cession and there was
nothing to cede because the debt had been extinguished by payment.
The SCA held further that the parties elected to reduce their agreement to writing
and are bound by such election and the resultant agreement.
|
36
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 260/2016
In the matter between:
CATHAY PACIFIC AIRWAYS LTD
FIRST APPELLANT
SHIRLEY JONES SECOND APPELLANT
and
HAI LIN FIRST RESPONDENT
RUIHONG WENG SECOND RESPONDENT
Neutral Citation: Cathay Pacific Airways & another v Lin & another (260/2016)
[2017] ZASCA 35 (29 March 2017)
Coram:
Maya AP and Majiedt and Van der Merwe JJA and Molemela and
Gorven AJJA
Heard:
9 March 2017
Delivered: 29 March 2017
Summary: Practice – urgent application – whether court order issued orally only
was effective – whether there was proper notice and service to affected parties –
contempt of court – whether the requirements for contempt of court were proved
beyond reasonable doubt
___________________________________________________________________
ORDER
On appeal from: Gauteng Local Division of the High Court, Johannesburg (Spilg J
sitting as court of first instance):
1 The appeal against the convictions of civil contempt of court is upheld with costs,
including the costs of two counsel.
2 The orders granted by Spilg J on 11 November 2014, and 14 October 2015
holding the appellants in contempt of court and imposing sentence upon them are
set aside and replaced with an order in the following terms:-
‘(a) The application to hold the third respondent and Ms Shirley Jones in contempt of
court is dismissed.
(b) The applicants are directed to pay the third respondent’s costs.’
3. The appeal against the order in the counterapplication is upheld in part by
substituting the order of Spilg J with the following order:
‘The counterapplication is dismissed with costs.’
___________________________________________________________________
JUDGMENT
Majiedt JA (Maya AP and Van der Merwe JA and Molemela and Gorven AJJA
concurring)
INTRODUCTION
[1] Judges wield enormous power in their courts. Judges decide, sometimes
conclusively, the rights and obligations of the parties before them. They are
independent, subject only to the Constitution and the law, which they are constrained
to apply impartially and without fear, favour or prejudice.1 But these powers must be
1 Section 165(2) of the Constitution: The courts are independent and subject only to the Constitution
and the law, which they must apply impartially and without fear, favour or prejudice.
exercised with great responsibility and with abundant caution. The overriding
consideration in every matter must indubitably be the interests of justice. The
blindfolded Lady Justice balancing the scales in her left hand and holding a sword in
her right hand personifies the moral force of justice. While all three of these attributes
of our system of justice come to the fore in this matter, it is the balancing of the
scales of justice that is paramount.
[2] This appeal concerns contempt of court orders made against the appellants
by Spilg J in the Gauteng Local Division of the High Court, Johannesburg. The
learned Judge found the appellants, Cathay Pacific Airways Limited (Cathay Pacific)
and Ms Shirley Jones, to have acted in contempt of orders granted in that court by
Wright J. Four orders were made by Wright J in a period of one week. This appeal is
with the leave of this court.
THE ISSUES
[3] The main issues for determination are:
(a) under what circumstances is a court empowered to grant an order made
telephonically and how should such an order be recorded and served effectively so
that it comes to the notice of affected parties and is capable of ascertainment;
(b) whether the respondents had discharged the onus of proving that the appellants
had been duly cited in the proceedings and that the court orders had been properly
brought to their knowledge;
(c) the liability for contempt of court of employees of a company in respect of an
order granted against their employer, where such employees had neither been cited
as a party nor an order granted against them.
THE FACTS
[4] The factual matrix is central to the determination of the issues and as such
requires extensive narration. The facts are largely common cause and, to the extent
that they were in issue, the well-known Plascon-Evans2 approach should have been
applied. The facts relevant to the determination of the issues are as follows. The
respondents, Mr Hai Lin and his spouse Ms Ruihong Weng, who are Chinese
2 Plascon-Evans Paints (TVL) Ltd. v Van Riebeeck Paints (Pty) Ltd. (53/84) [1984] ZASCA 51; [1984]
2 All SA 366 (A); 1984 (3) SA 623 (A).
citizens, had been granted permanent South African residency status. They reside in
Umkomaas, Kwa-Zulu-Natal. They have three children, Xuefeng, Zhengyu and Lili
Lin (the children) aged 19, 15 and 14 respectively. At the time,the children had also
received permanent residency status. During the evening of 25 July 2014, the three
children landed at OR Tambo International Airport on board a Cathay Pacific flight
from Hong Kong. The eldest child, Xuefeng, was in control of his two younger
siblings. On presenting themselves to the immigration authorities at the airport, the
two younger children, both of whom were still minors at that time, were refused entry
into the country. This refusal was based on the fact that they did not appear on the
computer system of the Department of Home Affairs (the Department), which was
the second respondent in the court a quo.
[5] Notices of refusal of entry were issued by the Department in respect of all
three children. As far as Zhengyu and Lili were concerned, the notices stated that
they were illegal foreigners on the basis that they were in possession of fraudulent
permanent residency permits. In respect of Xuefeng, the notice declared that he was
an illegal foreigner since he had accompanied his two siblings who were in
possession of the fraudulent permits. The notices were issued in terms of s 34(8) of
the Immigration Act 13 of 2002 (the Act), which reads as follows:
‘(8) A person at a port of entry who has been notified by an immigration officer that he or she
is an illegal foreigner or in respect of whom the immigration officer has made a declaration to
the master of the ship on which such foreigner arrived that such person is an illegal foreigner
shall be detained by the master on such ship and, unless such master is informed by an
immigration officer that such person has been found not to be an illegal foreigner, such
master shall remove such person from the Republic, provided that an immigration officer
may cause such person to be detained elsewhere than on such ship, or be removed in
custody from such ship and detain him or her or cause him or her to be detained in the
manner and at a place determined by the Director-General.’
[6] In terms of the declaration issued to the master of the ship under s 34 (8)
above, Cathay Pacific was instructed to transport the children back to Hong Kong on
the next available flight. That flight was Cathay Pacific flight number CX748 and was
due to leave for Hong Kong at 12h30 the following day, 26 July 2014. The
respondents became aware of the children’s plight on that Friday evening
(25 July 2014) and on the following day instructed an attorney, Mr Ashraf Mohamed
Essop, to assist in the matter. Shortly before 12 noon, Mr Essop telephoned Wright J
(who was the Judge on urgent duty on that day) and conveyed to him the situation
regarding the children. Wright J summarily issued what is referred to in the papers as
a ‘telephonic interdict’ (the first order). The contents of the first order were conveyed
telephonically at approximately 12 noon on 26 July 2014 by Mr Essop to one Mr
Mashoene, who was in the Cathay Pacific office at the airport at the time.
[7] In terms of the first order, Cathay Pacific was interdicted from boarding the
two younger children on the flight. It will be recalled that the flight was scheduled to
depart at 12h30 on that same day. The telephonic instruction to Mr Mashoene was
that Cathay Pacific should not board the two children on the flight for Hong Kong. He
was informed further that there was a court order to that effect. At that time
Mr Mashoene, who was employed not by Cathay Pacific but by Menzies Aviation
(Pty) Ltd as a lost property agent, was in the Cathay Pacific office handling
telephone calls and enquiries relating to lost baggage. In this regard Menzies
Aviation acts as an agent for Cathay Pacific.
[8] In response to the telephonic instruction, Mr Mashoene informed Mr Essop
that he had no control over the matter, but that he would refer the matter to the
employees of Cathay Pacific. To this end, Mr Mashoene conveyed the instruction
telephonically to Ms Zelda Swart, employed by Cathay Pacific as an airport service
officer. Importantly, Ms Swart was not informed by Mr Mashoene that there was a
court order prohibiting the children from boarding the flight. Her attitude was that
Cathay Pacific was enjoined by law to give effect to the Department’s instruction
under s 34(8) of the Act to remove the children from South Africa. The telephone
conversation between Mr Mashoene and Ms Swart occurred while the latter was at
the boarding gate from which passengers, including the children, were boarding flight
CX748 which was departing for Hong Kong. In the event the children left on that
flight for Hong Kong at 12h30 on 26 July 2014.
[9] At approximately 13h15 that same day, Mr Essop telephonically conveyed to
Ms Swart the same instruction as he had conveyed earlier to Mr Mashoene.
Ms Swart’s response was that she was indeed aware of the matter by virtue of
Mr Mashoene’s earlier telephone call, but that she had been legally bound to adhere
to the Department’s instruction and that consequently, the children had left for Hong
Kong on flight CX748. She further explained to Mr Essop that Mr Mashoene was
simply a lost property agent and that as such had no authority to enforce a
telephonic order that the minor children should not board the aircraft.
[10] Mr Essop also sought the assistance of the Department by engaging in a
telephonic conversation with Adv Deon Erasmus, the Department’s Chief Director of
Legal Services. Upon being informed by Mr Essop of the order granted by Wright J,
Adv Erasmus responded that he could do nothing to prevent the children from being
loaded and that he considered the matter to be out of his hands. Subsequently,
Mr Essop sought to extract an agreement from Ms Swart that the children would be
returned to Johannesburg on the next available flight from Hong Kong. Ms Swart
indicated in response that, absent any authority from her superiors and in the face of
the Departmental instruction, she was unable to accede to such a request.
[11] Shortly thereafter, at 14h49 on 26 July 2014, Wright J telephoned Ms Swart
and informed her that he intended to order the return of the children from Hong Kong
on the following Monday, 28 July 2014. Wright J requested that Ms Swart accede to
such an order on behalf of Cathay Pacific. Ms Swart declined once more to agree to
such an order, citing her lack of authority. She suggested, instead, that Wright J take
the matter up with her manager, Ms Shirley Jones, the second appellant in this
appeal. Ms Swart declined to furnish Wright J with Ms Jones’s cellular phone number
but undertook to request Ms Jones to contact the learned Judge. The latter is alleged
to have put Ms Swart to terms, after which he told her to revert to him within two
minutes, failing which he would issue an order. In the event, Ms Swart was unable to
locate Ms Jones and when Ms Swart conveyed this telephonically to Wright J at
around 14h55, the learned Judge indicated that unless he had heard again from
Ms Swart within five minutes, he would issue an order, a draft whereof was
subsequently sent to Ms Swart by e-mail. An incorrect e-mail address was,
however, used in transmitting the draft order. The e-mail was sent to an
@cathypacific.com address, instead of to an @cathaypacific.com address. The
second order was made shortly thereafter at around 15h20.
[12] In providing the written reasons for the second order, Wright J outlined the
above events in respect of both the first order (the ‘telephonic interdict’) and the
second order. In broad terms, the learned Judge confirmed that:
(a) he had issued the first order at 12 noon telephonically over his cell phone in
conversation with Mr Essop;
(b) that he had been informed thereafter at about 13h00 by Mr Essop that the flight
had left at 12h30 with the children on board,3 notwithstanding the order having been
conveyed to Mr Mashoene by both Mr Essop and Ms Mlaba, the Judge’s secretary;
(c) he had engaged in the conversation with Ms Swart narrated above, and that
since no response had been forthcoming from neither Ms Swart nor Ms Jones, he
had issued the second order.
It is necessary to briefly revert to these written reasons at a later stage. It will suffice
to emphasize that the written reasons constitute the only written recordal of the first
order. The order itself had never been reduced to writing.
[13] The terms of the second order were as follows:
‘1. The third respondent, [Cathay Pacific] is to return to OR Tambo International Airport the
children, Zhengyu Lin (with date of birth 18 August 1999 and passport number G34605379)
and Lili Lin (with date of birth 22 November 2000 and passport number G34605382) on the
first available Cathay Pacific flight from Hong Kong to OR Tambo International Airport.
2. The first and second respondents are ordered to admit the children to South Africa.
3. The first and second respondents are interdicted from deporting the children unless the
first and second respondents have a court order to that effect.
4. The first, second, fourth and fifth respondents are ordered to hold the children at the fourth
respondent’s holding facility at OR Tambo International Airport until:
4.1 There is a court order to the contrary or
4.2 They are released into the custody of the applicants at the option of the first and
second respondents.
5. The respondents are to allow the children to be visited by the applicants and the
applicant’s legal practitioners immediately on the children’s arrival at OR Tambo
International Airport.
6. This case is postponed to 14H00 on Monday 28 July 2014 in front of Wright J.
3 While the learned Judge referred to the ‘two younger children’ having been on board, it became
common cause that all three children had left on flight CX748.
7. The second to fifth respondents are to bring the children to court for the hearing at 14H00
on Monday 28 July 2014 before Wright J, High Court Building, corner Pritchard and Kruis
Streets, Johannesburg, Court 9F.
8. The question of costs is reserved.’
[14] The second order was purportedly communicated to Cathay Pacific via an
e-mail from the learned Judge’s chambers. As with the draft order earlier, the order
was sent to a ‘@cathypacific.com’ address, instead of to one with the suffix
‘@cathaypacific.com’. This error abounds in the papers outlining both the Reasons
for Judgment and the subsequent contempt application. The effect of the misspelling
of the email address is that neither the draft second order nor the order itself came to
the knowledge of Cathay Pacific until the third order was served on it. This has
important consequences for the contempt of court convictions and reference will be
made to it in due course. It also bears mention that the second appellant, Ms Jones,
had not been cited as a party in the second order, nor was she cited in any other
order issued by Wright J.
[15] There was no appearance by Cathay Pacific in court before Wright J on
28 July 2014 at 14h00. This non-appearance was caused by its lack of knowledge of
the second order due to the circumstances explained above. On 28 July 2014 Wright
J issued the third order which was similar to the terms contained in the second
order, save for the following: it also referred to the eldest child, Xuefeng, after it had
become apparent that he too had also been returned to Hong Kong on flight CX748;
it also included a further order directing Cathay Pacific ‘to return the three children to
OR Tambo International Airport without asking for payment but subject to Cathay
Pacific’s right later to institute legal proceedings for the recovery of any money which
Cathay Pacific considers payable to it’; lastly, the matter was postponed to 10h00 on
Friday 1 August 2014 before Wright J and the question of costs was reserved.
[16] On the following day, 29 July 2014, Mr Essop delivered a hard copy of the
Reasons for Judgment as well as the third order from the previous day to Ms Jones,
who refused to sign an acknowledgment of receipt. It became common cause,
however, that on that date Cathay Pacific for the first time acquired knowledge of the
existence and contents of the first three orders.
[17] Cathay Pacific did not appear before Wright J on 1 August 2014. I will advert
to its reasons for that non-appearance shortly. On that date Wright J granted the
fourth order, directing Cathay Pacific to pay the respondents’ costs of the
proceedings of 26 July 2014, 28 July 2014 and 1 August 2014 on an attorney and
client scale. Written reasons for that order form part of the record. They merely
repeat the events which gave rise to the first three orders and set out the terms of
the third and fourth orders.
[18] The respondents launched an urgent application after the fourth order had
been granted. They sought an order holding the appellants and Mr Mashoene in
contempt of the court orders issued by Wright J. A striking feature of the application
is that neither Ms Jones nor Mr Mashoene had been cited as parties to the contempt
proceedings.
[19] The contempt application served before Spilg J on 15 August 2014. The
learned Judge issued a rule nisi returnable on 9 September 2014. In terms of the
rule nisi the appellants and Mr Mashoene were called upon to show cause on
9 September 2014 why they should not be held in contempt of the orders granted by
Wright J on 26 and 28 July 2014.
[20] The
appellants
opposed
the
contempt
application
and
issued
a
counterapplication to have the first, second and third orders by Wright J, or parts
thereof, declared null and void and set aside. They also sought to have the punitive
costs order granted by Wright J on 1 August 2014 set aside. Spilg J found the
appellants in contempt of the court orders and he dismissed the counterapplication.
Cathay Pacific was found to be in contempt of the first, second and third orders and
Ms Jones was found in contempt of the second and third orders. No such finding
was made against Mr Mashoene as Spilg J ‘was unable to find that Mashoene acted
wilfully since he was obliged to obtain instructions from and was under the authority
of Swart’.
[21] It is necessary to highlight the following:
(a) No notice of motion nor any affidavit had ever been filed in any of the
proceedings before Wright J from which the first, second, third and fourth orders had
emanated.
(b) The first order had never been reduced to writing – the only recordal thereof is to
be found in the Reasons for Judgment of 28 July 2014 after the second order had
been made.
(c) The first and second orders had never been served on the appellants as the
e-mail addresses used to transmit the second order were erroneous, as indicated
above.
(d) The first time that the appellants became aware of the orders made by Wright J
was on 29 July 2014, when Mr Essop had delivered a hard copy to Ms Jones at the
Cathay Pacific offices.
(e) Ms Jones had not been cited as a party in the contempt proceedings nor in the
proceedings before Wright J.
[22] In relevant part the order made by Spilg J reads as follows:
‘1. The Third Respondent [Cathay Pacific] is held to be in contempt of the court orders
granted on 26 July 2014 by Wright J under case number 2014/22434 in that;
a. it boarded the applicants’ two minor children, Zhengyu and Lili onto flight CX748 and did
not disembark them despite the interdict preventing it from boarding the said children,
b. it did not return the said children to OR Tambo International Airport on a Cathay Pacific
flight departing from Hong Kong despite the second order granted to that effect;
and for the reasons set out in the judgment to be handed down by Friday
14 November 2014.
2. The Third Respondent is held to be in contempt of the court orders granted on
28 July 2014 by Wright J under the said case number in that;
it did not return the applicant’s eldest child Xuefeng to OR Tambo International Airport on a
Cathay Pacific flight departing from Hong Kong despite the order granted to that effect;
and for the reasons set out in the judgment to be handed down by Friday 14 November 2014
3. Ms Shirley Jones is held to be in contempt of the second court order granted on
26 July 2014 and the order granted on 28 July 2014 by Wright J under the said case number
in that;
she did not cause Cathay Pacific to return the applicant’s three children to OR Tambo
International Airport on a Cathay Pacific flight departing from Hong Kong despite the orders
granted to that effect;’
The learned Judge made further orders dismissing the counterapplication, ordering
Cathay Pacific to pay the costs of both the contempt application and the
counterapplication on the attorney and client scale and stood the sanctions imposed
on the appellants (the payment of fines) over until 11 December 2014.
THE ANSWERING AFFIDAVIT
[23] Cathay Pacific’s answering affidavit in the contempt proceedings was
deposed to by Mr Rakesh Raicar, its South African country manager. He had been
appointed to that position on 18 August 2014, ie after the orders had been made by
Wright J and after the rule nisi had been issued by Spilg J. According to Mr Raicar,
upon becoming aware of the case, he immediately consulted the airline’s attorneys.
Prior to his appointment the stance adopted by Cathay Pacific was that it was not
bound by the orders granted, since it had merely carried out instructions issued by
the Department. He hastened to add that that did not mean that Cathay Pacific was
inclined to disobey court orders but that equally, it was obliged to adhere to the
immigration laws of the various countries it operated in. The airline’s attorneys
advised him that the court orders were in fact null and void and should never have
been issued in the first place. This advice appears to have been based on the
judgment of this court in Motala.4
[24] Mr Raicar narrated the facts known to him from the airline’s perspective and
elaborated on his assertion that, as advised, the orders were null and void. He
motivated why the non-compliance by the appellants and Mr Mashoene was not
wilful. Mr Raicar concluded by asking that the rule be discharged with costs. He also
asked that, in terms of the counterapplication, the orders by Wright J be set aside, as
nullities, alternatively as orders having been erroneously sought and/or granted in
terms of Uniform Rule 42(1)(a), alternatively in terms of the common law. Insofar as
the fourth order is concerned, Mr Raicar contended that that order was erroneously
granted in the absence of Cathay Pacific.
4 Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO & others 2012 (3) SA
325 (SCA) para 14.
[25] The relief sought in the counterapplication has become moot, since Cathay
Pacific had in the meantime transported the children back to South Africa at its own
cost and without prejudice to its rights. In this appeal Cathay Pacific seeks the
dismissal of the contempt application and the setting aside of the order of Wright J of
1 August 2014 as well as costs.
THE LAW
[26] The requirements for civil contempt of court are well established. An applicant
who seeks a committal order must establish the following:
(a) that a court order was made;
(b) that the order had been served;
(c) non-compliance with the order;
(d) wilfulness and mala fides.
Proof beyond reasonable doubt is required. But, once the applicant has adduced
sufficient evidence to prove requirements (a), (b) and (c), the respondent bears an
evidentiary burden in respect of requirement (d). A failure by the respondent to
adduce evidence that establishes a reasonable doubt as to whether non-compliance
was wilful and mala fide, will mean that civil contempt will have been established
beyond reasonable doubt.5
[27] In the present instance, we are concerned with an alleged contumacious
failure or refusal to obey an order of court. Committal for civil contempt was sought in
the court a quo against the appellants for both coercive and punitive reasons: first to
compel Cathay Pacific to issue air tickets for the children’s return from Hong Kong,
and second, to punish both appellants for their alleged contumacy. In the event, as
stated, the children were flown back to South Africa without any concession on the
part of Cathay Pacific that it was in law compelled to do so. What remained therefore
was the committal sought by the respondents. Applying these general legal
principles to the facts in this matter, I propose dealing sequentially with the various
orders.
5 Fakie NO v CCII Systems (Pty) Ltd (653/2004); [2006] ZASCA 54; 2006 (4) SA 326 (SCA) para 42;
Tasima (Pty) Ltd v Department of Transport (792/2015) [2015] ZASCA 200; [2016] 1 All SA 465
(SCA) para 18; Pheko & others v Ekurhuleni Metropolitan Municipality (No 2) (CCT 19/11) [2015]
ZACC 10; 2015 (5) SA 600 (CC) para 32.
THE FIRST ORDER
[28] It is readily evident from the facts outlined above that on 26 July 2014
Wright J was seized with a matter of extreme urgency. Moreover, it involved the
welfare of minor children, whose best interests are always paramount in any and
every matter.6 Flight CX748 was due to leave for Hong Kong within just over half an
hour. By then the boarding gates in all likelihood had either already been closed or
on the verge of being closed. And as indicated above Mr Essop had been instructed
only during the course of that morning – from the papers this instruction appears to
have happened during the late morning. During the previous evening, as soon as the
respondents had become aware of their children’s predicament, they had first
telephonically contacted the Departmental officials without any success and second,
they thereafter invoked the assistance of attorneys in Sandton whose staff were
conversant in Mandarin. Finally, on the Saturday morning of 26 July 2014, Mr Lin
(the first respondent) had sought the assistance of an immigration agent in Durban.
The immigration agent, one Mr Hashim Malani, is the person who then referred him
to Mr Essop, who ultimately represented the respondents. It is evident that there
simply was not sufficient time for Mr Essop to have prepared a notice of motion, let
alone a founding affidavit.
[29] It is axiomatic that there are degrees of urgency. An applicant may, in a case
of sufficient urgency, create its own rules subject only to the court’s control and
insofar as possible in accordance with the Rules.7 Uniform Rule 6(12)(a) permits a
court in an urgent application to dispense with the normal forms and service and to
deal with the matter ‘as to it seems meet’. The degree of urgency will determine to
what extent a departure from the rules will be permitted.8 Where appropriate and in
cases of extreme urgency, the application may even be heard without service or
notice to the Registrar.9 Urgency is of course facts based. I am satisfied that the
matter before Wright J on 26 July 2014 which culminated in the first order was of the
6 Section 28(2) of the Constitution: A child's best interests are of paramount importance in every
matter concerning the child.
7 Republikeinse Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies (Edms) Bpk 1972 (1) SA 773
(A) at 782A-783H; Commissioner, South African Revenue Services v Hawker Air Services (Pty) Ltd;
Commissioner, South African Revenue Services v Hawker Aviation Partnership and others 2006 (4)
SA 292 (SCA) para 9.
8 Luna Meubel Vervaardigers (Edms) Bpk v Makin & another (t/a Makin’s Furniture Manufacturers)
1977 (4) SA 135 (W).
9 Republikeinse Publikasies, fn 6 at 782E.
utmost urgency which justified hearing it over the telephone and issuing an order
telephonically.
[30] The difficulties in respect of the first order relate to the failure to have it
reduced to writing and the failure to communicate the order to the relevant party,
Cathay Pacific. Absent a written order and given the extreme and urgent nature of
the circumstances, the only manner in which the order could have been
communicated, was orally. As outlined above, the order was communicated to
Mr Mashoene, who was not in the employ of Cathay Pacific, but of Menzies Aviation
which acted as an agent for the airline. And, while Ms Swart had been told by
Mr Mashoene not to board the children, he crucially failed to inform her that he was
telling her this based on a court order to that effect. These facts were set out in some
detail in Mr Raicar’s answering affidavit and were confirmed in confirmatory affidavits
by both Mr Mashoene and Ms Swart.
[31] Absent a finding that these averments in the answering papers were so
palpably far-fetched or so clearly untenable that they warrant rejection merely on the
papers, the matter had to be decided on the common cause facts and on the
appellants’ version. This trite principle was restated in National Director of Public
Prosecutions v Zuma.10 Spilg J failed to apply this approach. Knowledge by Cathay
Pacific of the existence and the content of the first order was essential before a
contempt finding could be made. However, the learned Judge had ‘no hesitation in
finding that notification of the order to [Mr Mashoene] was notification to Cathay
Pacific and that Swart had actual knowledge before the flight departed’. In addition,
Spilg J found that ‘(i)t is also common cause that Swart refused to comply with the
first order. Mr Mashoene conveyed as much on the version given by the airline. The
fact that a deliberate decision was taken to ignore the order because of the
declaration given effectively to Cathay Pacific by immigration officials satisfies the
requirements for wilfulness’. These findings are against the weight of the evidence.
First, it was not common cause at all that Ms Swart refused to comply with the first
order. In fact, on the version advanced on behalf of the appellants, she had
unequivocally conveyed to Wright J that she was unable to take a decision on the
10 National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) para 26.
learned Judge’s request, given her lack of authority. Second, notice to Mr Mashoene
could never have constituted notice to Cathay Pacific. He was not authorised to act
for Cathay Pacific. He was a Menzies Aviation employee, tasked with handling
baggage enquiries as an employee of Cathay Pacific’s agent.
[32] Spilg J relied on two aspects insofar as his findings on Mr Mashoene’s role
were concerned. Reference was firstly made to the fact that Mr Mashoene had later
accepted service of the second order on 19 August 2014, and had identified himself -
according to the Sheriff’s return of service - as the ‘admin officer’. Service was
effected at the Cathay Pacific offices at the OR Tambo airport. The return stated that
Mr Mashoene was ‘ostensibly a responsible employee . . . of and in control of and in
direct authority at the place of employment of Shirley Jones, addressee . . .’. It is well
established that a Sheriff’s return of service is prima facie proof of its contents. But in
this instance there was direct evidence to the contrary. In the absence of an affidavit
by the sheriff, the controverting evidence could not simply be ignored as was done
by Spilg J.
[33] Secondly, Spilg J found that, contrary to the evidence adduced in the
answering and confirmatory affidavits, ‘Menzies Aviation . . . does not perform only
baggage clearance on behalf of Cathay Pacific’. For this finding the learned Judge
referred to Menzies Aviation South Africa (Pty) Ltd v South African Airways (Pty)
Ltd.11 That case concerned the review and setting aside of a decision to award a
tender for the provision of ground handling and passenger services for SAA flights.
Paragraph 7 of the judgment by Blieden J describes the nature of the services for
which SAA had invited tenders. Blieden J listed these as follows:
‘Ground handling services comprise both ramp and passenger handling services. The
former, rendered on airport aprons (where aircraft are parked), include push back and towing
services for aircraft; providing steps for embarking and disembarking; bussing passengers
and crew between the airport and aircraft; loading and unloading luggage and cargo;
transporting luggage and cargo between terminals and aircrafts; supplying water and toilet
services to aircraft; supplying ground power to aircraft as required; manually starting aircraft
engines as required.’
11 Menzies Aviation South Africa (Pty) Ltd v South African Airways (Pty) Ltd & others [2009] ZA
GPJHC 65; 2009 JDR 1362 (GSJ) para 7.
The boarding of passengers is not one of the tasks outlined. In the opening
paragraph Blieden J describes Menzies Aviation thus:
‘. . . Menzies Aviation . . . is part of an international group of companies and specializes in
ground handling operations at airports. ‘
Even if it was permissible to rely on the evidence in another case, the passenger
services relevant in the present instance are plainly not part of Menzies Aviation’s
core business. And, as stated, it handled baggage services and enquiries on behalf
of Cathay Pacific in terms of an agency agreement. There is not an iota of evidence
in the papers that that agency agreement extended to passenger services of any
kind. In the premises the reference by Spilg J to Menzies Aviation v SAA was ill-
conceived.
[34] A court order should always be embodied in writing by the Registrar of the
court. The reasons for this are self-evident: it constitutes the recordal of what the
Judge had ordered and is the official document to be served by the Sheriff.12 In
addition, the order must not only be formulated carefully (since that is what may
eventually be appealed against), but must also be clear and easily understandable.13
In the Gauteng Division of the High Court, Johannesburg (from where this matter
originates), an applicant must ensure in instances where an urgent application is
moved outside the ordinary court hours, that ‘the order of the court can be typed so
that it can be signed by the presiding judge’s clerk’.14 As stated, this has not
happened in the present case.
[35] In summary as far as the first order is concerned – the order had, on the
evidence before us, never come to the knowledge of Cathay Pacific by the time flight
CX748 departed for Hong Kong. Cathay Pacific should therefore not have been
convicted of contempt of court in respect of the first order.
12 Administrator, Cape & another v Ntshwaqela & others 1990 (1) SA 705 (A) at 715D.
13 SA Eagle Versekeringsmaatskappy Bpk v Harford 1992 (2) SA 786 (A); Minister of Water and
Environmental Affairs v Kloof Conservancy (106/2015) [2015] ZASCA 177; [2016] 1 All SA 676 (SCA);
[2016] 1 All SA 676 (SCA) para 14; Mazibuko NO v Sisulu & others NNO 2013 (6) SA 249 (CC)
para 24.
14 Practice Note 7.3 of the Practice Manual of the Gauteng Local Division, Johannesburg; since
replaced by Practice Directive 02/2013.
THE SECOND ORDER
[36] As stated, the second order was also made on Saturday 26 July 2014, at
around 15h20. With Mr Essop present in his chambers, Wright J engaged in the
telephonic conversation with Ms Swart alluded to above. During that conversation
the learned Judge enquired from Ms Swart why he should not order Cathay Pacific
to return the children to South Africa. It appears that the telephone’s speakerphone
had been activated to enable Mr Essop to follow the conversation. It is common
cause that by this time the children were already on board flight CX748 and in
international airspace. There was no evidence adduced at all that Cathay Pacific was
able to comply with the order. The children had left the shores of this country and
were beyond the jurisdiction of South African courts.15 Courts cannot make orders
which will have no effect, such as those to be enforced in foreign jurisdictions.16
[37] Counsel for the respondents placed rather tentative reliance on Metlika
Trading.17 That case is entirely distinguishable on the facts. It concerned the return
of a Falcon aircraft to South Africa from Switzerland. This court held that, since the
respondents in that case were incola, an order was competent to compel them to
pursue all efforts to have the aircraft returned to South Africa. The court held (per
Streicher JA):
‘. . . if the respondent is an incola, the court may assume jurisdiction to grant an interdict
(whether mandatory or prohibitory) in personam no matter if the act in question is to be
performed or restrained outside the court’s area of jurisdiction.’18
In the present instance, Cathay Pacific is a company duly registered and
incorporated in Hong Kong, in the People’s Republic of China. It is a peregrinus and
any order for it to perform an act in a foreign jurisdiction (Hong Kong) will be of no
force and effect.
[38] For the reasons outlined above, there can be no basis to impute wilfulness or
mala fides to the appellants in circumstances where they were unable to comply with
the second order. Moreover, and in any event, the second order was never served
15 B v S 2006 (5) SA 540 (SCA) paras 19-20; Di Bona v Di Bona & another 1993 (2) SA 682 (C) at
695E-F.
16 Foize Africa (Pty) Ltd v Foize Beheer BV & others 2013 (3) SA 91 (SCA) para 15.
17 Metlika Trading Ltd & others v Commissioner, South African Revenue Services 2005 (3) SA 1
(SCA).
18 Metlika Trading para 49.
on the appellants. It first came to their knowledge when the third order was hand
delivered to Ms Jones on 29 July 2014. As stated, the purported service by e-mail on
Cathay Pacific was fatally defective because the e-mail address was misspelt.
Notwithstanding an acknowledgment of this misspelling and consequent non-
delivery, Spilg J held that ‘the content [of the second order] was known.’ This finding
is plainly wrong on the facts outlined above. The contempt convictions in respect of
the second order are thus also unsustainable.
THE THIRD ORDER
[39] This order came to the appellants’ knowledge when it was delivered to the
Cathay Pacific offices by Mr Essop on 29 July 2014. The same difficulty, alluded to
above, prevailed in respect of the third order in that the children were in Hong Kong
and no effect could be given to an order whose reach was beyond the jurisdiction of
South African courts. It bears repetition that the appellants were in law incapable of
giving effect to the order and also that the third order was not competently issued in
law as it was beyond the jurisdiction of the court a quo. The contempt convictions in
respect of the third order cannot stand.
[40] Furthermore, there is the added problem that Ms Jones was never cited as a
party to the contempt proceedings nor in the proceedings before Wright J. This
applies to both the second and third orders in respect of which she had been
convicted. No order can be made against a party who is not cited to appear.19 It is of
course so that any person who, with knowledge of a court order, aids and abets the
disobedience of a court order or is wilfully party to such disobedience, can also be
held in contempt, even though such person is not cited as a party to the contempt
proceedings.20 There is no evidence of such aiding and abetting here. Ms Jones’
refusal to sign an acknowledgment of receipt of the documents delivered by
Mr Essop on 29 July 2014 is indeed regrettable. But it appears to have been
occasioned by a reluctance to become involved in a contentious matter. That
reluctance also appears to have stemmed from advice by a colleague not to sign and
by some trepidation regarding the gravity of the matter. And at that stage, the Cathay
19 Lewis & Marks v Middel 1904 TS 291 at 303; cited with approval in Campbell v Botha & others
2009 (1) SA 238 (SCA) para 16.
20 Pheko, fn 4 above, para 47.
Pacific management was acting on the basis that they were legally bound to adhere
to the Departmental instruction to return the children to Hong Kong.
THE FOURTH ORDER
[41] The first, second and third orders are, as stated, moot given the children’s return
to this country. The only issue that remains in respect of the fourth order is the costs
order granted against Cathay Pacific. Costs were pertinently reserved in the third
order of 28 July 2014, and that had come to the knowledge of the appellants. It was
contended on behalf of Cathay Pacific that, since the third order had been issued in
its absence and without any knowledge by it of the matter at that time, its non-
appearance on 1 August 2014 is excusable. It was also contended that the third
order did not call upon the appellants to show cause on 1 August 2014 why the
orders (which were in any event in final form) relating to the return of the children
from Hong Kong, should not be granted. In their heads of argument appellants’
counsel did, however, make the following telling concession: ‘The only indication that
the first appellant should attend court, could possibly be that the question of costs
had been reserved’. Reference was also made to the fact that no notice of motion or
affidavits had been filed or served on Cathay Pacific.
[42] The argument that, for the reasons outlined above, the costs order had been
erroneously granted, lacks persuasion. Cathay Pacific is a large international airline.
When confronted on 29 July 2014 with the third order and, having been placed on
notice that (a) there was to be a hearing on 1 August 2014 and (b) that costs had
been reserved, it should have acted promptly and diligently to protect its interests.
Admittedly, the costs order should perhaps have been framed without any ambiguity,
for example by pertinently calling on Cathay Pacific to show cause why a costs order
(punitive or otherwise) should not be made against it. But the threat of an adverse
costs order (amongst others) nonetheless loomed large. In the event that its senior
officials and others in positions of authority had been uncertain about the steps to be
taken in the face of a looming potential costs order against the airline, they should
immediately have sought legal counsel for advice and/or an appearance on its behalf
on 1 August 2014. Argument was advanced rather tentatively that a lay person does
not know what the reservation of costs means. But it was conceded that no one said
so under oath in any of the affidavits for Cathay Pacific. The airline’s non-
appearance on 1 August 2014 was inexcusable and the costs order cannot be
interfered with. There was, however, no justification for a punitive costs order in
respect of the dismissal of the counterapplication.
CONCLUSION
[43] In summary – the contempt orders in respect of the first, second and third
orders as far as Cathay Pacific is concerned, are legally untenable and should be set
aside. The same is true in respect of Ms Jones’ conviction in respect of the second
and third orders. The costs order of 1 August 2014 was justified in the absence of
appearance by Cathay Pacific. The punitive costs order in dismissing the
counterapplication must be set aside.
[44] It is necessary to repeat the well-established principles in respect of urgent
applications, service and contempt of court. Courts are sometimes seized with
applications of the most extreme urgency. Where the exigencies so require, a notice
of motion and founding and supporting affidavits may be dispensed with. But the
court order which emanates from even the most urgent of applications, must always,
without exception, be subsequently recorded in writing for the various reasons
outlined above. In the present instance there is no reason imaginable (and none was
proffered) why the first order was never transcribed. And it is inexplicable why the
third order of 28 July 2014 was not preceded by a notice of motion and founding
affidavit setting out the events from 25 July 2014 onwards and motivating the need
for the third order which, as stated, amplified the second order to include the child,
Xuefeng. By 1 August 2014 it must have been apparent to all concerned, including
with respect, Wright J, that the urgency of the matter had abated. There appears to
have been inordinate haste in issuing the fourth order. In my view, prudence and
propriety required that the fourth order relating to costs should have been couched in
the form of a rule nisi calling upon Cathay Pacific to show cause why it should not be
ordered to pay costs (punitive or otherwise).
[45] It appears from the record that, understandably, Wright J seemed agitated by
the apparent lack of co-operation on the part of the Cathay Pacific employees. That
agitation, again understandably, increased as events unfolded after 26 July 2014
until 1 August 2014. This must have been exacerbated by a belief on his part that the
e-mails had been correctly addressed and, therefore, received. An unhappy
coincidence of events conspired to culminate in the unfortunate outcome in this
matter. The wellbeing of the children was implicated, time was of extreme essence to
restrain the departure of the children from this country’s shores (and in the end time
counted against an effective order being made), the wrong e-mail addresses were
used to purportedly effect service and, lastly, Cathay Pacific employees were
hesitant to act decisively. They were faced with the conundrum of an instruction from
the Department on the one hand and an oral court order on the other. An appellate
court must, of course, be slow to be overly critical in circumstances where it has the
crucial benefit of hindsight. But, with respect, Wright J erred in issuing orders beyond
his jurisdiction and in failing to ensure that proper service of the orders was effected.
And the failure to record the first order in writing, other than in the later Reasons for
Judgment, was highly irregular. The mistakes were self-evidently made under great
pressure and in an honest attempt to dispense justice expeditiously due to the
exigencies of the case. Abundant caution should, however, always be exercised to
act fairly and even-handedly in dispensing justice, even in the most urgent of cases.
[46] Convictions for civil contempt of court are axiomatically very serious. For this
reason the standard of proof is one beyond reasonable doubt. Equally self-evident is
the fact that a party must be cited before it can be convicted for civil contempt,
unless that party is alleged to have aided and abetted the contumacious disobeying
of a court order. A discernible feature in the judgment of Spilg J is an irritation with
what the learned Judge regarded as a serious lack of co-operation and contumacy
on the part of Cathay Pacific and Ms Jones. In finding against the appellants, the
learned Judge overlooked the various difficulties with the first three orders,
enunciated above. And in some instances he made bald findings against the weight
of the evidence. The most striking of these is that, notwithstanding having
acknowledged that the wrong e-mail addresses had been utilised in purporting to
effect service on Cathay Pacific, the learned Judge found that the contents of the
first and second order were in fact known to Ms Swart. Regrettably, the learned
Judge failed to correctly apply the well-established principles laid down in Fakie,
Tasima and Pheko. Importantly, further, the learned Judge failed to apply the proper
approach to disputes of fact where final relief was being sought.
[47] What remains is the issue of the costs of the appeal. One of the most
unfortunate aspects of the outcome of this case is that the party who precipitated the
flurry of events and who was plainly at fault, namely the Department, escaped
censure and is no longer before the court. The respondents acted in good faith and
with full justification, desperately trying to safeguard their children’s interests. But
their opposition to and active participation in the appeal were, in my view, ill-advised.
Cathay Pacific, on the other hand, was fully entitled to protect its interests in the
contempt proceedings. It is a large, globally known airline, in operation for more than
70 years, offering passenger and cargo services to 188 destinations in 47 countries
and territories. It had every reason to vigorously defend its reputation in the face of a
civil contempt conviction. Its employment of two counsel was warranted in the
circumstances.
[48] The following order is issued:
1 The appeal against the convictions of civil contempt of court is upheld with costs,
including the costs of two counsel.
2 The order granted by Spilg J on 11 November 2014, holding the appellants in
contempt of court, and the sentences imposed on 14 October 2015 is set aside and
replaced with an order in the following terms:-
‘(a) The application to hold the third respondent and Ms Shirley Jones in contempt of
court is dismissed.
(b) The applicants are directed to pay the third respondent’s costs.’
3. The appeal against the order in the counterapplication is upheld in part by
substituting the order of Spilg J with the following order:
‘The counterapplication is dismissed with costs’.
_______________________
S A Majiedt
Judge of Appeal
APPEARANCES
For Appellant: R S Stockwell SC (with him S P Pincus SC)
Instructed by: Assenmacher Attorneys, Johannesburg
Webbers, Bloemfontein
For Respondent: H Warner (with him A Essop)
Instructed by: Rossouws, Leslie Incorporated, Johannesburg
Rossouws Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM :
The Registrar, Supreme Court of Appeal
DATE
29 March 2017
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Cathay Pacific Airways Ltd & another v Lin & another (260/2016) [2017] ZASCA 35
(29 March 2017)
MEDIA STATEMENT
The Supreme Court of Appeal (SCA) today upheld an appeal against an order granted in the Gauteng
Local Division of the High Court, Johannesburg, in terms of which the appellants were convicted of
civil contempt of court. The first appellant, Cathay Pacific Airways(the airline), acting under an
instruction from the Department of Home Affairs(the Department) under s34(8) of the Immigration Act,
returned the respondents’ 3 children on a flight back to Hong Kong from OR Tambo International
airport. Upon their arrival in this country, the 2 younger children (who were minors at the time) were
declared by the Department to be illegal foreigners on the basis that they were in possession of
fraudulent residency permits. The older child was declared to be an illegal foreigner since he had
accompanied the 2 younger children. It became common cause afterwards in the course of the
litigation that this was a mistake on the part of the Department. An order was issued by the High
Court, Johannesburg, by telephone to restrain the airline from boarding the children. The order was,
however, not properly conveyed to the relevant airline employee and the children left for Hong Kong.
Within a period of a week three subsequent orders were made: 2 for the return of the children from
Hong Kong and the fourth order directed the airline to pay the costs on a punitive scale. Thereafter
the respondents launched civil contempt proceedings in the High Court which was opposed by the
airline and Ms Shirley Jones, a senior employee of the airline. Spilg J found the airline to be in
contempt of the first, second and third orders and Ms Jones was found to be in contempt of the
second and third orders.
The first issue at the heart of the appeal concerned the circumstances in terms of which a court is
empowered to grant an order telephonically and the processes to be employed in ensuring that such
order is recorded and served effectively in order that it may come to the notice of affected parties.
Another issue dealt with in the appeal is the liability for civil contempt of court of an employee of a
company in respect of an order granted against that company, where the employee had neither been
cited as a party, nor an order granted against him or her.
The SCA, in dealing with the first order, considered the facts and the urgency of the situation giving
rise to the appeal, where the welfare of minor children was at stake. The SCA held that it was highly
improper not to reduce the terms of the first (telephonic) order to writing, although it readily accepted
that the Judge had indeed been seized with a matter of extreme urgency and that such urgency
justified hearing the matter over the phone as well as the subsequent issuing of an order
telephonically.
The SCA also held that the fact that the appellants were held in contempt of court when the order in
question had never been served on them was unsustainable and plainly wrong, given the facts.
Moreover, that in order to succeed with a conviction of contempt of court, proof beyond reasonable
doubt and satisfaction of all the elements was required, and that had not been done. In dealing with
the rest of the orders, the SCA further held that the court a quo had erred in issuing orders that were
beyond its jurisdiction and had also failed to apply the proper approach to disputes of fact where final
relief was being sought. Finally, it highlighted the importance and necessity for abundant caution in
the fair and even-handed dispensing of justice however urgent a matter may be. Consequently, the
appeal was upheld and the order of the High Court set aside. The appeal against the dismissal of the
airline’s counter-application relating to the punitive costs order (the fourth order) was only partially
successful, in that the order was amended to a normal party and party costs order.
.
--- ends ---
|
2776
|
non-electoral
|
2012
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 710/11
Reportable
In the matter between:
SOUTH AFRICAN CONGO OIL COMPANY
(PTY) LTD
Appellant
and
IDENTIGUARD INTERNATIONAL (PTY) LTD
Respondent
Neutral citation:
South Africa Congo Oil Company (Pty) Ltd v
Identiguard International (Pty) Ltd (710/11)
[2012] ZASCA 91 (31 May 2012)
Coram:
MPATI P, CACHALIA, LEACH JJA and
KROON AND BORUCHOWITZ AJJA
Heard:
15 MAY 2012
Delivered:
31 MAY 2012
Summary:
Execution – garnishee proceedings – rule of court
45(12)(a) – whether attachment of debt in terms of
rule
45(8)
necessary
to
render
garnishee
proceedings effective.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Victor J
sitting as a court of first instance):
The following order is made:
The appeal succeeds with costs including the costs of two counsel;
The order of the court below is set aside and the following order
substituted for it:
‘The application is dismissed with costs, including the costs of two
counsel.’
___________________________________________________________
JUDGMENT
___________________________________________________________
BORUCHOWITZ AJA (MPATI P, CACHALIA, LEACH JJA and
KROON AJA concurring):
[1] This appeal is concerned with garnishee proceedings under the
Uniform Rules of Court for the attachment of a debt owed to a judgment
debtor by a third person (Rule 45(12)).
[2] On 28 February 2003, judgment by default was entered by the
South Gauteng High Court against the Government of the Democratic
Republic of the Congo (‘the DRC’) in favour of the respondent for
payment of US$576 000 and US$1 395 000, or the equivalent of these
sums in South African Rand, together with interest thereon and costs of
suit. Pursuant to a writ of execution issued on the strength of the
judgment, the respondent sold in execution an aircraft owned by the
DRC. The sale yielded an amount of R1 766 007.72. The respondent has
only obtained partial satisfaction of the judgment and the balance of the
judgment debt remains unpaid.
[3] The respondent invoked garnishee proceedings in terms of rule
45(12) against the appellant as a means of executing on the judgment
against the DRC. It is common cause that a sum of US$2 million (the
debt) was owed by the appellant to the DRC when the garnishee
proceedings commenced. On 16 September 2010 the respondent issued
two separate notices in terms of rule 45(12)(a). The first directed the
sheriff to attach the debt and the second, (which I will henceforth refer to
as ‘the garnishee notice’) called upon the appellant to pay the amount of
the debt to the respondent. The garnishee notice was served on the
respondent on 20 September 2010. The appellant refused to pay the
sheriff the amount demanded of it. As a result, the respondent approached
the South Gauteng High Court for an order in terms of rule 45(12)(b), that
the appellant show cause why it should not pay the sheriff the amount of
the debt in satisfaction of the respondent’s writ of execution. The
application was opposed. The appellant disputed that the respondent was
entitled to invoke the provisions of rule 45(12)(b) in the prevailing
circumstances and various grounds of defence were raised. The court
below dismissed these contentions and granted an order authorising the
garnishee notice. The appellant was also ordered to pay the costs of the
application. The present appeal is with the leave of the court below.
[4] The respondent contended, in limine, that the appeal was moot and
will have no practical effect or result as the appellant is, on its own
admission, not able to comply with a court order to pay the debt.
Moreover, the issues raised in the appeal are said not to be of any public
interest as to warrant this court exercising its discretion and hearing the
appeal.
[5] Section 21A(1) of the Supreme Court Act 59 of 1959 empowers
the court to dismiss an appeal if it would not have any practical effect or
result. It is well settled that mootness does not constitute an absolute bar
to the justiciability of an issue and that the court has discretion whether or
not to hear a matter. The test is one of the interests of justice. A relevant
consideration is whether the order the court makes will have any practical
effect either on the parties or on others, and in the exercise of its
discretion a court may decide to resolve an issue that is moot if to do so
will be in the public interest. This will be the case where it will either
benefit the larger public or achieve legal certainty (Van Wyk v Unitas
Hospital & another 2008 (2) SA 472 (CC) para 29. See, also, Executive
Officer, Financial Services Board v Dynamic Wealth Limited and others
2012 (1) SA 453 (SCA) paras 43 and 44 and the reference therein to the
decision in R v Secretary of State for the Home Department, Ex parte
Salem [1999] 2 All ER 42 (HL) at 47d-f). See, also, Independent
Electoral Commission v Langeberg Municipality 2001 (3) SA 925 (CC)
para 9).
[6] In my view, it cannot be said that the appeal will have no practical
effect or result. The respondent has indicated that it will in due course
apply for the winding-up of the appellant. In addition, the appeal
involves, a decision on an important question - the proper construction
and legal effect of garnishee proceedings brought under rule 45(12) and
its inter-relationship with the provisions of rule 45(8). It will therefore be
of benefit to the larger litigating public and it is necessary that legal
certainty as to interpretation of the procedural machinery provided for in
rule 45(12) be obtained. It is thus in the public interest that this court
entertain the appeal.
[7] I turn therefore to consider what is, essentially, the principal issue
in the appeal: whether it is a requirement of rule 45(12)(a) that the sheriff
should attach the debt in accordance with the procedure envisaged in
rule 45(8). The garnishee machinery provided for in rule 45(12), as far as
is relevant, reads:
‘(12) (a) Whenever it is brought to the knowledge of the sheriff that there are debts
which are subject to attachment, and are owing or accruing from a third person to the
judgment debtor, the sheriff may, if requested thereto by the judgment creditor, attach
the same, and thereupon shall serve a notice on such third person, hereinafter called
the garnishee, requiring payment by him to the sheriff of so much of the debt as may
be sufficient to satisfy the writ, and the sheriff may, upon any such payment, give a
receipt to the garnishee which shall be a discharge, pro tanto, of the debt attached.
(b) In the event of the garnishee refusing or neglecting to comply with any such
notice, the sheriff shall forthwith notify the judgment creditor and the judgment
creditor may call upon the garnishee to appear before the court to show cause why he
should not pay to the sheriff the debt due, or so much thereof as may be sufficient to
satisfy the writ, and if the garnishee does not dispute the debt due, or claimed to be
due by him to the party against whom execution is issued, or he does not appear to
answer to such notice, then the court may order execution to issue, and it may issue
accordingly, without any previous writ or process, for the amount due from such
garnishee, or so much thereof as may be sufficient to satisfy the writ.’ (emphasis
added)
[8] Rule 45(8) prescribes the manner in which an attachment is to be
made, and reads in material part as follows:
‘(8) If incorporeal property, whether movable or immovable, is available for
attachment, it may be attached without the necessity of a prior application to court in
the manner hereinafter provided:
(a)
...
(b)
...
(c)
In the case of the attachment of all other incorporeal property or incorporeal
rights in property as aforesaid,
(i)
The attachment shall only be complete when-
(a)
Notice of the attachment has been given in writing by the sheriff to all interested
parties and where the asset consists of incorporeal immovable property or an
incorporeal right in immovable property, notice shall also have been given to the
registrar of deeds in whose deeds registry the property or right is registered, and
(b)
The sheriff shall have taken possession of the writing or document evidencing
the ownership of such property or right, or shall have certified that he has been
unable, despite diligent search, to obtain possession of the writing or document;
(ii) The sheriff may upon exhibiting the original of the warrant of execution to the
person having possession of property in which incorporeal rights exist, enter upon the
premises where such property is and make an inventory and valuation of the right
attached.’
[9] Counsel were agreed that it is a requirement of rule 45(12)(a) that the
debt owed by the garnishee to the judgment debtor be attached, but
differed as to the manner in which this was to be achieved. The appellant
contended that the attachment must be effected in accordance with the
procedure outlined in rule 45(8)(c) whereas the respondent argued that
mere service of the garnishee notice on the garnishee serves as an
attachment. If the appellant’s contention is correct there was no effective
attachment as contemplated by the rule and this precluded the court below
from granting the relief it did.
[10] The appellant maintained that on a literal interpretation of
rule 45(12)(a) it is plain that an attachment of the debt is required. The
rule expressly provides that the sheriff may, if requested by the judgment
creditor, attach the debt and serve a notice on the third party.
Accordingly, that wording does not permit the construction sought to be
placed upon it by the respondent.
[11] The appellant also submitted that rules 45(8) and (12) should be
read together and in the context of rule 45 which regulates the execution
process. By reading rule 45(12)(a) in isolation, it was contended, the
provision for the attachment of the debt would not only be inchoate but a
departure from the long-standing practice in garnishee proceedings that
there be an attachment. Whilst the service of a garnishee notice may have
constituted an attachment of a debt under the common law, an attachment
of that nature only followed upon an application to court on notice to the
debtor and the creditor in respect of the debt and upon the court
sanctioning the issue and service of the garnishee order. (see Bergmann v
Colonial Government (1907) 24 (SC) 703 at 706; Reinhardt v Ricker and
David 1905 TS 179 at 186-188). Accordingly, it was submitted that
because notice was not given to the DRC, and no endeavour had been
made to effect an attachment in terms of rule 45(8)(c) the garnishee
proceedings were ineffective.
[12] On the other hand, the respondent invoked the case of Reichenberg
v Röntgen 1983 (3) SA 745 (W) in support of its contention that mere
service of the garnishee notice on the garnishee constitutes an attachment.
Its reliance on that decision was, in my view, misplaced. In that matter
the amount owing by the garnishee to the judgment debtor was attached
pursuant to two writs of execution. The court concluded (at 747H) that by
reason of the attachment the defendant had become obliged to pay the
debt to the judgment creditor. The judgment in Reichenberg is thus no
authority for the proposition that mere service of the garnishee notice
operates as an attachment of the debt. Nor is it authority for the
proposition that the recognised procedure for the attachment of
incorporeal property as set out in rule 45(8) is inapplicable.
[13] Respondent’s counsel also relied on several foreign authorities1 to
buttress its aforesaid contention. Since garnishee proceedings are
governed by the Uniform Rules, it is unhelpful, if not irrelevant, to rely
on foreign authorities as an aid to interpretation of the rules. Whilst
broadly similar procedures are followed in the jurisdictions referred to,
none of the authorities relied upon deals with the essential question under
consideration.
[14] A further argument advanced on behalf of the respondent was that
the attachment procedure in rule 45(12) applies to the exclusion of the
____________________
1 Reference was made to Rekstin v Severo Sibirsko & Co and the Bank for Russian Trade Limited
[1933] 1 KB 47 where the Court of Appeal held, (at 70), that –
‘[T]he effect of the service of garnishee order nisi is, according to Lord Watson in Rogers v Whiteley
(4), to make the garnishee ‘custodier’ for the court of the whole funds attached.’
In Rekstin (at 71) the court applied the finding of Atkin LJ in Joachimson v Swiss Bank Corporation
[1921] 3 KB 110 at 131, that –
‘[T]he service of the order nisi binds the debt in the hands of the garnishee – that is, creates a charge in
favour of the judgment creditor.’
The dictum of Atkin LJ was followed in Choice Investments Limited v Jeromnimon (Midland Bank
Limited, garnishee) [1981] 1 All ER 225 at 227 where Lord Denning stated that:
‘[A]s soon as the garnishee order nisi is served on the bank, it operates as an injunction. It prevents the
bank from paying the money to its customer until the garnishee order is made absolute, or is
discharged, as the case may be. It binds the debt in the hands of the garnishee, that is, creates a charge
in favour of the judgment creditor … the ‘attachment’ is not an order to pay. It only freezes the sum in
the hands of the bank until the order is made absolute or is discharged.’
Reference was also made to American jurisprudence and in particular to the case of Harbor Bank of
Maryland v Hanlon Park Condominium 153 Md. A pp 554, 834A 2d 993, 51.U.C.C. Rep. Serv. 2d 903
(2003) in which it was held that –
‘[A] writ of garnishment “preserves the assets of the judgment debtor by creating an ‘inchoate lien’ that
is binding and prevents the garnishee from disposing of those of the assets in his possession until such
time as a judgment is entered in the garnishment proceedings” . . . The general rule is that “once the
writ of garnishment is issued and laid in the hands of the garnishee, he is bound to safely keep the
assets of the debtor in his possession”.’
procedure contained in rule 45(8). The latter, it was submitted, deals with
a different subject matter, namely, execution against the judgment
debtor’s own property. This contention is clearly without substance.
There is no principled reason why the attachment of a debt in the hands of
a third party should be treated differently to the attachment of a judgment
debtor’s incorporeal property. The following remarks of Howie J in Cape
Town Municipality and Another v Allianz Insurance Co Ltd 1990 (1) SA
311(C) are apposite:
‘One must bear in mind that a “right” and a “debt” are, after all, merely opposite poles
of one and the same obligation…. Essentially, therefore, claiming payment of the debt
is no different in principle from enforcing the right to payment of the debt.’
[15] Finally, it was suggested that support for the respondents
contention is to be found in the following phrase which appears in
rule 45(12)(b):
‘the court may order execution to issue…without any previous writ or process, for the
amount due from such a garnishee… as may be sufficient to satisfy the writ.’
It was argued that the fact that rule 45(12)(b) provides that the court may
order execution ‘without any previous writ or process’ was an indication
that a separate or prior attachment of the debt was not required in order to
invoke garnishee proceedings under rule 45(12). It was also submitted
that in the light thereof the words ‘attach the same…’ which appear in
rule 45(12)(a) were tautologous. This contention is incorrect. As is
evident from the history of the rule as outlined below, the ‘previous writ
or process …’ was a reference to the proceedings, which under the
common law, had to be instituted against the garnishee before an
attachment of the debt could be made.
[16] Rule 45(12) must be viewed against the backdrop of the common
law and the procedural position that obtained immediately before its
introduction. Under the common law a special application to court was
always required in order to attach the debt owing by a third person to the
judgment debtor. (See the Bergmann and Reinhardt cases supra; Van
Zyl’s Judicial Practice 4th ed at 254 and Herbstein & Van Winsen The
Civil Practice of the High Courts of South Africa 5th ed at 1039.) The
requirement that an attachment of the debt be effected in garnishee
proceedings has consistently been followed by our courts, save that under
the present rules the attachment may be effected without the necessity of
a prior application to court.
[17] Rule 45(12) was inserted into the rules by GN R235 of 18 February
1966, and is based on the wording of the old Cape rule 39. Before the
introduction of the rule a creditor was obliged, except in the Cape and
Natal, after effecting an attachment of the debt, to approach the court by
way of application for an order calling upon the garnishee to show cause
why the debt should not be paid to the sheriff in satisfaction of the writ in
execution. The reason for the introduction of the rule was to provide a
uniform mechanism based on the old Cape rule obliging the garnishee to
pay the attached debt to the creditor and not the judgment debtor.
[18] The case of Simpson v Standard Bank of South Africa Limited 1966
(1) SA 590 (W) is illustrative of the position that obtained before the
introduction of rule 45(12). There, a divorced wife applied for an order
that a bank pay to her moneys due by her ex-husband. The moneys
standing to the credit of the bank account constituted a right of action
which her ex-husband (the judgment debtor) had against the bank. She
launched the application without first issuing a writ of execution and
effecting an attachment of her ex-husband’s claim against the bank.
Galgut J said the following in regard to the procedure followed:
‘… [I]t seems to me that the procedure which the applicant should have followed is,
firstly, to have issued a writ of execution as provided for in Rule 45(8)(c). In terms of
that writ the Deputy Sheriff will in the meantime attach the claim against the bank so
that the money in the bank account cannot be paid over to the ex-husband (cf. the
order made in Ex parte Crous, 1913 Transvaal Provincial Division 648 at pages 649
to 650). Thereafter or at the same time she could have approached the court by way of
application for an order calling upon her ex-husband to show cause why the bank (ie
the so-called garnishee) should not be directed to pay over to the Deputy Sheriff on a
fixed day so much of the moneys in their hands, to which her ex-husband is entitled,
towards satisfaction of the writ of execution issued out of this court, and in the event
of the bank having any reason for refusing to make such payment, directing the bank
to appear and show cause why it should not make the required payment to the Deputy
Sheriff …’.
[19] Simpson was delivered on 25 December 1965, shortly before the
introduction of rule 45(12). What emerges from that case is that rule
45(8) must be employed when effecting an attachment of incorporeal
property including the attachment of a debt owing by a third person to the
judgment debtor. Rule 45(12) did not, as was suggested by the
respondent, dispense with the attachment requirement, or create a discreet
attachment procedure. What it in fact did was to establish the machinery
necessary to oblige the garnishee to pay the attached debt to the judgment
creditor.
[20] The need to attach the debt is self evident. An attachment in
execution creates a pignus judiciale the effect of which is that control of
the property attached passes from the judgment debtor to the officer
entrusted with the execution of the writ, the dominium of the debt
remaining with the judgment debtor (see Liquidators Union and Rhodesia
Wholesale Ltd v Brown & Co 1922 AD 549 at 558-9). The necessity for
an attachment of incorporeal property such as a debt was described by
Innes CJ in Reinhardt supra at 187.
‘(T)he essential to be observed in all cases of the attachment of debts is that the debtor
should receive due notice, so that he may be warned not to discharge his obligation to
his original creditor, and so that he may have an opportunity of coming to the Court
for relief in case he wishes to raise the question of the validity of the debt, or any lien,
discharge or other matter which would operate in his favour.’
[21] Were the respondents contentions correct, only the garnishee, to
the exclusion of all other interested parties, including the judgment
debtor, would have notice of the attachment. This would redound to their
prejudice. By reason of rule 45(8)(c)(i)(a) an attachment is only complete
once the sheriff has given notice in writing ‘to all interested parties’. See
Stratgro Capital (SA) Ltd v Lombard NO and others 2010 (2) SA 530
(SCA) paras 15-17. Compare Schmidt v Weaving 2009 (1) SA 170 (SCA)
paras 15-21.
[22] The argument of the respondent fails to take account of the plain
language employed in rule 45(12)(a) and in particular the words
‘[a]ttach the same, and thereupon shall serve a notice on such third person…’
The adverb ‘thereupon’ ‘is of particular significance.’ The Shorter Oxford
English Dictionary 6 ed Vol 2 p 3234 ascribes the following meanings to
it:
(1) ‘Upon that or it; Upon that (in time or order)’;
(2)
‘On that being done or said; (Directly) after that’;
(3)
‘On that subject or matter with reference to that.’
Given the context in which the adverb appears in rule 45(12)(a) the first
two meanings ascribed thereto are appropriate.
Properly interpreted the phrase ‘[a]ttach the same, and thereupon shall serve a
notice on such third person…’ envisages two separate jural acts (a) an
attachment of the debt and (b) service upon the garnishee of the
prescribed notice.
[23] For these reasons I conclude that it is indeed a necessary
requirement of rule 45(12)(a) that the sheriff attach the debt in
accordance of rule 45(8)(c). Such attachment coupled with service of the
garnishee notice has the effect, as in English law and other foreign
jurisdictions, of prohibiting the person upon whom the garnishee notice is
served from parting or dealing with the debt pending the outcome of the
garnishee proceedings. It is by virtue of the attachment that the garnishee
becomes obliged to pay not the judgment debtor but the judgment
creditor (see Reichenberg (supra) at 747H in fin; as also the cases there
cited, namely Paramount Furnishers v Lezar’s Shoe Store & Outfitters
1970 (3) SA 361 (T) at 364-365 and African Distillers Limited and others
v Honiball and another 1972 (3) SA 135 (R) at 136H.
[24] In the present instance it is common cause that no notice was given
to the DRC and that no endeavour was made by the sheriff to effect an
attachment in accordance with rule 45(8)(c). Accordingly, the garnishee
proceedings were rendered ineffective and the court below had erred in
granting the order that it did. For these reasons the appeal should succeed.
This conclusion renders it unnecessary to decide the other issues raised in
the appeal.
[25] The following order is made:
The appeal succeeds with costs including the costs of two counsel;
The order of the court below is set aside and the following order
substituted for it:
‘The application is dismissed with costs, including the costs of two
counsel.’
__________________________
P BORUCHOWITZ
ACTING JUDGE OF APPEAL
Appearances:
Appellant:
A. O Cook SC (with him G M Ameer)
Instructed by
Norton Rose South Africa, Sandton
Webbers, Bloemfontein
Respondent:
L.J. Morrison SC (with him N Dayand-Ingroop)
Instructed by
Webber Wentzel, Johannesburg
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
31 May 2012
STATUS: Immediate
South African Congo Oil Company (Pty) Ltd v Identiguard International 710/11
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
The Supreme Court of Appeal (the SCA) today upheld an appeal from the South
Gauteng High Court, Johannesburg, setting aside the order of the high court
authorising the issue of a garnishee notice in terms of rule 45(12) (a) of the Uniform
Rules of Court
The respondent Identiguard International had obtained a judgment against the DRC
Government (DRC). As it had only obtained partial satisfaction of the judgment it
invoked garnishee proceedings against the appellant in terms of rule 45(12).to
attach a debt owed to the DRC by the appellant It was common cause that no notice
was given to the DRC and no endeavour was made by the Sheriff to effect an
attachment of the debt. The appellant refused to pay the amount of the debt to the
Sheriff. The respondent then approached the high court for an order in terms of rule
45 (12) (b) to show cause why it should not pay the debt owing to the DRC to the
respondent.
The SCA held that it is a requirement of rule 45(12) (a) that the Sheriff attach the
debt in accordance with rule 45(8). It further held that rule 45(12) did not dispense
with the attachment requirement or create a discreet attachment procedure but
introduced the machinery necessary to oblige the garnishee to pay the attached debt
to the judgment creditor. The SCA further held that such attachment coupled with
service of the garnishee notice has the effect of prohibiting the person upon whom
the garnishee notice is served from parting or dealing with the debt pending the
outcome of the garnishee proceedings. The SCA also held that it is by virtue of the
attachment that the garnishee becomes obliged to pay not the judgment debtor but
the judgment creditor.
The appeal was consequently upheld.
-- ends --
|
2286
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 522/08
In the matter between:
SAYED HOOSEN MIA
Appellant
and
VERIMARK HOLDINGS (PTY) LTD
Respondent
Neutral citation: Mia v Verimark Holdings (Pty) Ltd (522/08) [2009]
ZASCA 99 (18 September 2009)
Coram:
STREICHER,
MLAMBO
and
SNYDERS
JJA
and
GRIESEL and WALLIS AJJA
Heard:
24 August 2009
Delivered: 18 September 2009
Summary: Damages – Non-fulfilment of suspensive condition in
written agreement – Whether the respondent has proved
a claim for damages as contemplated in the agreement.
ORDER
On appeal from: Johannesburg High Court (Moshidi J sitting as court
of first instance).
The following order is made:
1.
The appeal is upheld with costs such costs to include those
consequent upon the employment of two counsel.
2.
The order of the court a quo is altered to read as follows;
‘(a)
On claim 1 judgment is granted in favour of the plaintiff for R13
160 together with interest thereon at the rate of 15,5% per annum from
date of demand, being 24 February 2003, to date of payment.
(b)
Claim 2 is dismissed.
(c)
The defendant is to pay the plaintiff’s costs of suit on the
appropriate magistrates’ court scale from the commencement of the
action until the end of the first day of the trial, such costs to exclude the
costs of making discovery and the costs attendant upon the preparation
and copying of the trial bundle.
(d)
The plaintiff is to pay the defendant’s costs, including the costs of
two counsel, from the second day of the trial until the completion of
proceedings, as well as the costs excluded in paragraph (c).’
JUDGMENT
WALLIS AJA (STREICHER, MLAMBO and SNYDERS JJA
and GRIESEL AJA concurring).
[1] Suspensive conditions are commonly encountered in contracts for
the sale of immovable property. Their legal effect is well settled. The
conclusion of a contract subject to a suspensive condition creates ‘a very
real and definite contractual relationship’ between the parties.1 Pending
fulfilment of the suspensive condition the exigible content of the contract
is suspended.2 On fulfilment of the condition the contract becomes of full
force and effect and enforceable by the parties in accordance with its
terms. No action lies to compel a party to fulfil a suspensive condition. If
it is not fulfilled the contract falls away and no claim for damages flows
from its failure.3 In the absence of a stipulation to the contrary in the
contract itself, the only exception to that is where the one party has
designedly prevented the fulfilment of the condition. In that event, unless
the circumstances show an absence of dolus on the part of that party, the
condition will be deemed to be fulfilled as against that party and a claim
for damages for breach of the contract is possible.4
1 Corondimas v Badat 1946 AD 548 at 551, 558-559; Palm Fifteen (Pty) Limited v Cotton Tail Homes
(Pty) Ltd 1978 (2) SA 872 (A) at 887.
2 Odendaalsrust Municipality v New Nigel Estate Gold Mining Co Ltd 1948 (2) SA 656 (O) at 665-667.
3 Design and Planning Service v Kruger 1974 (1) SA 689 (T) at 695C-F; Jurgens Eiendomsagente v
Share 1990 (4) SA 664 (A) at 674D-675B.
4 Macduff & Co Ltd (in liquidation) v Johannesburg Consolidated Investment Co Ltd 1924 AD 573 at
590-591.
[2] In the present case the parties entered into a contract on 2 July
2002 in terms of which the appellant, Mr Mia, purchased from the
respondent, Verimark Holdings (Pty) Ltd, an immovable property
situated in Sandton on which Verimark’s office premises were situated.
The purchase price was R13,5 million payable against transfer and had to
be secured by the provision of a suitable, unconditional and irrevocable
guarantee within seven days of the conclusion of the agreement. The
contract contained a suspensive condition making it subject to the
guarantee being obtained within seven days failing which it would be
deemed to be of no force and effect. It is common cause that the
guarantee was not furnished by 10 July 2002 and that as a result the
agreement fell away. Verimark does not allege that Mia brought about the
failure of the suspensive condition by any default on his part so no
question of fictional fulfilment arises. Nonetheless Verimark successfully
sued Mia for damages in the amounts of R13 160 and R2 248 964.49 in
the Johannesburg High Court. Leave to appeal having been refused by the
trial court but granted by this Court, Mia now appeals against that
judgment.
[3] The foundation for Verimark’s claim is found in the terms of the
suspensive condition. The material parts of the clause read as follows:
‘7.1
The operation of the whole of this Agreement (except for the obligation of the
Purchaser to timeously obtain fulfilment of the suspensive condition) is suspended
pending the presentation of the guarantee, as contemplated in 3.2, by no later than 7
days after the effective date.
7.2
...
7.3
In the event that the suspensive condition is not timeously fulfilled ... this
Agreement shall from the date referred to in 7.1 ... be deemed to be of no force or
effect provided that the Purchaser shall be liable to the Seller for the costs incurred by
the Seller in respect of the drafting, negotiation and signature of this Agreement and
any other damages suffered by the Seller as a result of such non-fulfilment.’
In terms of the particulars of claim Verimark’s claims were brought under
clause 7.3 as claims in terms of the contractual undertaking contained in
the proviso to that clause. Therefore the claims were couched as
contractual claims, not conventional claims for damages arising from a
breach of contract. The first claim is for the costs amounting to R13 160
in respect of the drafting, negotiating and signature of the agreement.
That claim is now conceded and we are told has been paid together with
interest. Its only relevance for present purposes is therefore in relation to
the costs incurred in pursuing the claim. The appeal concerns the merits
of the second claim. The nature of that claim and the circumstances
giving rise thereto require some explanation.
[4] As mentioned, Verimark’s offices were situated in the building
standing on the property that was the subject of the sale. In addition to
that property it leased warehouse premises in Midrand where it stored the
goods that are its stock in trade. At the time its financial position was not
entirely satisfactory and it decided to consolidate the office and
warehouse in new premises as a measure to save costs and improve its
financial circumstances. The lease of the warehouse was nearing an end
and so the office property was placed on the market, it being the intention
once it had been sold to terminate the warehouse lease and move to new
consolidated premises. Verimark claimed that if Mia had provided the
guarantee as contemplated within the seven day period stipulated in the
agreement it would have been able to pass transfer of the office property
by no later than 31 October 2002 and would have been able to relocate to
new premises on 1 November 2002. Instead, so it alleged, it was only
able to secure new premises in terms of a lease concluded on 20 October
2002 under which new premises were to be constructed for it. This lease
provided for the warehouse portion of the new premises to be available
by 1 May 2003 and the balance on a later date by arrangement with
Verimark. That eventually turned out to be 1 October 2003, the office
property having been sold by public auction in June 2003.
[5] Verimark’s second claim is for the additional costs that it incurred
between 1 November 2002 and 1 May 2003 in the case of the warehouse,
and between 1 November 2002 and 1 October 2003 in the case of the
office premises, in consequence of its inability to move from its old
warehouse and office premises to the proposed new premises. It claims
these costs under the following headings:
(a) R1 525 646.66 being the interest on its bond over the office premises
during the relevant period;
(b) R199 320.20 being the costs of providing security at its office
premises from 1 November 2002 to 30 September 2003;
(c) R253 080.76 being the rates and taxes paid in respect of the office
premises from 1 November 2002 to 30 September 2003;
(d) R114 894.18 being the cost of maintenance for the office premises in
the form of building repairs, plumbing, cleaning and sanitation, pest
control and garden services from 1 November 2002 to 30 September
2003;
(e) R13 485.26 being insurance for the office building from 1 November
2002 to 30 September 2003;
(f) R1 017 409.75 being rental in respect of the warehouse from 1
December 2002 to 30 April 2003;
(g) R167 622.76 being additional rates and taxes in respect of the
warehouse for the same period.
(h) R90 406.14 being the cost of advertising the immovable property for
sale.
In calculating its claim for damages Verimark gives credit for an amount
of R1 132 901.22 as the rental it calculates it saved as a result of not
moving premises earlier. Making this allowance gives the figure of
R2 248 964.49 for which the court below held Mia to be liable to
compensate Verimark.
[6] In its pleadings Verimark based its claim for damages solely on the
provisions of clause 7.3 of the agreement and not on any alleged breach
of contract. The relevant paragraphs in the particulars of claim dealing
with the terms of the contract read as follows:
‘4.7
The provision of the bank guarantee by the Defendant to the Plaintiff would
operate as a suspensive condition.
4.8
…
4.9
In the event of the Defendant failing to deliver the bank guarantee to the
Plaintiff by 9 July 2002, or within the extended period, the agreement would be
deemed to be of no further effect.
4.10
In the event of the agreement becoming of no further force or effect, as a
result of the Defendant failing to deliver the bank guarantee, the Defendant would be
liable to the Plaintiff for the costs incurred by the Plaintiff in respect of the drafting,
negotiation and signature of the agreement, as well as any other damages suffered by
the Plaintiff.’
In pleading the second claim Verimark alleged that there had been a
failure to fulfil the suspensive condition; that the contract became of no
force and effect and that ‘in terms of the written agreement’ Mia was
liable for any damages suffered by Verimark in the event of Mia’s failure
to deliver a bank guarantee timeously. It then formulated its claim in the
fashion already described.
[7] In formulating its claim in this manner Verimark did not challenge
any of the basic principles in relation to suspensive conditions set out in
paragraph 1 of this judgment, but accepted that clause 7.1 was a
conventional suspensive condition the failure of which would not give
rise to any claim for damages. Its claim was accordingly a contractual one
based on the undertaking in clause 7.3. No question of breach of contract
came into the picture. On that basis the outcome of the case would have
depended upon the construction of the words ‘any other damages suffered
by the Seller as a result of such non-fulfilment’ and in particular on the
meaning to be assigned to the word ‘damages’ in clause 7.3. Ascertaining
the meaning of this word would involve a conventional exercise in
contractual interpretation in accordance with well-established rules.5 The
language used by the parties must be considered in its particular context
and in the light of the relevant surrounding circumstances. In general
terms, what needs to be determined is what type of financial loss or
detriment is encompassed by the expression ‘any other damages’.
Expressed more narrowly the question is whether any of the heads of
claim advanced by Verimark fall within that expression.
[8] In arguing its case in this Court Verimark shifted its ground and
contended that the failure by Mia to provide the guarantee timeously
constituted a breach of contract. Its case as now presented can be
summarised as follows. It submits that under clause 3.2 Mia was obliged
to pay the purchase price on transfer and in the interim it was to be
secured by a suitable, unconditional and irrevocable bank guarantee
which was to be delivered to the seller no later than seven days after the
effective date, being the date of signature of the agreement. It says that
the words, ‘except for the obligation of the Purchaser to timeously obtain
fulfilment of the suspensive condition’ in parentheses in clause 7.1, mean
5 Coopers & Lybrand & others v Bryant 1995 (3) SA 761 (A) at 767E - 768E.
that this obligation was untouched by the suspension of the ‘whole of this
Agreement’ in clause 7.1. Accordingly when Mia failed to provide the
guarantee he was in breach of his obligations under the agreement and
liable to pay damages. That liability is recorded in clause 7.3 of the
agreement, but is a liability arising from the alleged breach of contract
rather than one created by the contract itself. It is not dependent upon
notice being given in terms of the breach clause (clause 14) because the
operation of that clause is suspended by clause 7.1. The damages
recoverable as a result are those that would ordinarily be recoverable for a
breach of contract.
[9] Mia disputes this construction of clause 7.1. He contends that the
suspension of the whole of the agreement in clause 7.1 extends to the
obligation to provide the guarantee and that the words in parentheses
apply only to the more limited obligation resting upon him to do all
things necessary and within his power to secure the fulfilment of the
condition. He accordingly disputes the suggestion that the mere failure to
provide the guarantee was a breach of contract, but accepts that as a result
of the contract becoming of no force and effect he is liable in terms of
clause 7.3 to pay the costs incurred in drafting, negotiating and signing
the agreement and any other damages suffered by Verimark as a result of
the non-fulfilment of the suspensive condition. His liability is one arising
by virtue of the contractual stipulation and it is accordingly necessary to
construe the clause in order to determine the meaning to be ascribed to
the word ‘damages’ and hence the scope of his undertaking. He contends
that properly understood the ‘damages’ referred to in clause 7.3 are
restricted to those costs and expenses, if any, incurred by Verimark that
were wasted as a result of the non-fulfilment of the condition and the
agreement lapsing and do not extend to other damages that would
ordinarily flow from a breach of the agreement. If that is incorrect he
contends that the requirements for a successful claim for special damages
are absent and that the evidence does not support these claims. In addition
he challenges the order made by the court below that he pay the costs of
the action on the attorney and client scale.
[10] Assuming it is open to Verimark on these pleadings to contend that
the failure to provide a guarantee, without more, constitutes a breach of a
contractual obligation by Mia, that is clearly relevant to a proper
understanding of the nature of the ‘damages’ referred to in clause 7.3. If
the contention is correct the inevitable conclusion would be that clause
7.3 is referring to damages in the broad sense of whatever damages flow
from that breach of contract calculated on whatever basis may be
permissible. However, even on that basis, Mr Joubert SC, who appeared
for Mia, submitted that Verimark had failed to prove its entitlement to the
damages claimed by it. As in my view that contention is correct, it is
unnecessary to address the issues of construction raised by the parties’
conflicting arguments.
[11] Approaching the matter on the basis that Mia was in breach of a
contractual obligation to provide the guarantee needed to secure payment
of the price, the agreement that in that event the contract would be
regarded as of no force or effect must be treated in the same way as if
Verimark had cancelled the contract as a result of Mia’s breach and
become entitled to claim damages as a result. On Verimark’s contentions
it is entitled to be put in the same position as it would have been in if the
contract had been performed, insofar as that can be done by the payment
of money and without undue hardship to the wrongdoer. Two types of
damages are recoverable on this basis, namely, those that flow naturally
and generally from the kind of breach in question and that the law
regards as a probable result of the breach (usually referred to as general
damages) and those that, although caused by the breach, would ordinarily
be regarded as too remote to be recoverable, but that in the special
circumstances attending the conclusion of the contract, the parties
actually or presumptively contemplated would result from its breach
(usually called special damages).6 Where damages of the latter kind are
claimed the special circumstances, on the basis of which the parties are to
be presumed to have formed their contemplation, must be proved by
evidence in the usual way.7 The contemplation of those circumstances
must be ascertained at the time the contract is concluded.8 At present our
law adheres to the principle that it is not only necessary that the damage
was within the contemplation of the parties, but also that the contract was
concluded on that basis (the ‘convention’ principle), although that may
be the subject of reconsideration on some other appropriate occasion.9
[12] The damages that flow naturally from the failure of a contract of
purchase and sale are ordinarily calculated as the adverse difference
between the nett price that would have been paid under the failed
transaction and the market value of the property at the time for
performance.10 In many cases the calculation will be based on the nett
price actually achieved on resale provided there is no reason to think that
market circumstances have materially altered in the interim.11 Those are
the damages that a purchaser would reasonably anticipate as flowing
6 Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A) at 687C-F.
7 Shatz Investments (Pty) Ltd v Kalovyrnas 1976 (2) SA 545 (A) at 552A-B.
8 Shatz Investments at 551D-H.
9Shatz Investments at 552A-554F. The controversy remains unresolved. Thoroughbred Breeders'
Association v Price Waterhouse 2001 (4) SA 551 (SCA) para 47.
10 Novick v Benjamin 1972 (2) SA 842 (A) at 860B-D; Katzenellenbogen Ltd v Mullin 1977 (4) SA 855
(A) at 879H-880B.
11 Culverwell & another v Brown 1990 (1) SA 7 (A) at 30I-31F.
from a default in paying the purchase price and a subsequent
cancellation. As damages will probably flow from a particular breach if
the party in default would have anticipated their occurrence as a realistic
possibility in the circumstances,12 are any of the heads of damages
claimed by Verimark in this category?
[13] The only items that it was suggested in argument fall under this
head were the interest on the mortgage over the office property and the
additional costs of security guards, rates and taxes, maintenance and
insurance in respect of that property. In my view these do not flow
naturally from the failure to bring about the fulfilment of the suspensive
condition. Had the condition been fulfilled then in due course Verimark
would have received the purchase price less estate agent’s commission. If
the property had been sold for less than the agreed price, after taking
account of additional sale costs such as the advertising costs in relation to
the auction ultimately conducted, there would have been a loss suffered.
If Verimark had changed its mind about moving to new premises and
remained in its old offices then it could have claimed the difference
between the price offered by Mia and the market value of the property.
That was foreseeable and a reasonable possibility in all the
circumstances. However that is not the basis of the claim because
Verimark in fact sold the building the following year for more than the
price offered by Mia, even after taking account of the additional
advertising costs.
[14] The expense items referred to above stand on an entirely different
footing. If the sale had proceeded they would have ceased in respect of
this building but would have been incurred or replaced by equivalent
12 Thoroughbred Breeders para 49.
expenses in premises elsewhere, or the rental in respect of new premises
would have taken account of such expenses. Neither Verimark nor Mia
could foresee what would happen in this regard. Much would depend on
how quickly a new purchaser would be found. That in turn would depend
upon the state of the property market. If a new purchaser were found
fairly quickly then Verimark would move to new premises. Whether it
would need to incur similar expenses in new premises would depend on
the terms on which it occupied those premises. The costs incurred would
depend on whether these were more luxurious or more Spartan than the
existing offices. If it was compelled to stay in the existing premises for a
period the expenses would continue to be incurred but Verimark would
obtain benefits from them in the form of security, maintenance of the
property, insurance cover and the payment of interest on its bond rather
than rental. The expenses would maintain the value of its asset and
thereby contribute to its obtaining the higher price that was obtained
when it was sold the following year. No doubt the costs incurred would
have been deductible as expenses in the production of income for income
tax purposes and the VAT payable would have been deducted as an input
credit. No-one in the position of Mia could have any insight into these
matters of internal administration of Verimark’s business much less
foresee as a realistic possibility that if he failed to provide the guarantee
Verimark would suffer loss in relation to them. All in all the situation is
far too beset with uncertainty for it to be said that these were costs that
were foreseeable as a realistic possibility flowing naturally from the
failure to provide a guarantee for payment of the purchase price.
[15] I turn then to consider the claim on the basis that it is recoverable
as special damages. In order to assess that claim it is necessary to have
regard to the special circumstances on which Verimark relied in
advancing this claim as it is those circumstances that must be proved in
order to advance the claim at all. The special circumstances on which
Verimark relied as set out in its pleadings were limited to ‘the
Defendant’s knowledge of the Plaintiff’s intention to vacate the
immovable property and occupy alternative business and warehouse
premises’. No allegations were made in regard to knowledge of
Verimark’s desire to reduce costs nor were any details alleged in regard
to the nature or location of the proposed new premises and the basis upon
which the move to such premises would result in a cost saving. It is
unclear in those circumstances on what basis Verimark then contended
that the damages it was claiming were within the contemplation of the
parties at the time of entering into the written agreement, but it is
unnecessary to go into this as there is a prior insurmountable difficulty
with its case.
[16] The claim advanced on the basis of special damages founders
because the evidence does not support even the limited pleaded
proposition on which it is based. Britz, who was the principal witness for
Verimark in this regard, said that Blair, the agent acting for Verimark in
looking for a purchaser, knew of its plans in regard to selling the office
premises and consolidating new office premises with new warehouse
facilities. However Blair was Verimark’s agent and his knowledge could
not be attributed to Mia. The fact that at the same time he was also
employed by Mia to find a tenant for the building that he was buying
from Verimark cannot alter this. It certainly forms no basis for the
submission advanced to us that Blair must have told Mia about
Verimark’s plans. That is pure speculation. As regards the knowledge of
Mia there is no evidence that he was aware of Verimark’s plans. Britz
merely testified to some limited and irrelevant conversations when Mia
visited the premises. It was suggested that the absence of evidence could
be overcome by drawing an inference against Mia from his failure to
testify, but the cases are clear that such an inference can only be drawn
when there is at least some evidence that prima facie supports the
proposition sought to be proved.13 Here the evidence provided no basis at
all for attributing to Mia knowledge of Verimark’s plans so that his
failure to give evidence is a neutral factor.
[17] Even if the claim for special damages is limited to the additional
costs in respect of the office premises the same problems of lack of
knowledge and absence of foreseeability confront Verimark. Not only
was Mia not made aware of the existence of the warehouse and the plan
to consolidate it with the office, he did not know that Verimark was
disposing of the office premises in order to cut its costs by reducing its
overheads. As was put to its counsel in argument, Mia did not know if
Verimark intended to move to Pofadder or to more palatial premises in
Sandton. He could not then have known the underlying facts on which
the claim is based and could not have foreseen that Verimark would
suffer the damages it now seeks to recover as a result of the failure to
provide the guarantee for the purchase price.
[18] What is more, a claim for special damages requires that, in the light
of the relevant special circumstances, the damages claimed must have
been in the contemplation of the parties when the contract was
concluded. However, when Verimark’s attorneys formulated its claim in
correspondence, in letters dated 14 February 2003 and 4 August 2003,
(the latter after the property had been sold) they did so on a wholly
13 Titus v Shield Insurance Co Ltd 1980 (3) SA 119 (A) at 133D-134B; Raliphaswa v Mugivhi & others
2008 (4) SA 154 (SCA) para 15.
different basis to that advanced at the trial. The letters contain no
suggestion that the contract had been concluded in the light of knowledge
of special circumstances or that the damages now claimed (which were
not the damages claimed in the letters) were foreseeable when the
contract was concluded. As knowledge of the special circumstances on
which Verimark relies in support of its claim for special damages is
crucial to establish foreseeability, which in turn is necessary for them to
be in the contemplation of the parties when they contracted, the letters
are a clear indication that the parties did not have the requisite knowledge
or foresight.
[19] For those reasons the appeal must succeed and the judgment in
favour of Verimark be set aside. In the court below an order for attorney
and client costs was made against Mia. In arguing the appeal Mr du
Toit SC submitted that if the appeal succeeded that success should not
carry with it an order for costs in favour of Mia and similarly no order for
costs should be made in Mia’s favour in respect of the trial. He based this
on allegations of dishonesty that he founded on amendments made to
Mia’s plea, the late abandonment of the defence of rectification and
Mia’s failure to give evidence. He added in regard to the appeal that Mia
had falsely stated in his application for leave to appeal that he had been
refused a loan whereas this was not true.
[20] It is correct that Mia amended his pleadings several times and
abandoned certain defences, but the same point can be made against
Verimark. The claim it formulated in correspondence prior to
commencing proceedings and its initially pleaded claim were
significantly different from the claim finally advanced. It is not possible
for us to discern whether these changes of stance were, as suggested to us
by Mr Joubert SC, a result of counsel’s advice as to the law and the
proper conduct of the case or for some other reason. They do not appear
to have prolonged the proceedings unnecessarily or resulted in a
significant waste of costs. In making its order the trial court should have
borne in mind, as I do, the words of Trollip JA in the Shatz Invesments
case14 that:
‘But generally, in regard to that complaint and others by plaintiff about the manner in
which the trial was conducted on defendant's behalf, one should bear in mind that
usually a wide latitude should be afforded a defendant in presenting his defence,
especially when he is confronted with a substantial claim for damages. In such a case,
I think, the defendant is usually entitled
'to put his back against the wall and to fight from any available point of advantage'
(cf KEKEWICH J in Blank v Footman, Pretty & Co 39 Ch D 678 at p. 685, quoted
with approval in Nel v Nel 1943 AD 280 at p. 288).’
[21] As regards Mia’s failure to give evidence, if there was, as I have
found, no case for him to meet there was no reason for him to do so and
no criticism can be addressed against him for not doing so. That leaves
only the point about the falsehood in the application for leave to appeal.
That cannot affect the costs of the trial and did not affect either the grant
of leave to appeal or the outcome of the appeal. Whilst it is deprecated it
does not warrant an adverse order for costs.
[22] The appeal therefore succeeds with costs including those of two
counsel. However, in regard to the costs in the court below it must be
borne in mind that the claim to recover the costs of negotiating, drafting
and signing the sale agreement was resisted to the end although no part of
the trial was spent on it. Verimark is entitled to some costs in regard to its
successful pursuit of that claim. Mr Joubert SC suggested that the
14 At 560D-F.
appropriate order would be one in which the first claim was upheld with
costs on the appropriate Magistrates’ Court scale and the second claim
should be dismissed with costs including those of two counsel. However
that may create unnecessary complexity in taxing the rival bills of costs.
It seems to me preferable for Verimark to have its costs on the
appropriate magistrates’ court tariff up to the first day of the trial and for
Mia to have his costs thereafter including the costs of two counsel. An
adjustment is made in respect of the costs of discovery and the
preparation of the trial bundle as these costs related almost exclusively to
the second claim.
[23] In the result the following order is made:
(a)
The appeal is upheld with costs such costs to include those
consequent upon the employment of two counsel.
(b)
The order of the court a quo is altered to read as follows:
‘(i) On claim 1 there will be judgment for the plaintiff for R13 160
together with interest thereon at the rate of 15,5% per annum from date of
demand, being 24 February 2003, to date of payment.
(ii)
Claim 2 is dismissed.
(iii) The defendant is to pay the plaintiff’s costs of suit on the
appropriate magistrates’ court scale from the commencement of the
action until the end of the first day of the trial such costs to exclude the
costs of making discovery and the costs attendant upon the preparation
and copying of the trial bundle.
(iv)
The plaintiff is to pay the defendant’s costs, including the costs of
two counsel, from the second day of the trial until the completion of
proceedings, as well as the costs excluded in paragraph (c).’
M J D WALLIS
ACTING JUDGE OF APPEAL
APPEARANCES
FOR APPELLANT:
A P JOUBERT SC (with him D H WIJNBEEK)
the heads of argument having been prepared by
A P JOUBERT SC (with him M M SMIT).
Instructed by
Melamed
&
Hurwitz
Inc,
Johannesburg
Rosendorff, Reitz and Barry, Bloemfontein
FOR RESPONDENT:
S DU TOIT SC (with him G NEL).
Instructed by
Bell, Dewar and Hall Inc, Johannesburg
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: Friday 18 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.
SAYED HOOSEN MIA v VERIMARK HOLDINGS (PTY) LTD
In a judgment delivered today the Supreme Court of Appeal upheld an appeal
against a judgment of the Johannesburg High Court awarding damages of
R2 248 964.49 to Verimark consequent upon the failure of an agreement of purchase
and sale of immovable property due to the non-fulfilment of a suspensive condition.
On 2 July 2002 the parties entered into an agreement in terms of which the
appellant, Mr Mia, purchased from Verimark, an immovable property situated in
Sandton on which Verimark’s office premises were situated. The purchase price was
R13,5 million payable against transfer and had to be secured by the provision of a
suitable, unconditional and irrevocable guarantee within seven days of the conclusion
of the agreement. The contract contained a suspensive condition making it subject to
the guarantee being obtained within seven days failing which it would be deemed to
be of no force and effect. The guarantee was not furnished by 10 July 2002 and as a
result the agreement fell away.
Verimark claimed damages in terms of a clause in the agreement dealing with
the consequences of non-fulfilment of the suspensive condition. It had succeeded in
selling the property at an enhanced price nearly a year later and accordingly it had not
suffered a loss on resale. Instead it claimed as special damages the costs of preparing
the agreement and the costs it had incurred in continuing to occupy for a further
period both the office premises and a warehouse that it had intended to consolidate
with its offices in a new building. The Court held that there was no evidence that Mr
Mia was aware of Verimark’s plans so that the damages claimed were not foreseeable
or recoverable. In the result the only damages that Verimark was entitled to were the
costs of preparing the agreement, which had been paid prior to the appeal.
Accordingly the judgment of the Johannesburg High Court was set aside subject to an
appropriate order of costs.
|
4001
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 896/2021
In the matter between:
RUTH EUNICE SECHOARO
APPLICANT
and
PATIENCE KGWADI RESPONDENT
Neutral citation:
Ruth Eunice Sechoaro v Patience Kgwadi (896/2021) [2023]
ZASCA 46 (4 April 2023)
Coram:
DAMBUZA AP, SCHIPPERS and NICHOLLS JJA and KATHREE-
SETILOANE and SIWENDU AJJA
Heard:
1 March 2023
Delivered: 4 April 2023
Summary: Application for leave to appeal – whether respondent’s unilateral mistake
in signing agreement is reasonable – under misapprehension as to its contents -
agreement wholly inconsistent with prior agreement with ex-husband – mistake
reasonable and excusable - proposed appeal enjoying no prospects of success.
___________________________________________________________________
ORDER
___________________________________________________________________
Application for leave to appeal from: Gauteng Division of the High Court, Pretoria
(Vorster AJ sitting as court of first instance):
Paragraph 2 of the order of the high court is set aside and replaced with the
following order:
‘The first respondent, Rorich Wolmarans Luderitz, is directed to pay the
applicant 50% of the proceeds of the sale of the property held in its trust
account within 30 days of finalisation of the deceased’s estate.’
Save as aforesaid, the application for leave to appeal is dismissed with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Kathree-Setiloane AJA (Dambuza AP, Schippers and Nicholls JJA and
Siwendu AJA concurring):
[1] This is an application for leave to appeal the decision of the Gauteng Division of
the High Court, Pretoria (the high court), in terms of which it declared that the
agreement signed by the respondent, Ms Patience Kgwadi, and her ex-husband, Mr
Israel Kgwadi, on 18 July 2012 (the 2012 agreement) is unenforceable. The
application was referred for oral argument in terms of s 17(2)(d) of the Superior
Courts Act.1
[2] The respondent married the deceased on 14 May 1987 in community of
property. Their marriage was dissolved on 25 October 1991. They concluded a
settlement agreement which was made an order of court on the same day. The court
order afforded Mr Kgwadi a period of 14 days to apply to court for variation of the
settlement agreement.
1 10 of 2013.
[3] At the time of their divorce, the respondent and the deceased were joint owners
of an immovable property in Boksburg (the property). Since the settlement
agreement did not deal with the division of the property, they verbally agreed that
each of them would be entitled to half of the value of the property. It was specifically
agreed that Mr Kgwadi would pay the respondent half the value of the property. He,
however, never did.
[4] On 25 September 2010, Mr Kgwadi married the applicant, Ms Ruth Eunice
Sechoaro. Thereafter, on 2 October 2010, he made a will in which he, inter alia,
bequeathed 50% of his estate to his fiancée, the applicant at the time, provided she
survived him by a period of seven days, and they were still married at the date of his
death. Mr Kgwadi appointed First National Bank Trust Services (Pty) Ltd (FNB) as
the executor of his estate.
[5] On 28 March 2012, the respondent was seriously injured in a motor vehicle
accident and was admitted to Charlotte Maxeke Hospital in Johannesburg (the
hospital). She remained in hospital until September 2012. On 18 July 2012, a
messenger from the law firm Denoon Sampson Ndlovu Inc, whom she assumed to
be representing Mr Kgwadi, called at the hospital to get the respondent to sign a
document, entitled ‘variation agreement’, in terms of which she would award the joint
property solely to Mr Kgwadi, which she did. The applicable provisions of the
agreement are these:
‘2. The parties have now agreed to amend the settlement agreement in so far as it relates to
the Property.
3. The parties hereby agree that:
3.1
The Property shall be awarded solely to [Mr Kgwadi].
…
3.5
They shall cooperate with each other and shall sign all and any necessary
documents as may be required by the conveyancers appointed by [Mr Kgwadi] to attend to
the transfer of the Property into his name, as and when called upon to do so.’
[6] Mr Kgwadi passed away on 29 September 2014. The Master of the High Court,
Johannesburg (the Master) appointed Ms Prishania Naidoo, FNB’s nominee, as the
executor of the estate. On 31 May 2017, the respondent as a seller, and Ms Naidoo,
on behalf of FNB, signed an offer to purchase the property by a third party in the sum
of R550 000. On 22 January 2018, Rorich Wolmarans Luderitz Inc, the attorneys
attending to the transfer of the property, informed the respondent by email that she
was not entitled to 50% of the proceeds of the sale of the property, because the
variation agreement stated that the property was awarded solely to the deceased.
[7] On 19 February 2018, the respondent launched an application in the high court
challenging the enforceability of the 2012 agreement on two grounds. The first was
that it was entered into more than 20 years after the settlement agreement had been
made an order of court and not within the 14-day period stipulated in the order, and
that Mr Kwgadi did not apply to court for an order varying the settlement agreement.
The second ground was that she signed the agreement without any intention to be
bound by its terms. She alleged that she had been injured in a serious motor vehicle
accident and was admitted to hospital, where she spent six months. She was
diagnosed with an acetabulum hip fracture dislocation and had to undergo a skin
traction and surgery to her hip. She was ‘constantly in extreme pain’ and ‘was
normally sedated to minimise the pain’ she experienced. She signed the agreement
without reading it, as she did not have the strength to do so in the state that she was
in. She assumed that the agreement dealt with what she and the deceased had
agreed upon, ie, that he would pay her 50% of the value of property.
[8] The respondent furthermore alleged that the attorneys’ messenger did not
inform her of the nature and contents of the agreement, save to tell her that the
agreement dealt with the property which she and the deceased jointly owned. She
accepted that the messenger was not bound to inform her of the terms of the
agreement before she signed it. She, however, contended that given her condition at
the time, he should at least have explained them to her. The reason being that there
were terms she ‘could not have reasonably expected in the agreement, specifically
the term that [she] was giving [her] 50% share in the property to the [Mr Kgwadi]
without any payment of the value of [her] half share in the property’. In the
circumstances, she contended that her mistake in signing the agreement without
reading it was reasonable and that she should not be bound by it.
[9] The applicant disputed these allegations in her answering affidavit on the basis
that the respondent suffered a hip fracture dislocation, which did not affect her
mental functioning. She contended that the respondent was of ‘sound and sober
senses’ when she signed the variation agreement and was neither under duress nor
unconscious.
[10] The high court found that the ‘factual dispute whether the [respondent] knew
and intended to forfeit the undivided share in the immovable property by the
signature of the amendment agreement… is not a real dispute’, and ‘can be resolved
without oral evidence, looking purely at the evidence as a whole’. The high court held
that ‘[t]aking into account the surrounding common cause facts’, the inference that
the respondent signed the agreement with the intention to be bound did not pass the
probability test as:
(a) The document was presented for signature to the respondent 20 years after their
divorce;
(b) There was no evidence that the nature and importance of the document, which
was a binding agreement in terms of which she forfeited her 50% undivided share in
the property, was explained to the respondent or ever discussed with her;
(c) Had the nature and importance of the document been explained to the
respondent, then it would have been a simple matter for the applicant to have
adduced that evidence;
(d) Had she been told of the import and effect of the document, the respondent
would not have signed it;
(e) On the crucial aspect of whether she knew what she was signing, there is no
evidence apart from the respondent’s evidence that she was unaware of it; and
(f) It was improbable that the respondent would have disposed of her 50% undivided
share in the property without any apparent reason for doing so.
[11] The high court consequently found that the application must succeed and made
the following order:
‘1. That the Agreement signed by the [respondent] and her deceased husband [Mr Kgwadi]
on the 18th of July 2012 is not enforceable against the [respondent] and also not enforceable
against the deceased estate of [Mr Kgwadi].
2. That the First Respondent Rorich Wolmarans Luderitz Inc be compelled to pay to the
[respondent] 50% [of the proceeds of the sale of the property held in its trust account
within 30 days of finalisation of the deceased’s estate].2
3. That the [Master] be interdicted from approving and confirming the amendment of the
Liquidation and Distribution Account under Estate Number 034807/2014 to the effect that it
should be in accordance with the last will and testament of [Mr Kgwadi].
4. That, alternatively in the event that the [Master] has already amended the Liquidation and
Distribution Account to effect the contents of the last Will and Testament, an Order
interdicting [Rorich Wolmarans Luderitz Inc] from finalising the Estate of [Mr Kgwadi] in
accordance with the contents of the last Will and Testament of [Mr Kgwadi];
5. The [applicant] is ordered to pay the [respondent’s] costs of suit.’
[12] The applicant, who is the deceased’s surviving spouse, applied to the high
court for leave to appeal, which was dismissed. She subsequently applied to this
Court for leave to appeal.
[13] It is essential to deal with nature of the 2012 agreement. This is because the
parties adopt the erroneous view that it is a variation agreement, which varied the
settlement agreement that was made an order of court on the date of the divorce of
the respondent and Mr Kgwadi. Despite its title, the 2012 agreement is not a
variation agreement as it does not vary the settlement agreement. The settlement
agreement did not deal with the division of the joint property of the respondent and
Mr Kgwadi. As is apparent from its terms, the 2012 agreement is simply one in terms
of which the respondent purportedly disposed of her half share in the property to Mr
Kgwadi, for no value.
[14] The applicant’s primary ground in support of its application for leave to appeal
against the judgment and order of the high court, is that it failed to have regard to the
dispute of fact. The applicant contended, in this regard, that when the respondent
signed the 2012 agreement there was nothing wrong with her psychologically, hence
she was aware of, and intended to be bound by its terms. As correctly held by the
high court, the dispute concerning whether the applicant knew and intended to forfeit
the undivided share in the movable property by signing the 2012 agreement, is not a
2 Paragraph 2 of the high court’s order is incomplete.
real dispute of fact as it could be resolved on the common cause facts on the papers.
It is significant, in this regard, that the applicant did not challenge the respondent’s
version that she signed the 2012 agreement because it was reasonable to expect
that it would not contain a term that would require her to give up her 50% share in
the property to Mr Kgwadi for no value.
[15] The applicant merely contended, in her answering affidavit, that the injuries
sustained by the respondent were not psychologically related and that she did not
sign the 2012 agreement under duress. The applicant’s contentions are unsurprising
as she has no personal knowledge of the circumstances under which the agreement
was signed by the respondent. On this crucial aspect, there is no other evidence
apart from the respondent’s that she signed the 2012 agreement because she could
not have reasonably expected it to contain a term whereby, she would forfeit her
50% share in the joint property. Besides, this is entirely consistent with her allegation
of a verbal agreement between her and the deceased that each of them would be
entitled to half of the value of the property, which remains unchallenged.
[16] The only question remaining is whether, on the objective facts, by signing the
2012 agreement the respondent had bound herself to parting with her 50% share in
the property to Mr Kgwadi, for no value. Put differently, was her unilateral mistake
(error) in signing the agreement without reading it reasonable (justus)? In George v
Fairmead (Pty) Ltd,3 this Court held that:
‘When can an error be said to be justus for the purpose of entitling a man to repudiate his
apparent assent to a contractual term? As I read the decisions, our Courts, in applying the
test, have taken into account the fact that there is another party involved and have
considered his position. They have, in effect, said: Has the first party – the one who is trying
to resile – been to blame in the sense that by his conduct he has led the other party, as a
reasonable man, to believe that he was binding himself? … If his mistake is due to a
misrepresentation, whether innocent or fraudulent, by the other party, then, of course, it is
the second party who is to blame and the first party is not bound.’4
3 George v Fairmead (Pty) Ltd [1958] 3 All SA 1 (A); 1958 (2) SA 465 (A) at 471B-C; See also Brink v
Humphries & Jewell (Pty) Ltd 2005 (2) SA 419 (SCA); [2005] 2 All SA 343 (SCA).
4 Ibid.
[17] In National and Overseas Distributors Corporation (Pty) Ltd v Potato Board,
Schreiner JA stated the position thus:
‘Our law allows a party to set up his own mistake in certain circumstances in order to escape
liability under a contract into which he has entered. But where the other party has not made
any misrepresentation and has not appreciated at the time of acceptance that his offer was
being accepted under a misapprehension, the scope for a defence of unilateral mistake is
very narrow, if it exists at all. At least the mistake (error) would have to be reasonable
(justus), and it would have to be pleaded.’5
[18] The respondent’s unchallenged evidence is that the settlement agreement
which was concluded in 1991 and made an order of court, did not deal with the
division of the property, because both she and Mr Kgwadi were under the
impression, consequent upon their marital regime, that each of them would be
entitled to half of the value of the property. They agreed that Mr Kgwadi would pay
the respondent the value of her share in the property. He, however, never did so.
[19] More than two decades later, knowing full well that the respondent was in
hospital recovering from serious injuries, Mr Kgwadi caused his attorney to present
the 2012 agreement, containing entirely different terms to those they had agreed
upon over 20 years earlier, to the respondent for her signature. It is clear on the
objective facts that Mr Kgwadi did so deliberately, and with intent to deceive the
respondent into forfeiting her half share in the joint property. This explains why the
applicant chose to adduce no evidence on how it came about that the respondent
and Mr Kgwadi decided to amend their prior agreement. These facts were peculiarly
within the knowledge of Mr Kgwadi and the applicant, who married him shortly
thereafter, and stood to inherit 50% of his estate on his death. Bearing in mind that
the respondent already had an agreement with Mr Kgwadi concerning her share of
the property, she had no reason to expect that she would be asked to sign an
agreement containing terms to the contrary.
5 National and Overseas Corporation (Pty) Ltd v Potato Board [1958] 3 All SA 13 (A); 1958 (2) SA 473
(A) at 479G-H.
[20] Mr Kgwadi knew, or must have known, contrary to what is stated in the
agreement presented to the respondent for signature, that she had not consented to
amend their prior agreement that he would pay her 50% of the value of the property;
that he was not entitled to sole ownership of the property; and that there was no
basis for depriving the respondent of her share of the property. Consequently, when
he received the agreement after the respondent had signed it, Mr Kgwadi knew of
her mistake as he was the cause of it.6 In these circumstances, it cannot be
suggested that by signing the agreement, the respondent misled Mr Kgwadi, as a
reasonable person, to believe that she was binding herself to its terms and that he
was solely entitled to the property, for no value.7
[21] It is important to keep in mind that the respondent acted consistently with her
belief that the agreement did not contain a term to the effect that she gave up her
50% share in the property to Mr Kgwadi for no value. In May 2017, in her capacity as
a seller, she signed an offer by a third party to purchase the property for R550 000.
On enquiring with the transferring attorneys about payment of her 50% share of the
proceeds of the sale, they informed her that she was not entitled to any proceeds as
the ‘variation agreement’ stated that Mr Kgwadi was the sole owner of the property.
Shortly thereafter, she instituted the application in the high court claiming payment of
50% of the proceeds of the sale of the property.
[22] In the circumstances, I consider the respondent’s unilateral mistake to be
reasonable and excusable. Accordingly, the proposed appeal has no reasonable
prospects of success. The application for leave to appeal must, therefore, be
dismissed with costs. Paragraph 2 of the high court’s order is incomplete and must
be corrected.
[23] The following order is made:
Paragraph 2 of the order of the high court is set aside and replaced with the
following order:
6 GB Bradfield Christie’s Law of Contract in South Africa 8 ed (2022) at 385.
7 George v Fairmead fn 1 at 471B-C.
‘The first respondent, Rorich Wolmarans Luderitz, is directed to pay the
applicant 50% of the proceeds of the sale of the property held in its trust
account within 30 days of finalisation of the deceased’s estate.’
Save as aforesaid, the application for leave to appeal is dismissed with costs.
________________________
F KATHREE-SETILOANE
ACTING JUDGE OF APPEAL
Appearances
For the applicant:
D Z Kela
Instructed by:
Ndumiso Voyi Inc, Midrand
Webber Attorneys, Bloemfontein
For the respondent:
W Smit
Instructed by:
Schoeman
Sejwane
Grobler
Inc,
Roodepoort
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:
4 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
Ruth Eunice Sechoaro v Patience Kgwadi (896/2021) [2023] ZASCA 46 (4 April 2023)
Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against the
decision of the Gauteng Division of the High Court, Pretoria (the high court).
The issue before the SCA was whether on the objective facts, by signing the 2012 agreement the
respondent had bound herself to parting with her 50% share in the property to the deceased, Mr Kgwadi,
for no value. Put differently, whether the respondent’s unilateral mistake (error) in signing the
agreement without reading it was reasonable (justus).
The respondent, Ms Patience Kgwadi, married Mr Kgwadi on 14 May 1987 in community of property.
Their marriage was dissolved on 25 October 1991. They concluded a settlement agreement which was
made an order of court on the same day. The court order afforded Mr Kgwadi a period of 14 days to
apply to court for variation of the settlement agreement. At the time of their divorce, the respondent and
the deceased were joint owners of an immovable property in Boksburg (the property). Since the
settlement agreement did not deal with the division of the property, they verbally agreed that each of
them would be entitled to half of the value of the property. It was specifically agreed that Mr Kgwadi
would pay the respondent half the value of the property. He, however, never did.
On 25 September 2010, Mr Kgwadi married the applicant, Ms Ruth Eunice Sechoaro. Thereafter, on 2
October 2010, he made a will in which he, inter alia, bequeathed 50% of his estate to his fiancée, the
applicant, provided she survived him by a period of seven days, and they were still married at the date
of his death. Mr Kgwadi appointed First National Bank Trust Services (Pty) Ltd (FNB) as the executor
of his estate.
On 28 March 2012, the respondent was seriously injured in a motor vehicle accident and was admitted
to Charlotte Maxeke Hospital in Johannesburg (the hospital). She remained in hospital until September
2012. On 18 July 2012, a messenger from the law firm Denoon Sampson Ndlovu Inc, whom she
assumed to be representing Mr Kgwadi, called at the hospital to get the respondent to sign a document,
entitled ‘variation agreement’, in terms of which she would award the joint property solely to Mr
Kgwadi, which she did. Mr Kgwadi passed away on 29 September 2014. The Master of the High Court,
Johannesburg (the Master) appointed Ms Prishania Naidoo, FNB’s nominee, as the executor of the
estate. On 31 May 2017, the respondent as a seller, and Ms Naidoo, on behalf of FNB, signed an offer
to purchase the property by a third party in the sum of R550 000. On 22 January 2018, Rorich
Wolmarans Luderitz Inc, the attorneys attending to the transfer of the property, informed the respondent
by email that she was not entitled to 50% of the proceeds of the sale of the property, because the
variation agreement stated that the property was awarded solely to the deceased.
The responded that signed the agreement without reading it, as she did not have the strength to do so in
the state that she was in. She assumed that the agreement dealt with what she and the deceased had
agreed upon, ie, that he would pay her 50% of the value of property.
The SCA held that Mr Kgwadi knew, or must have known, contrary to what was stated in the agreement
presented to the respondent for signature, that she had not consented to amend their prior agreement
that he would pay her 50% of the value of the property; that he was not entitled to sole ownership of
the property; and that there was no basis for depriving the respondent of her share of the
property. Consequently, when he received the agreement after the respondent had signed it, Mr Kgwadi
knew of her mistake as he was the cause of it. Furthermore, the SCA found that the respondent acted
consistently with her belief that the agreement did not contain a term to the effect that she gave up her
50% share in the property to Mr Kgwadi for no value. Therefore, the SCA considered the respondent’s
unilateral mistake to be reasonable and excusable.
~~~~ends~~~~
|
3099
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 476/2015
In the matter between:
WESTINGHOUSE ELECTRIC BELGIUM
SOCIÉTÉ ANONYME APPELLANT
and
ESKOM HOLDINGS (SOC) LTD FIRST RESPONDENT
AREVA NP INCORPORATED IN FRANCE SECOND RESPONDENT
Neutral Citation: Westinghouse v Eskom Holdings (476/2015) [2015] ZASCA 208
(9 December 2015)
Coram:
Lewis, Ponnan, Theron, Petse and Mathopo JJA
Heard:
23 November 2015
Delivered: 9 December 2015
Summary: Review of tender award: where an administrative body takes into
account considerations that are extraneous to the tender evaluation criteria, as set
out in the invitation to bid, its decision to make the award is unlawful and
procedurally unfair. Award set aside and matter remitted to administrative body for
reconsideration.
___________________________________________________________________
ORDER
On appeal from: Gauteng Local Division of the High Court, Johannesburg (Carelse
J sitting as court of first instance).
1 The appeal is upheld and the cross appeal is dismissed, in each instance with the
costs of three counsel.
2 The order of the court a quo is set aside and replaced with the following:
„(a)
The application to review and set aside the decision of the Bid Tender
Committee of 12 August 2014 succeeds with the costs of three counsel.
(b)
The matter is remitted to Eskom Holdings (Soc) Ltd for reconsideration in
terms of s 8(1)(c)(i) of the Promotion of Administrative Justice Act 3 of 2000.‟
___________________________________________________________________
JUDGMENT
Lewis JA (Ponnan, Theron, Petse and Mathopo JJA concurring)
[1] The issue for determination in this appeal is the lawfulness of a tender
process conducted by the first respondent, Eskom Holdings Soc Ltd (Eskom).
Eskom is a public company, the entire share capital of which is owned by the State.
It is thus an organ of state, as contemplated in the Constitution and the Promotion of
Administrative Justice Act 3 of 2000 (PAJA). The tender process involved two
bidders,
the
appellant, Westinghouse Electric
Belgium
Société
Anonyme
(Westinghouse) and the second respondent, Areva NP Incorporated in France
(Areva). The tender was in respect of the replacement of six steam generators at the
Koeberg nuclear power station in the Western Cape. The replacement will cost some
R5 billion. The tender was awarded to Areva on 12 August 2014.
[2] On 15 August 2014 Eskom advised Westinghouse that its bid had been
unsuccessful. It immediately sought an urgent interdict in the Gauteng Local Division
of the High Court, Johannesburg to stop Eskom and Areva from concluding a
contract for the replacement of the steam generators. It withdrew the application for
reasons that are not germane to this appeal. It then sought an urgent review of the
decision to award the tender to Areva, in the same court, in September 2014. Both
Eskom and Areva opposed the application, which was dismissed by Carelse J in
March 2015. Westinghouse appeals against the substantive order and Areva cross-
appeals against the order of the court a quo that the application be dismissed with
the costs of only two counsel when it had employed three. The appeal by
Westinghouse and cross-appeal by Areva lie to this court with the leave of the court
a quo.
[3] The basis for the application, which lies at the heart of the appeal, is that the
decision to award the tender to Areva was taken unlawfully. The reasons for the
decision were said to be „strategic considerations‟, and the existence of a „float‟ (a
buffer period of three months) in Areva‟s bid, which Eskom concedes were not part
of the specified tender criteria. Areva, on the other hand, contended that these
considerations were embodied in the tender criteria.
[4] If Westinghouse is correct that the award was unlawful, it asks that this court
order that it be awarded the tender, since its bid was about R140 million cheaper
than Areva‟s and, in addition, its supplier development and localisation contribution
(SD & L), which was part of the tender criteria, was worth about R157 million more
than Areva‟s. These figures are contested, but the respondents concede that the
bids were evenly matched in all other respects. Thus Westinghouse argues that, had
Eskom not taken into account strategic considerations, the award would have been
made to it.
[5] The questions to be determined are accordingly whether the award followed
an unlawful tender process, and if so, whether this court should substitute
Westinghouse for Areva as the successful bidder. Areva also contends that
Westinghouse did not have locus standi to institute the application or pursue the
appeal since, it argues, in fact the bid was made by an American company,
Westinghouse Electric Company LLC (Westinghouse USA), for which it was acting
as agent. Westinghouse denies that it is an agent, and maintains that it was the party
that made the bid. And of course Areva‟s cross-appeal against the costs order
should also be considered in the event that the appeal does not succeed.
[6] It should be noted that Eskom and Areva did in fact enter into the envisaged
contract and the work is proceeding. Eskom maintains that the work must be
completed by 2018, when there will be a planned shutdown of the Koeberg plant in
stages, and the steam generators would then be replaced. None of the parties deny
that the replacement of the generators is vital to the country‟s power grid and that the
energy crisis that affects it will be greatly exacerbated if the work for which
Westinghouse and Areva tendered is not done urgently. Some background is
required.
The Koeberg power station
[7] Koeberg is the only nuclear power station in Africa. It comprises two units
each of which has three steam generators. The equipment was first manufactured by
Areva (formerly known as Framatone). The plans were designed by Westinghouse
USA. There is a planned shutdown of Koeberg in 2018 – for some reason referred to
as the „X23‟ outage. Since at least 2010 Eskom has known of the need to replace
the steam generators, which are prone to „Inter Granular Stress Corrosion Cracking‟,
and which necessitates their replacement. By the end of 2014, the one unit had been
in operation for 30 years, and by the end of this year the second unit will also have
been operating for 30 years. Eskom considered that by 2018 they would need to be
replaced. It also regarded nuclear safety as a priority. It started a tender process for
the replacement in 2010 but cancelled it.
The tender process
[8] The process currently under review began in 2012. It lasted two years.
Eskom, as an organ of state, is required to adopt a Supply Chain Management
Procedure (SCM procedure). The one in place when the tender process began was
adopted in September 2011. This requires Eskom to comply with various
requirements that stem from s 217(1) of the Constitution, which provides that organs
of state must, when procuring goods or services, follow „a system that is fair,
equitable, transparent, competitive and cost-effective‟. Effect is given to s 217 of the
Constitution by the Preferential Procurement Policy Framework Act 5 of 2000. (See
s 217(3) of the Constitution.)
[9] Eskom‟s SCM procedure follows the prescripts of the Constitution and the
Act. Relaxation of the SCM procedure is permissible only with specific authority and
where deviations are required to obtain funding or technical benefits. And any
deviation must still meet the constitutional imperatives. The policy is implemented
through a variety of committees, the ones involved in this tender process being
primarily the Executive Procurement Sub-Committee (EXCOPS) and the Board
Tender Committee (BTC).
[10] The SCM procedure obliges Eskom to formulate tender criteria clearly and
without ambiguity; to attach weightings to each criterion and to evaluate and rank
bidders on the basis of their total points allocated in respect of each criterion. The
tender criteria were not changed during the course of the tender process. At the start
of the process, when Eskom invited expressions of interest in the tender, and when it
issued documentation for the tender on 18 August 2012, the tender was divided into
three lots. It was envisaged that different lots would be awarded to different bidders.
The first lot was for the manufacture and delivery of replacement steam generators.
The second was for their installation and associated work. The third was for
engineering and safety analyses consequent on the replacement. Eskom required
the replacement to take place during the planned outage commencing in June 2018.
[11] The process that ensued was exhaustive. The expressions of interest,
following the invitation in June 2012, were audited by an independent consultant: this
established a shortlist of suppliers who qualified. Only Westinghouse and Areva
qualified to make bids.
[12] The invitations to tender that followed recorded that:
„The tender evaluation process will be based on evaluating the overall value to Eskom rather
than the tendered prices only. Eskom reserves the right not to award this tender to the
highest ranked or highest scoring tender, as it needs to leverage or align its procurement
practices to driving Socio-economic development objectives that are enshrined in various
government policies such as: BBBEE [broad based black economic empowerment], Plan
Industrial Policy Action and the New Growth Path. Preference will be given to responses
who score high in these areas.‟
[13] The criteria for the evaluation of responsive tenders were:
Supplier Development and Localisation [SD & L] 10 % for BBBEE and 20 %
Localisation and development;
Financial is 35 %; and
35 % Technical including SHE [safety health and environment]; Programme and
Quality.‟
[14] However, as both Westinghouse and Areva are foreign-owned entities the
BBBEE requirement and evaluation fell away. And so the committee evaluating the
tenders (the BTC) could take into account only SD & L, technical criteria and the
cost. The deviation that allowed for special initiatives was not applicable. The
invitation to tender also provided that Eskom reserved the right to conduct a further
procurement process through negotiating with bidders, even after the evaluation
process, provided that it had the permission of the Eskom Board of Directors or the
relevant delegated authority.
[15] Both Westinghouse and Areva submitted bids in respect of all three lots.
Eskom appointed a committee of 25 members with the requisite technical skills. Its
role was to assess the bids with reference to the bid criteria and to make
recommendations
to
the
EXCOPS.
The
EXCOPS
would
then
make
recommendations to the BTC, which was the delegated authority charged with
making the final determination. In December 2012 the technical committee
recommended to the EXCOPS that Westinghouse be awarded the tenders in respect
of Lots 1 and 3 and that Areva be awarded the tender for Lot 2. On 14 January 2013,
the EXCOPS made the same recommendation to the BTC.
[16] In February 2013, the BTC, having considered the recommendations of the
EXCOPS, concluded that it did not have the expertise to make a final determination
in respect of the bids, and resolved to appoint a Swiss firm, AF-Consult Switzerland
Limited (AF Consult), to advise it on technical matters. AF Consult is a consultant in
the area of energy, environmental and nuclear technology. It was required to
address a number of issues, including the timing of the replacement of the steam
generators, the business case made out and whether the technical specifications
were appropriately developed. It was, however, requested to concentrate on the
technical aspects of the evaluation. On Eskom‟s version, there were two qualifying
bids, both of which could meet Eskom‟s requirements: there was very little difference
between the two.
[17] AF Consult produced a report in July 2013. It made three „top‟
recommendations. These were that (a) Eskom should consider a more thorough
evaluation of rejected technical options in Lots 1 and 3; that (b) it should consider
whether all lots should be „delivered by one supplier‟; and that (c) Eskom should take
into account previous experience for Koeberg and Eskom with the suppliers. Most
significantly, AF Consult suggested that certain „strategic considerations‟ should be
taken into account by Eskom. As it expressly said in the main body of the report, one
item not previously considered was Eskom‟s previous experience with bidders.
Another was that the bidders should be asked to improve their localisation and
development of skills applicable for work on nuclear power projects in South Africa.
Thirdly, Eskom should consider issues such as gaining experience with foreign
suppliers. These matters were not part of the bid specifications.
[18] On 13 December 2013, and pursuant to AF Consult‟s recommendations,
Eskom invited Westinghouse and Areva to submit composite bids for the three lots.
The tender evaluation criteria were not changed. No new criteria were introduced.
And on 14 January 2014 they both submitted composite bids.
[19] The technical committee met again to consider the new bids and then
recommended to the EXCOPS that Lots 1 and 3 should be awarded to
Westinghouse. The EXCOPS in turn recommended to the BTC that the award in
respect of Lot 2 should be determined after a process of competitive negotiation with
both bidders. The BTC was advised to approve a mandate to negotiate with
suppliers, but not conclude any contract, in order to „extract more value in terms of
price and supplier development and localisation benefits‟. The EXCOPS accepted
the recommendation of the technical committee that the tenders in respect of Lots 1
and 3 be awarded to Westinghouse and so recommended to the BTC.
[20] However, the BTC did not accept the EXCOPS recommendations. It preferred
to enter into a composite contract in respect of the three lots. Thus a further
subcommittee (the Exco Task Team) was appointed by Eskom‟s „interim chief
executive officer‟ on 14 May 2014. It was mandated to consider the issue of a single
composite contract. The Exco Task Team recommended that a composite contract
should be concluded after parallel negotiations with both Westinghouse and Areva,
which would be led by an independent person. The Koeberg team, it recommended,
„should consider all project risks and the implications of meeting the Outage 23
schedule with the appropriate risk mitigation actions‟.
[21] On 2 June 2014 the BTC resolved to accept the recommendation of the Exco
Task Team, and to embark upon the process of parallel negotiation that would
involve team members with Eskom specific plant knowledge or Eskom employees
who were not part of the evaluation team. It required that negotiations were to be
concluded „so as not to delay Eskom‟s readiness for the 2018 outage and enable it
to adhere to the Outage 23 Project [X23] Schedule.‟
The parallel negotiations
[22] Westinghouse and Areva were invited to engage in parallel negotiations with
Eskom on 13 June 2014. They were led by an independent consultant from
Germany, Mr Ruediger Koenig. Prior to the commencement of the negotiations,
Westinghouse, Areva, and AF Consult discussed the process telephonically. Eskom
advised that, following the negotiations, they would be expected to make final offers
which allowed only for cost adjustments on deviations, options or risks identified in
the course of the negotiations. The conversations were recorded and minutes made.
No mention was made about changing the bid criteria.
[23] Thus the original tender criteria, set out above, remained applicable. The
deponent to Eskom‟s answering affidavit, Mr M M Koko, then the acting Group
Executive for Technology and Commercial at Eskom, attached to the affidavit an
unattested statement by Koenig describing the negotiations. In it, he confirmed that
the original tender criteria were to apply. He said that the bidders were advised at the
outset of the negotiations that Eskom would inform them if new criteria were to be
added. None were in fact introduced. But late in the negotiations, Koenig did mention
that „high level decision factors‟ would be considered and that „strategic
considerations‟ might be taken into account.
[24] Koenig added in his statement:
„In the spirit of transparency, throughout the negotiations I made efforts to emphasise items
to both bidders that in my observation were likely to be of special importance to Eskom. For
instance, it became apparent to me that due to the delays already encountered in the
procurement process, the ability to meet schedule would be a critical factor for the selection
of a bidder and implementation of the project. I can confirm that I therefore personally
pressed the point with each of the bidders, that they should look at the entire schedule and
demonstrate to Eskom the robustness of their schedule, and not just adherence by the letter
to key dates.‟
[25] Koko confirmed that on the last day of the parallel negotiations, Eskom
advised Westinghouse and Areva that, in addition to the tender evaluation criteria, in
making the final determination of the award it would have regard to strategic
considerations. What they would be was not, however, disclosed. When
Westinghouse made enquiries as to the nature of the strategic considerations, it was
not told. Eskom representatives were simply unable to respond to requests for
clarification.
[26] The final offers by Westinghouse and Areva were submitted before the
deadline. Westinghouse, which submitted its final offer on 11 July 2014, accepted all
of Eskom‟s contractual terms, which included the obligation to complete the
installation of the replacement steam generators during the 2018 scheduled outage.
On 28 July 2014, Koko, and Mr T Govender (the Eskom Group Executive,
Generation), wrote a report to the BTC, which was tabled at its meeting on 31 July
2014, recommending that a contract be awarded to Westinghouse at a contract
value of R4 215 682 094, with a contingency amount of R843 136 418. But they
recommended, in the alternative, that the award be made to Areva. The Areva
contract value would have been higher, as would the contingency amount.
[27] At its meeting on 31 July 2014, the BTC was not prepared to accept a
recommendation in the alternative. It considered that the bids were comparable, but
noted that Westinghouse‟s price was substantially lower: it „translated into a lot of
money‟. The BTC discussed the buffer period of three months (the float) in Areva‟s
bid, but agreed that „[t]he schedule risk was deemed to be equal by the Negotiation
Team purely on a factual basis.‟ There was significant discussion of the float. There
was also a discussion of strategic considerations. In the end, the BTC resolved that
the EXCOPS should meet urgently to consider a single recommendation to be
placed before it. It agreed to meet again on 12 August 2014.
[28] Koko and Mr C Matjila, the acting chief executive officer, prepared a revised
recommendation for the EXCOPS recommending that a contract be concluded with
Areva. Govender refused to sign this submission. He wrote, in an email to Koko,
Matjila and another Eskom employee, dated 4 August 2014, that he did not have a
basis to change his mind and that all the decision making structures should have the
opportunity to consider the alternative recommendations originally made to the BTC.
He acknowledged, however, that the chief executive officer had the prerogative to
make a different recommendation.
[29] The EXCOPS held a special meeting on 6 August 2014, and discussed the
question of the float and the cost differential again at length. It was noted that there
was a risk in the Areva offer since it would be using a subcontractor, SENPEC
(Shanghai Electric Nuclear Power Equipment Company Limited), which had worked
in China only, and that the costs might be understated. It resolved that Eskom should
conclude a contract with Westinghouse. But it again noted that the BTC might
consider concluding a contract with Areva because of the importance of the work to
be done on schedule.
[30] A recommendation was sent to the BTC on 7 August 2015 that strategic
issues should be considered in making the final decision, but proposed that the
contract should be concluded with Westinghouse at a total contract value of R4 215
682 094, and a contingency value of R843 136 418 (20 per cent of the total contract
cost). The recommendation was signed by all the members of the EXCOPS. Despite
the recommendation the BTC resolved, on 12 August 2014, that the contract be
awarded to Areva.
The reasons for the BTC’s decision
[31] The reasons for the volte-face emerge from a letter sent to the Minister of
Public Enterprises by Mr Zola Tsotsi, the Chairman of the Eskom Board, and Ms Neo
Lesela, the Chair of the BTC, dated 13 August 2014. They said, inter alia:
„Having due consideration of all the facts presented to the BTC, it became apparent that the
management of Eskom‟s risk was the primary driver of decisions to be made. Key
considerations then became certainty on the ability of the preferred supplier to manage
adherence to the critical path of Eskom‟s project schedule and the ability to offer benefits for
South Africa to meet its strategic supplier development and localization imperatives.‟
[32] They then explained the processes that had led to the decision and stated
that both bidders demonstrated compliance with Eskom‟s technical, commercial and
SD & L requirements; that both were technically capable of performing the work; that
both met the SD & L targets; and that both had committed to Eskom‟s milestones
and contractual terms. The letter continued:
„Notwithstanding the fact that Westinghouse has emerged as the lowest price bidder with an
NPV [Net Present Value] price difference of 0.99 % excluding SD & L (equivalent to R36 808
992), the following strategic considerations were made by the BTC:
Areva (then Framatone) was involved as the nuclear constructor as part of a
consortium and became the OEM [original equipment manufacturer] for the plant
since the start of operations in 1985;
While the original design for plants of this age is owned by Westinghouse, Areva is
the . . . OEM for Koeberg and on-going support from it throughout the life of the plant
would be beneficial to safe and reliable operations;
Areva was the main engineering organization at construction and therefore has the
in-depth information on the design and safety assumptions. These factors are
relevant considerations for keeping the plant safe through technical problems and
plant upgrades;
over the last 15 or so years, Areva generally demonstrated better control of sub-
suppliers and had a stronger overall “branding control”. In other words, sub-suppliers
generally acted in the Areva image and/or the Areva overall quality control process
ensured quality of supply;
Areva has, or has contracts for, approximately 36 SGR projects between 2005 and
2018, including 9 SGR projects planned between 2015 and 2018, while
Westinghouse in the same period (2005-2018) has had 2 as prime contractor;
Areva has offered to grant Eskom its intellectual property rights in respect of the
nuclear power station equipment; and
In addition to the . . . SD& L offer that both bidders made to Eskom, Areva offered
during the negotiations to exchange some training activities with a study on the
feasibility to manufacture nuclear valves in South Africa. This represents potential
major benefit to South Africa in terms of localisation and job creation in the short to
medium term. Valves have been designated by the Department of Trade and
Industry . . . as a commodity for localisation.‟
The letter advised that the decision had been taken by secret ballot and that
there had been four votes in favour of the award to Areva and one against.
[33] As will be immediately apparent, these considerations were not
expressly part of the bid evaluation criteria. Areva contended that they were
implicit. Eskom conceded, as I have said earlier, that they were not part of the
tender. Moreover, in Eskom‟s answering affidavit, Koko raised a further reason
for the award to Areva: it had included in an updated schedule a global float – a
three month buffer period (the float) which optimised meeting the target date. He
said that Westinghouse had not submitted an updated schedule and so its
advantage shifted when Areva showed that it was able to mitigate against the risk
of delay. Again, Areva contended that the performance of the work timeously was
an inherent requirement of the tender criteria. Yet Koko, in the answering affidavit
to the application for the interdict, denied that the float played a role in the
evaluation process.
Was the BTC entitled to take into account the strategic considerations?
[34] The answer to the question whether the BTC was entitled to take into
account what it termed strategic considerations lies in the bid evaluation criteria.
If they fell outside these criteria then it is clear that the BTC acted beyond its
powers, and thus unlawfully. And if any one of the considerations was taken into
account when it should not have been, then that is sufficient to vitiate the
decision.
[35] Carelse J in the court a quo considered that the strategic
considerations „were relevant considerations for the selection of the successful
bidder. None of the six criteria applied can be said to be irrelevant
considerations.‟ She held thus that the BTC‟s decision was not arbitrary or
capricious, and that the tender process was procedurally fair. In this regard she
relied on Lawrence Baxter Administrative Law (1984) at 446:
„Administrative action based on formal or procedural defects in not always invalid.
Technicality in the law is not an end in itself. Legal validity is concerned not with
technical but also with substantial correctness. Substance should not always be
sacrificed to form; in special circumstances greater good might be achieved by
overlooking technical defects. . . .‟
[36] That is doubtless still good law. In Allpay Consolidated Investment
Holdings (Pty) Ltd & others v Chief Executive Officer, South African Social
Security Agency & others 2013 (4) SA 557 (SCA) (Allpay SCA) para 96 this court
said:
„There will be few cases of any moment in which flaws in the process of public
procurement cannot be found, particularly where it is scrutinized intensely with the
objective of doing so. But a fair process does not demand perfection and not every flaw
is fatal.‟
It is, of course, only immaterial flaws (termed „inconsequential‟ by that court) that
may be overlooked. The judgment in Allpay SCA was reversed on appeal to the
Constitutional Court (the principles formulated by that court are discussed below)
but, as I understand it, that principle was not attacked.
[37] But the learned judge in the court a quo appeared to overlook the
principle that in assessing the lawfulness of the tender process a court must
consider only whether the bids have been properly evaluated against the tender
criteria. Other considerations are not relevant.
Unfairness in the process
[38] It is appropriate at this stage to consider the law as to unlawfulness in
the tender process, both as to the award taken for the wrong reasons and as to
unfairness in the process. There are many decisions of this court that have held
that immaterial irregularities in a tender process do not necessarily vitiate a
tender award. Allpay SCA is one. I do not propose to deal with them
comprehensively. It is trite that fairness in the procurement process is a value in
itself. In Tetra Mobile Radio (Pty) Ltd v MEC, Department of Works 2008 (1) SA
438 (SCA) para 9 this court said:
„[F]airness 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 [of the Constitution] permeate the procedure for
awarding or refusing tenders.‟
[39] Proper compliance with the procurement process is necessary for the
process to be lawful. Strict rules of compliance have been laid down by the
Constitutional Court. In Allpay Consolidated Investment Holdings (Pty) Ltd &
others v Chief Executive Officer, South African Social Security Agency & others
[2013] ZACC 42; 2014 (1) SA 604 (CC) para 39 the court approved the dictum of
this court in Premier, Free State & others v Firechem Free State (Pty) Ltd 2000
(4) SA 413; [2000] ZASCA 28 (SCA) para 30, where Schutz JA said:
„One of the requirements . . . is that the body adjudging tenders be presented with
comparable offers in order that its members should be able to compare. Another is that a
tender should speak for itself. Its real import may not be tucked away, apart from its
terms. Yet another requirement is that competitors should be treated equally, in the
sense that they should all be entitled to tender for the same thing. Competitiveness is not
served by only one or some of the tenderers knowing what is the true subject of the
tender. . . . that would deprive the public of the benefit of an open and competitive
process.‟ (My emphasis.)
[40] The Constitutional Court said in Allpay (para 40):
„Compliance with the requirements for a valid tender process, issued in accordance with
the constitutional and legislative procurement framework, is thus legally required. These
requirements are not merely internal prescripts that [the tender awarding body] may
disregard at whim. To hold otherwise would undermine the demands of equal treatment,
transparency and efficiency under the Constitution. Once a particular administrative
process is prescribed by law, it is subject to the norms of procedural fairness codified by
PAJA. Deviations from the procedure will be assessed in terms of those norms of
procedural fairness. That does not mean that administrators may never depart from the
system put in place or that deviations will necessarily result in procedural unfairness. But
it does mean that, where administrators depart from procedures, the basis for doing so
will have to be reasonable and justifiable, and the process of change must be
procedurally fair.‟ (Footnotes omitted.)
[41] See also Steenkamp NO v Provincial Tender Board, Eastern Cape
2007 (3) SA 121; [2006] ZACC 16 (CC) para 60, where the Constitutional Court
said that strict compliance with tender procedures by both bidders and
adjudicators is of central importance in public procurement tenders. In Allpay the
court said also (para 92) that „the purpose of a tender is not to reward bidders
who are clever enough to decipher unclear directions. It is to elicit the best
solution through a process that is fair, equitable, transparent, cost-effective and
competitive‟.
[42] The gravamen of the Constitutional Court judgment in Allpay is that in
order to ensure a fair outcome in a tender award, the process itself must be fair. If
the process is compromised it cannot be known what course it would have taken
if the procedural requirements had been properly observed (para 24).
[43] The tender invitation, which sets out the evaluation criteria, together
with the constitutional and legislative procurement provisions, constitute the
legally binding framework within which tenders have to be submitted, evaluated
and awarded. There is no room for departure from these provisions (Allpay para
38).
Taking a decision for a reason that is irrelevant or bad
[44] It is a well-established principle that if an administrative body takes into
account any reason for its decision which is bad, or irrelevant, then the whole
decision, even if there are other good reasons for it, is vitiated. In Patel v Witbank
Town Council 1931 TPD 284 Tindall J said (at 290);
„[W]hat is the effect upon the refusal of holding that, while it has not been shown that
grounds 1, 2, 4 and 5 are assailable, it has been shown that ground 3 is a bad ground for
a refusal? Now it seems to me, if I am correct in holding that ground 3 put forward by the
council is bad, that the result is that the whole decision goes by the board; for this is not
a ground of no importance, it is a ground which substantially influenced the council in its
decision . . . . This ground having substantially influenced the decision of the committee,
it follows that the committee allowed its decision to be influenced by a consideration
which ought not to have weighed with it.‟
[45] This passage was approved by this court in Rustenburg Platinum
Mines (Rustenburg Section) v Commission for Conciliation, Mediation and
Arbitration 2007 (1) SA 576 (SCA) para 34 where Cameron JA said: „This
dimension of rationality in decision-making predates its constitutional formulation.‟
Once a bad reason plays a significant role in the outcome it is not possible to say
that the reasons given for it provide a rational connection to it. (The decision of
this court was reversed by the Constitutional Court but this principle was not
questioned: Sidumo & another v Rustenburg Platinum Mines Ltd & others 2008
(2) SA 24; [2007] ZACC 22 (CC)).
[46] The taking of a decision for a reason that is assailable – one, in this
case, that falls outside the parameters of the bid criteria – clearly vitiates the
decision itself. Section 6 of the Promotion of Administrative Justice Act 3 of 2000
(PAJA) provides:
„6 Judicial review of administrative action
(1) Any person may institute proceedings in a court or a tribunal for the judicial review of
an administrative action.
(2) A court or tribunal has the power to judicially review an administrative action if–
(a) the administrator who took it –
(i) was not authorised to do so by the empowering provision;
(ii) acted under a delegation of power which was not authorised by the empowering
provision; or
(iii) was biased or reasonably suspected of bias;
(b) a mandatory and material procedure or condition prescribed by an empowering
provision was not complied with;
(c) the action was procedurally unfair;
(d) the action was materially influenced by an error of law;
(e) the action was taken –
(i) for a reason not authorised by the empowering provision;
(ii) for an ulterior purpose or motive;
(iii) because irrelevant considerations were taken into account or relevant considerations
were not considered; . . . .‟ (My emphasis.)
Unfair process
[47] Westinghouse argues that the whole process of the award of the
tender was unlawful because there was not proper compliance with the tender
requirements by the BTC. Thus there was no fairness; an efficient process was
not ensured; and there was no safeguard against corruption. In Allpay Froneman
J said (para 27):
„[D]eviations from fair process may themselves all too often be symptoms of corruption
or malfeasance in the process. In other words, an unfair process may betoken a
deliberately skewed process. Hence insistence on compliance with process formalities
has a threefold purpose: (a) it ensures fairness to participants in the bid process; (b) it
enhances the likelihood of efficiency and optimality in the outcome; and (c) it serves as a
guardian against a process skewed by corrupt influences.‟
[48] The very fact that the BTC resorted to strategic considerations without
making these known to either Westinghouse or Areva, and without making them
part of the bid evaluation criteria, appears to me to be fundamentally unfair. And
the fact that Eskom added to these in its answering affidavit by stating that the
BTC had also had regard to the float added injury to insult. No mention was made
of this consideration in the letter to the Minister and of course Westinghouse was
not given the opportunity to point out where, in its schedule, it had built in buffer
periods to avoid delay in the completion of the work.
[49] Westinghouse does not complain about the resort to the negotiations: it
complains that after the negotiations had ended, Eskom still took into account
factors other than those found in the bid criteria. As I have pointed out earlier, it is
common cause that these were not changed after the invitation to tender was
made. Areva argues that these considerations were to be found in the invitation
to bid.
Were the strategic considerations part of the bid evaluation criteria?
[50] Westinghouse argues that each of the strategic considerations that
materially influenced the decision to award the tender to Areva was not relevant
because the respective bids had to be evaluated only against the published bid
criteria: these were the financial, technical and the SD & L. Eskom does not
contend that the strategic considerations were bid criteria. It concedes that they
were not. But Areva argues that all of them are to be found in the tender
documents. I do not propose to analyse its contentions in any depth. If any of the
considerations that caused the BTC to award the tender to Areva is outside the
parameters of the bid criteria the decision is bad in law. In considering each of
the strategic considerations and the float, it must be borne in mind, as Schutz JA
said in Firechem above, that the tender must speak for itself.
The original equipment manufacturer
[51] In its letter to the Minister, Eskom listed as the first strategic
consideration that Areva was the manufacturer of the Koeberg plant.
Westinghouse also lays claim to having been involved in that a Westinghouse
USA design was used. In my view that is irrelevant. But in any event, the
evaluation in respect of Lot 3 had already taken into account the fact that Areva
was the original equipment manufacturer (OEM) when assessing the respective
experience of the bidders. In Eskom‟s technical assessment it expressly stated
that in this section no preference should be given to the OEM as it would amount
to bias in favour of Areva. It said that Westinghouse had already been penalized
for not being the OEM in the section evaluating „management of the input data‟.
[52] It was accordingly not open to the BTC to take the decision based on
this consideration in addition to having evaluated it when considering experience.
OEM status was not ever part of the tender criteria. Koko admitted in Eskom‟s
answering affidavit that it was not a specific requirement that the bidder be the
OEM, but said the fact that Areva was such „provides an increased comfort‟ to
Eskom. It provided more certainty that the work would not be delayed.
[53] The BTC thus took into account an irrelevant consideration that was
not part of the tender criteria. For this reason alone Westinghouse is justified in
arguing that the award was reviewable under s 6(2)(e)(iii) of the PAJA.
Control over subcontractors and ‘branding control’
[54] The second strategic consideration that tipped the balance in favour of
Areva was that it had previously „generally demonstrated better control of sub-
suppliers and had a stronger overall “branding control”‟. What exactly this meant
is unclear. In any event this also lay outside the tender award criteria. And it was
not discussed during the negotiating process. No foundation was laid for the
consideration as a matter of fact. But worst of all, Eskom did not give
Westinghouse the opportunity to defend its record. And, as a matter of fact,
Areva would have used a subcontractor, SENPEC, that had never worked
outside of China. There is nothing to suggest that its previous record gave it, for
this award, the edge in this respect. Indeed, in the Commercial Report on the
bids to the BTC, Eskom officials said to the BTC that the use of SENPEC
„requires specific risk mitigation measures such as increased oversight quality
assurance activities which Eskom would need to perform‟.
[55] Nonetheless Koko, for Eskom, explained that although neither bidder
was penalized for prior incidents involving subcontractors, he also said that this
consideration tipped the balance between quality and costs where the two
bidders were equally competent to perform the work. A decision based on this
consideration as a reason for the award to Areva is also reviewable under
s 6(2)(e)(iii) of the PAJA.
Experience
[56] The BTC advised the Minister that the third strategic consideration for
the award to Areva was that it had more planned contracts for steam generator
replacement, in the period between 2005 and 2018, than did Westinghouse –
some 36 – whereas Westinghouse had but two. This, according to Westinghouse
was a bad reason first because, as a matter of fact, Westinghouse‟s primary
subcontractor, Bechtel, has considerable experience. This was recognized by
Eskom when it responded to a criticism made by AF Consult:
„The scoring assigned to Westinghouse in the individual Lot evaluation includes the
Bechtel experience since, as documented in the initial bid document, Westinghouse has
a lengthy record of performing SGRs. Bechtel has been included as a Westinghouse
sub-supplier. This has not changed for the composite bid.‟
[57] Secondly, the consideration was bad because it had already been
taken into account, as illustrated above. To regard it as tipping the balance when
both bidders had scored well for experience is plainly absurd. In fact, Areva had
scored 100 per cent, on Eskom‟s version. This too renders the decision
reviewable.
Intellectual Property Rights
[58] The fourth strategic consideration was said by the BTC to be that
Areva had offered to grant its intellectual property rights in respect of Koeberg to
Eskom. Again, this was not a criterion of assessment. Although Eskom does not
rely on it now, saying the factor is neutral, the letter to the Minister states that it
was a reason for the award to Eskom. It cannot have it both ways. It was not a
reason relevant to the award, and since the BTC said it had taken it into account,
it took the decision for an irrelevant reason. That too is a ground for review.
Areva’s SD & L offering
[59] The fifth reason advanced to the Minister for the BTC‟s decision was
that, in addition to what Areva had included in its tender, in the negotiation
process it had offered to exchange certain training activities for a study on the
feasibility of manufacturing nuclear valves in South Africa. As Westinghouse
argues, this offer is not quantifiable. Moreover, the SCM procedure states that the
compliance matrix „contains the evaluation framework and methodology and will
be used as the basis for the evaluation of SD & L as a criterion‟. It continues to
state that the compliance matrix, with adjustments for each tender, must be
included as a mandatory tender returnable for completion by suppliers.‟ Thus,
argues Westinghouse, the additional offer by Areva was not part of the
compliance matrix and should not have been taken into account.
[60] Moreover, Areva‟s SD & L had to be compared with that of
Westinghouse.
As
I
have
already
indicated
Westinghouse‟s
supplier,
development and localization offer, made in its bid, was worth substantially more
than that originally offered by Areva. Koko denied, in the answering affidavit, that
Eskom had taken the additional offer by Areva into account. He said that it was
an attractive offer, but that it would be investigated only after the award was
made to Areva. Yet that is not what the BTC said to the Minister: either Koko was
wrong or the BTC was misleading the Minister when it said that in addition to the
SD & L offers in their bids, Areva had offered training activities related to nuclear
generator valves, and that this was a strategic consideration. The decision is
reviewable for this reason too. In Metro Projects CC & another v Klerksdorp
Municipality & others 2004 (1) SA 16 (SCA) para 14, this court said that to allow a
bidder to „augment its tender so that it might have a better chance of acceptance
by the decision-maker‟ is unfair.
The schedule float
[61] As I have said, Eskom added a sixth additional reason for the decision
in its answering affidavit. Areva had built in a period of three months in its
schedule to avert delay. No mention of this was made to the Minister. Moreover,
in its answering affidavit in the urgent application for an interdict, Eskom had
denied that the float was a consideration taken into account. So Eskom‟s position
is contradictory.
[62] Areva argues that the time schedule was always a crucial factor. The
steam generators had to be replaced during the X23 outage. A buffer period was
thus essential and always known to both bidders. A float was in fact discussed at
the BTC meeting of 31 July 2014, where one member had asked if the float was
a tender requirement. The member also asked whether Westinghouse had been
advised that the float carried weight in the adjudication process. But the minutes
record that the schedule risk was deemed to be equal by the negotiation team.
[63] In addition, the EXCOPS report (dated 5 August 2014) to the BTC
stated that if Westinghouse were to „slip‟ by one month its cost advantage would
be negated. But that is because it calculated its bid value as R36 million less than
that of Areva, whereas the actual figure was some R140 million, excluding SD &
L benefits.
[64] Westinghouse argues thus that the reliance on the float as a reason for
the award was irrational. The BTC failed also to take into account that
Westinghouse had unconditionally committed to Eskom‟s requirement that the
replacement steam generators had to be installed in the 2018 outage. It did so
under pain of a penalty of R5 million for each day by which it was late.
Westinghouse maintained that as a matter of fact it had built in 41 days as a
contingency, and had offered to work seven days a week (instead of six) that
would have given it a „cushion‟ of 104 days in addition. There is no need to
determine whether that is in fact so. Until the BTC took its decision on 12 August
2014, Westinghouse had not been asked to demonstrate where the float lay in its
schedule. But it would have appeared from the schedule and the bid had Eskom
been specifically concerned with a buffer period. Thus this reason too, advanced
by Eskom for the first time in its answering affidavit, was bad and rendered the
decision reviewable.
The BTC’s decision was unlawful
[65] In my view, when the BTC took into account each of the strategic
considerations, and the consideration of the float, and thus decided to award the
tender to Areva, it made the decision unlawfully in terms of s 6(2)(e)(iii) of the
PAJA. And the failure, if these reasons were decisive, to refer them to the bidders
and give them the opportunity to clarify their bids, or to reopen the process and
amend the tender criteria to include the factors, made the whole process
irrational and unlawful. The award must thus be set aside.
Did Westinghouse have locus standi to institute proceedings?
[66] The argument raised by Areva in this regard is that various letters sent
to Eskom reveal that it was acting not for itself but for its associated American
company, Westinghouse USA. Evidence of this is to be gleaned from several
letters. These include one dated 21 July 2014, intended to clarify issues raised by
Eskom, written on the letterhead of Westinghouse Electric Belgium SA, and
signed by Mr L van Hulle, the Vice President for Marketing, Europe, Middle East
and Africa (Van Hulle was the deponent to Westinghouse‟s founding affidavit); Mr
F Wolvaardt, the Eskom Customer Account Manager; and Mr F Poncelet, the
Westinghouse Marketing Manager Major Projects Europe, Middle East and
Africa. In the letter they wrote: „Our offer, these clarifications and any subsequent
communications relating to this offer are the property of, and contain information
which is proprietary and confidential to, Westinghouse Electric Company LLC,
and may be used only for purposes of offer evaluation.‟
[67] In Areva‟s answering affidavit, Mr Y-M Pacé, referring to this statement,
pleaded that: „From this, it must be deduced, I contend, that the true tenderer was
not Westinghouse, but rather Westinghouse USA. This would mean that the
applicant has no locus standi in these proceedings.‟ Areva relies on other letters
too. There is no need to dwell on them. Areva complains also that the court a quo
did not admit one of them for the wrong reason. Most of the documents on which
Areva relies to show that Westinghouse is only an agent, and as such has no
standing, are to similar effect: for example, in its final offer to Eskom made in July
2014, Westinghouse wrote to Eskom stating that „Westinghouse Electric Belgium
on behalf of Westinghouse Electric Company is pleased to submit the present
offer to ESKOM‟.
[68] Other documents suggesting that Westinghouse USA is the true
tenderer are a part of the Westinghouse bid that deals with the use of Bechtel as
a sub-supplier, and in which it is said that the proposal is a joint effort of
Westinghouse USA and Bechtel Power Corporation (Bechtel); and a
memorandum (signed only on behalf of Bechtel) dealing with the proposed
contract between Westinghouse and Bechtel which refers also to Westinghouse
USA.
[69] Westinghouse argues, on the other hand, that it was always the bidder.
Eskom understood it to be such. If the tender had been awarded to it, the award
would have been not to Westinghouse USA but to it, the company that had in fact
submitted the bid. And it was Westinghouse that had participated in the
negotiations. Areva relies on Sandton Civic Precinct (Pty) Ltd v City of
Johannesburg & another 2009 (1) SA 317 (SCA) in arguing that Westinghouse
has no standing. There Cameron JA said (para 19):
„The applicant must establish the legal lineage between itself and the rights-acquiring
entity the resolution mentions. That it has not done. While in a sense this is technical,
and procedural, it also goes to the substance of the applicant‟s entitlement to come to
court.‟
I consider that Westinghouse has established its legal lineage.
[70] Moreover, Areva did not deny that Westinghouse had submitted its first
bid in October 2012 and a revised offer in 2014. The references to acting on
behalf of Westinghouse USA are mere surplusage and must be disregarded.
Areva‟s argument on Westinghouse‟s standing must thus fail, as it did in the court
a quo.
Substitution and the appropriate relief
[71] Westinghouse asks that it be substituted for Areva: Eskom should be
ordered to conclude the contract for the replacement of the steam generators to
Westinghouse. This is permissible in terms of s 8(1) of the PAJA which provides
that a reviewing court may grant any order that is just and equitable. Section
8(1)(c)(i) allows for the matter to be remitted for reconsideration by the
administrator, and 8(1)(c)(ii) provides that in exceptional circumstances a court
may substitute or vary the administrative action.
[72] In Gauteng Gambling Board v Silverstar Development & others 2005
(4) SA 67 (SCA) para 29, Heher JA said:
„An administrative functionary that is vested by statute with the power to consider and
approve or reject an application is generally best equipped by the variety of its
composition, by experience, and its access to sources of relevant information and
expertise to make the right decision. The court typically has none of these advantages
and is required to recognise its own limitations. . . . That is why remittal is almost always
the prudent and proper course.‟
He relied in this regard on, inter alia, the Constitutional Court decision in Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs & others 2004 (4) SA
490; [2004] ZACC 15 (CC) paras 46-49. The court in Gauteng Gambling
nonetheless considered that there were exceptional circumstances in that matter
and because of the inevitability of the outcome, accepted that remittal was not
necessary and substitution was appropriate.
[73] The question is essentially one of fairness. In Commissioner,
Competition Commission v General Council of the Bar of South Africa & others
2002 (6) SA 606 (SCA) Hefer AP said (para 14):
„[T]he remark in Johannesburg City Council v Administrator, Transvaal & another [1969
(2) SA 72 (T) at 76D-E] that “the Court is slow to assume a discretion which has by
statute been entrusted to another tribunal or functionary” does not tell the whole story.
For, in order to give full effect to the right which everyone has to lawful, reasonable and
procedurally fair administrative action, considerations of fairness also enter the picture.
There will be no remittal to the administrative authority where such a step will operate
procedurally unfairly to both parties.‟
[74] Most recently, the Constitutional Court in Trencon Construction (Pty)
Ltd v Industrial Development Corporation of South Africa & another 2015 (5) SA
245; [2015] ZACC 22 (CC) reversed a decision of this court which had ordered
remittal to a bid evaluation committee: the committee had wrongly concluded that
one of two bids was non-responsive. The Constitutional Court held, however, that
substitution was the appropriate remedy. Khampepe J said (para 47):
„To my mind, given the doctrine of separation of powers, in conducting this enquiry there
are certain factors that should inevitably hold greater weight. The first is whether a court
is in as good a position as the administrator to make the decision. The second is whether
the decision of the administrator is a foregone conclusion. These two factors must be
considered cumulatively. Thereafter, a court should still consider other relevant factors.
These may include delay, bias or the incompetence of an administrator. The ultimate
consideration is whether a substitution order is just and equitable. This will involve a
consideration of fairness to all implicated parties. It is prudent to emphasise that the
exceptional circumstances enquiry requires an examination of each matter on a case-by-
case basis that accounts for all relevant facts and circumstances.‟ (Footnote omitted.)
The court said further that the first enquiry is whether it is in as good a position to
make the decision as the administrator was. Second, it must determine whether a
substituted award is a foregone conclusion.
[75] Westinghouse argues that this court is in as good a position as the
BTC was to award the bid to it and that Eskom should be ordered to conclude a
contract with it, even though a contract has already been concluded with Areva
and work commenced in September 2014. Further, it contends, it is a foregone
conclusion that Eskom would have awarded the tender to Westinghouse had the
BTC not taken irrelevant considerations into account.
[76] In my view, however, it would not be equitable for this court to
substitute Westinghouse for Areva. First, Eskom, albeit at the last minute,
decided that various criteria, not part of the bid specification, were decisive.
These were strategic considerations that gave Areva the advantage, despite
Westinghouse‟s considerably less costly bid. Thus the administrator, Eskom,
itself relied on considerations that it regarded as vital but which it had not placed
in the bid criteria. Eskom should accordingly start the tender process again and if
it still considers that the criteria it wrongly took into account, or to which it
attributed double weighting, are vital it should include these amongst the bid
evaluation criteria.
[77] Second, Areva has already started the work. This court does not know
what the consequences of substitution will be. And the 2018 deadline is looming.
[78] Westinghouse argues that it is a foregone conclusion that it would have
been the successful bidder had irrelevant considerations not been taken into
account. Areva argues to the contrary. It is true that the EXCOPS recommended
that Westinghouse be awarded the contract. But it also recommended, in the
alternative, that the award should go to Areva despite its bid being more costly.
We do not know that it is a foregone conclusion that Westinghouse will succeed,
especially if the strategic considerations are properly taken into account.
Accordingly the matter must be remitted to Eskom for reconsideration.
The cross-appeal
[79] Areva has cross-appealed against the order of Carelse J awarding it
only the costs of two counsel in the court a quo. There is no merit in the cross-
appeal. In any event it is of no consequence since Westinhhouse‟s appeal
succeeds.
Order
[80] 1 The appeal is upheld and the cross-appeal is dismissed, in each
instance with the costs of three counsel.
2 The order of the court a quo is set aside and replaced with the following:
„(a) The application to review and set aside the decision of the Bid Tender
Committee of 12 August 2014 succeeds with the costs of three counsel.
(b) The matter is remitted to Eskom Holdings (Soc) Ltd for reconsideration in
terms of s 8(1)(c)(i) of the Promotion of Administrative Justice Act 3 of 2000.‟
_______________________
C H Lewis
Judge of Appeal
APPEARANCES
For Appellant:
J J Gauntlett SC (with him D Borgström and
L Kelly)
Instructed by:
Webber Wentzel, Johannesburg
Honey Attorneys, Bloemfontein
For First Respondent:
I V Maleka SC (with him H Rajah)
Instructed by:
Mchunu Attorneys, Johannesburg
Bokwa Attorneys, Bloemfontein
For Second Respondent:
P B Hodes SC (with him D Goldberg and
D Simonsz)
Instructed by:
Dentons Incorporated as Kapditwala, Cape
Town
Van der Merwe & Sorour 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
9 December 2015
STATUS
Immediate
Westinghouse v Eskom Holdings (476/2015) [2015] ZASCA 208
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 reversed the decision of the Gauteng
Local Division that had dismissed the application for the review of an award
by Eskom to Areva NP, a French company, of a tender to replace the steam
generators in the two units of the Koeberg Nuclear Power Station in the
Western Cape. The application was brought by Westinghouse Electrique,
Belgium, which was the unsuccessful bidder. Eskom required that the steam
generators at Koeberg be replaced during a scheduled outage in 2018.
The Board Tender Committee (BTC) of Eskom had taken the decision to
award the tender to Areva for various strategic considerations that fell outside
the bid evaluation criteria. The Gauteng Local Division had considered that
the strategic considerations were relevant to the award and that the decision
was thus not unlawful. It did not take into account that Westinghouse had not
known what these criteria were before the decision was made and had thus
not had an opportunity to deal with them. The court also did not take into
account that a tender process must be procedurally fair, and that a bid should
be evaluated only against the bid criteria contained in the invitation to tender.
The SCA found that the process followed by Eskom was procedurally unfair
and the award made for reasons that were not relevant. It thus set aside the
decision of the BTC, but remitted the matter to Eskom to reopen the tender
process if it still considered that the strategic considerations were decisive.
|
2253
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 446/08
In the matter between:
SIPHESIHLE PROTAS MSHENGU APPELLANT
v
THE STATE
RESPONDENT
Neutral citation:
Mshengu
v
the
State
(446/2008)
[2009] ZASCA
(29 May 2009)
Coram:
Jafta, Ponnan and Mhlantla JJA
Heard:
13 May 2009
Delivered:
29 May 2009
Summary:
Plea of guilty in terms of s 112 of the Criminal Procedure Act 51
of 1977 – the requirements therefor restated.
ORDER
On appeal from: High Court Petermaritzburg (Natal Provincial Division,
(Van Niekerk AJ and Moleko J concurring)
In the result the following order is made:
1.
The appeal is allowed and the conviction and sentence are set
aside.
JUDGMENT
JAFTA JA (Ponnan and Mhlantla JJA concurring)
[1] On 22 September 2004, the appellant, a 13-year-old, quarrelled
with a 14-year-old boy and stabbed him once in the chest with a knife.
The victim died as a result of the injury inflicted by the appellant. The
next day the appellant was arraigned before the regional court on a charge
of murder. He was represented by an attorney at the trial. He pleaded
guilty to murder and a statement setting out the basis of his plea was
tendered in terms of s 112 of the Criminal Procedure Act 51 of 1977. He
was duly convicted on his plea of guilty and sentenced to eight years’
imprisonment.
[2] He appealed against the conviction and sentence to the
Pietermaritzburg High Court (Van Niekerk AJ, Moleko J concurring).
The conviction was challenged on the basis that the statement tendered
did not satisfy the requirements of s 112(2) in that it failed to admit that
the appellant was criminally liable for his conduct. Accordingly, it was
argued, that the magistrate should not have been satisfied that the
appellant was indeed guilty. The sentence was attacked on the ground that
it was excessive.
[3] The appeal against conviction was dismissed but the sentence
imposed by the trial court was set aside. The matter was remitted to the
trial court for sentence to be considered afresh. This appeal is with the
leave of the high court.
[4] Two issues arise in this mater. The first issue is whether, in view of
the appellant’s age, the statement tendered on his behalf complied with s
112(2) of the Act. If not, whether the matter should be remitted to the trial
court following the setting aside of the conviction.
[5] Before the Act was enacted the prosecution was required to lead
evidence in all trials, including cases where the accused had pleaded
guilty.1 Section 112 of the Act introduced a different procedure that
dispensed with the leading of evidence where a plea of guilty is
tendered.2 However, Parliament sought to protect accused persons against
the consequences of convictions based on incorrect pleas of guilty by
including in the section two safeguards designed to determine whether a
plea of guilty was properly tendered.3 The primary purpose of the written
1 R v Nathanson 1959 (3) SA 124 (A) and S v Roux 1975 (3) SA 190 (A).
2 The relevant part of the section is quoted below.
3 S v Naidoo 1989 (2) 114 (A).
statement in terms of s 112(2) is to set out the admissions of the accused
and the factual basis supporting his or her guilty plea.
[6] Section 112 provides:
‘(1)
Where an accused at a summary trial in any court pleads guilty to the offence
charged, or to an offence of which he may be convicted on the charge and the
prosecutor accepts that plea –
(a)
….
(b)
the presiding judge, regional magistrate or magistrate shall, if he or she is of
the opinion that the offence merits punishment of imprisonment or any other form of
detention without the option of a fine or of a fine exceeding [R1500], or if requested
thereto by the prosecutor, question the accused with reference to the alleged facts of
the case in order to ascertain whether he or she admits the allegations in the charge to
which he or she has pleaded guilty, and may, if satisfied that the accused is guilty of
the offence to which he or she has pleaded guilty, convict the accused on his or her
plea of guilty of that offence and impose any competent sentence.
(2)
If an accused or his legal adviser hands a written statement by the accused into
court, in which the accused sets out the facts which he admits and on which he has
pleaded guilty, the court may, in lieu of questioning the accused under subsection
(1)(b), convict the accused on the strength of such statement and sentence him as
provided in the said subsection if the court is satisfied that the accused is guilty of the
offence to which he has pleaded guilty: Provided that the court may in its discretion
put any question to the accused in order to clarify any matter raised in the statement.’
[7] Section 112(2) requires that the statement must set out the facts
which he admits and on which he has pleaded guilty. Legal conclusions
will not suffice. The presiding officer can only convict if he or she is
satisfied that the accused is indeed guilty of the offence to which a guilty
plea has been tendered. If not, the provisions of s 113 must be invoked.
[8] The statement tendered by the appellant in this mater must be
examined against the above backdrop. It reads:
‘2.
The charge has been explained to me and I understand the charge that is being
brought against me. I was not forced or influenced by any person to plead guilty. I am
making this statement freely and voluntarily in front of my mother Ester Mshengu.
My explanation is as follows:
3.
I admit that I killed Nkosikhona Ngobese, a 14 year old male person, on the
22nd day of September 2004 at and or near Idube Road near House No 324
Mpophomeni in the regional division of Kwa-Zulu Natal. On the day in question I had
an argument with the deceased. As a result of the argument I then took out the knife
from the motor vehicle, went straight to him and stabbed him once in the chest. The
deceased fell on the ground and at that stage he was bleeding. The deceased died as a
result of the wound and bleeding. I then ran away. Few minutes later I was
apprehended by members of the community who called the police. I was then arrested
and charged with murder.
4.
I admit that my actions in stabbing the deceased with a knife resulted in the
deceased’s death. Further to the above I admit that my actions were unlawful and
intentional.
5.
I admit that my actions at the time of the commission of the offence were
unlawful and intentional and that I intended to cause the death of the deceased.’
[9] The above statement does not admit the charge in all of its
ramifications. Section 112 requires as much. It amounts instead to a
simple regurgitation of what must have been the content of the charge
sheet. The accused in this particular instance is rebuttably presumed to be
criminally non-responsible. The burden of rebutting this presumption
rests on the prosecution. An important step in the proceedings was to
ascertain whether his development was sufficient to rebut the
presumption. That plainly did not occur. The prosecution would
obviously have been relieved of that obligation had an appropriate
admission been made by the accused. That likewise did not occur. No
evidence capable of rebutting that presumption had been placed before
the magistrate. When regard is had to the record in its entirety, it is
obvious that none who were involved in the trial were alive to the
presumption of criminal non-responsibility, that was in operation in
respect of this child.
[10] What was said in the statement was too terse and open to the
construction that, with the benefit of hindsight and the experience of
finding himself in a courtroom, he knew that he had done wrong. The
statement told the magistrate nothing about his state of mind at the time
of the stabbing or of his level of perception then. Nor, if he was mature
enough to answer for his behaviour. For, as it was put by Didcott J in S v
M 1982 (1) SA 240 (N) at 242 D-E:
‘Accused persons sometimes plead guilty to charges, experience shows, without
understanding fully what these encompass. The danger of doing so is obvious in a
society like ours, which sees many who are illiterate and unsophisticated coming
before the courts with no legal assistance. The danger is greater still, it goes without
saying, when such a one is a young child with a limited grasp of the proceedings.
[11] Before us counsel for the state conceded that standing on its own
the statement was deficient in this important respect. He did suggest that
any such deficiency was cured by the fact that the child had legal
representation. I cannot agree. On the facts of this case, there appears to
be no outward manifestation that counsel appreciated that this issue was a
live one. One can hardly therefore take any comfort from that.
[12] It follows that the conviction cannot stand and must be set aside.
[13] The next issue that calls for consideration is whether the course
suggested in s 312 of the Act should be followed in this case. If a
conviction is set aside solely on the basis that s 112 was not complied
with the section requires that the matter be remitted to the trial court for it
to comply with or act in terms of s 113. Section 312(1) provides:
‘(1)
Where a conviction and sentence under section 112 are set aside on review or
appeal on the ground that any provision of subsection (1)(b) or subsection (2) of that
section was not complied with, or on the ground that the provisions of section 113
should have been applied, the court in question shall remit the case to the court by
which the sentence was imposed and direct that court to comply with the provision in
question or to act in terms of section 113, as the case may be.’
[14] In the past the language of the section has been construed to mean
that its provisions were peremptory.4 In S v Arendse and Another5 the
Cape High Court held that s 312 was peremptory but declined to remit the
case because, in its opinion, it was clear that the remittal would serve no
purpose. The court said: 6
‘It seems to me that, notwithstanding the provisions of s 312 (1), that section does not
compel this Court to commit a fatuity. The Act cannot intend that this Court must
remit, in a case where all are ad idem, ie the State is ad idem and the Court agrees
with the State and that is also the attitude of the appellants’ representative that no
conviction can accrue in this case. It seems to me that in those circumstances no Court
is even compelled to follow a course and give an order that certain proceedings must
now take place which are pointless, can have no purpose and can have no outcome,
other than the acquittal of the accused.’
[15] The question that arises is whether the language of the section is
indeed peremptory. The construction that favours the view that it is
peremptory is influenced by the use of the word ‘shall’ in the section. The
word does not, by itself, conclusively determine that a provision is
peremptory. The courts have found it impossible to lay down a conclusive
4 S v Khupiso; S v Africa 1979 (2) SA 605 (O).
5 1985 (2) SA 103 (C) at 108F.
6 Ibid p 107J-108F.
test.7 A court called upon to determine whether a particular provision is
peremptory or directory must construe the language of the concerned
provision in the context, scope and object of the Act of which it forms
part.8 Thus in Maharaj and Others v Rampersad9 this court rejected the
argument that ‘shall’ in the context of the enactment it was concerned
with indicated that the provision was mandatory. The court said:10
‘[Appellant’s counsel] pointed out that the regulation used the word “shall” –
translated in the Afrikaans version by the word “moet” – in relation to the requirement
of attaching to the application a plan or map tracing and, on the authority of such
decisions as Messenger of the Magistrate’s Court, Durban v Pillay 1952 (3) SA 678
(A), and Feinberg v Pietermaritzburg Liquor Licensing Board 1953 (4) SA 415 (A) at
p 419, he contended that this was a “strong indication” that the requirement was
peremptory. In the former of the two cases referred to immediately above
Van den Heever JA described the word “moet” in Kantian terms as embodying the
“categorical imperative”. It would be a work of supererogation to refer to the long list
of examples in our reported case-law where that word, in the light of considerations
pointing to another conclusion, has had to surrender this resounding accolade and
been reduced to the status of a mere directory verb.’
[16] In addition to statutory context, the section must be construed
consistently with the Constitution and if possible it must be given a
construction which will not be inconsistent with an accused’s fair trial
rights. Section 39(2) of the Constitution obliges every court to promote
the spirit, purport and objects of the Bill of Rights when interpreting
legislation. In Fraser v ABSA Bank Ltd (National Director of Public
Prosecutions as Amicus Curiae) the Constitutional Court said:11
7 Leibbrandt v South African Railways 1941 AD 9.
8 Charlestown Town Board v Vilakazi 1951 (3) SA 361 (A).
9 1964 (4) 638 (A).
10 Ibid p 643G-644B.
11 2007 (3) SA 484 (CC) para 47.
‘The
question
raised
by
this
application
is
whether
the
Supreme
Court of Appeal’s interpretation of s 26 [of the Prevention of Organised Crime Act]
has failed to promote the spirit, purport and objects of the Bill of Rights in terms of s
39(2). …Section 39(2) requires more from a Court than to avoid an interpretation that
conflicts with the Bill of Rights. It demands the promotion of the spirit, purport and
objects of the Bill of Rights. These are to be found in the matrix and totality of rights
and values embodied in the Bill of Rights. It could also in appropriate cases be found
in the protection of specific rights, like the rights to a fair trial in s 35(3), which is
fundamental to any system of criminal justice, and of which the rights to legal
representation and against unreasonable delays are components. The spirit, purport
and objects of the protection of the right to a fair trial therefore have to be
considered.’
[17] The purpose of s 312 is to prevent an injustice which may occur if
an accused person were to escape punishment for his or her crime only
because his or her conviction was set aside on the ground that there was a
failure to comply with s 112 of the Act. But an injustice cannot occur
where the accused has served the entire sentence by the time the
conviction is set aside on appeal. Nor can it occur where a fresh
conviction cannot be achieved following a remittal to the trial court. To
construe s 312(1) in the manner that renders its provisions peremptory
may result in an injustice or even an infringement of an accused person’s
right to a fair trial. There can be no justification for ordering that an
accused person, who has already served the entire punishment, be
subjected to a second trial. Such an order would be inconsistent with the
right to a fair trial. In my view it could never have been the intention of
the legislature that a court is obliged to comply with the section
irrespective of the injustice or unfairness that it may cause. I therefore
conclude that s 312(1) is not peremptory.
[18] The course prescribed by the section must, however, be followed
unless the court on review or appeal is of the view that it would lead to an
injustice or would be a futile exercise. The court retains the discretion not
to order a remittal if the circumstances of the case are such that the
remittal will be inappropriate.
[19] In this matter the appellant had served more than two years of the
original sentence imposed by the trial court when he appeared before it
for re-sentencing. Having had regard to a probation officer’s report and
the time spent by the appellant in detention, the trial court imposed a
sentence of three years’ imprisonment wholly suspended for five years on
certain conditions. There has already been a remittal of the matter to the
trial court which considered it appropriate to impose a non-custodial
sentence. In these circumstances it would be unfair, in my view, to order
a remittal of the case once more.
[20] In the result the appeal is allowed and the conviction and sentence
are set aside.
________________________
C N JAFTA
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
A M Skelton (Ms)
Instructed by
Mastross Incorporated
Pietermaritzburg
Honey Attorneys
Bloemfontein
FOR RESPONDENT:
S Sankar
Instructed by
The Director of Public Prosecutions
Pietermaritzburg
The Director of Public Prosecutions
Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
29 May 2009
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
Today, the Supreme Court of Appeal (the SCA) has set aside a judgment of the
Pietermaritzburg High Court which confirmed the conviction of murder against a
teenager.
The appellant who was 13 years at the time the offence was committed, had
quarrelled with a 14-year-old boy and stabbed him once in the chest with a knife.
The next day the appellant appeared before a regional court charged with murder.
He pleaded guilty and was convicted on the basis of his plea of guilty and sentenced
to 8 years’ imprisonment. An appeal to the high court succeeded on sentence only
and the matter was remitted to the trial court to pass a new sentence. It sentenced
him to 3 years’ imprisonment wholly suspended for 5 years on certain conditions.
On a further appeal to the SCA it was argued on the appellant’s behalf that the
statement he made to the trial court and on which that court relied for convicting was
deficient, in that it did not satisfy the requirements of s 112(2) of the Criminal
Procedure Act 51 of 1977. The statement had failed to admit that the appellant had
matured to the level that he could be held criminally liable. In law a child below the
age of 13 years is regarded as not criminally liable unless the prosecution can show
that it is liable.
Having considered the statement the SCA concluded that it indeed failed to comply
with s 112(2) and set aside the conviction.
|
3886
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 835/2021
In the matter between:
BANELE BAFO NHLAPO
Appellant
and
THE STATE
Respondent
Neutral citation:
Nhlapo v The State (Case no 835/2021) [2022] ZASCA 125 (26
September 2022)
Coram:
PETSE DP and MOTHLE and HUGHES JJA and CHETTY and
SIWENDU AJJA
Heard:
17 August 2022
Delivered:
26 September 2022
Summary: Criminal law and procedure – sentence in excess of the prescribed
minimum for robbery – whether effective sentence of 20 years’ imprisonment for
robbery and attempted murder was inappropriate – whether the whole of the
sentence for attempted murder ought to run concurrently with sentence for robbery.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Mngqibisa-Thusi J
and Phahlane AJ, sitting as court of appeal):
The appeal is dismissed.
JUDGMENT
Chetty AJA (Petse DP, Mothle and Hughes JJA and Siwendu AJA concurring):
[1] The appellant, Mr Banele Nhlapo, together with his co-accused Mr Boy
Lebyane, were convicted in the regional court, on 8 June 2011, of robbery with
aggravating circumstances and attempted murder. They were sentenced to 17 years’
imprisonment on the count of robbery and five years’ imprisonment on the count of
attempted murder. The regional court ordered two years of the sentence for
attempted murder to run concurrently with the sentence for robbery. The appellant
was therefore sentenced effectively to 20 years’ imprisonment. He applied for, and
was refused, leave to appeal against his conviction and sentence. On petition to the
Gauteng Division of the High Court, Pretoria (the high court), in terms of s 316(1) of
the Criminal Procedure Act 51 of 1977 (CPA), leave was granted in respect of
sentence only. That court dismissed the appeal on 6 December 2017 finding no
misdirection by the trial court in imposing an effective period of 20 years’
imprisonment.
[2] The appellant then applied to this Court for special leave to appeal against his
sentence, such application being granted on 9 June 2021. The issues for
determination before this Court are whether the high court erred in confirming the
sentence for robbery imposed by the trial court in excess of the prescribed minimum
in terms of s 51(2) of the Criminal Law Amendment Act 105 of 1997 (the CLA), and
in confirming that only a portion of the sentence for attempted murder was to run
concurrently with that of the sentence for robbery.
[3] The facts of the matter are relatively uncomplicated. The evidence before the
trial court was that the appellant was in the vicinity of a tavern in the area of
Etwatwa, Gauteng, on the evening of 3 October 2010 in the company of his co-
accused, Mr Lebyane, and other young ‘boys’. At the same time, the complainant, Mr
Ntuli, and his friend Mr Dlamini, visited the same tavern, where they had a few
drinks. On leaving the establishment in the early hours of the morning, the
complainant and Mr Dlamini walked through a passage where they were confronted
by the appellant and his accomplices. The appellant, without provocation, stabbed
the complainant in the head, back and neck. At this stage, Mr Dlamini noticed that Mr
Lebyane was pointing a firearm in his direction. Mr Dlamini fled the scene for his own
safety, leaving behind the complainant, who was being assaulted by the appellant.
[4] Upon being stabbed by the appellant, the complainant was robbed of his
cellular phone, R250 in cash and a ring. These items were never recovered. During
the ensuing attack, the complainant fled from his attackers and sought refuge in a
nearby yard belonging to Mr Ndala, who was asleep at the time and was awoken by
screams for help. Mr Ndala noticed three boys standing outside his yard, with the
complainant inside his yard, saying that he had just been robbed. When it appeared
that Mr Ndala might intercede on behalf of the complainant, one of the boys broke a
bottle and threatened to stab Mr Ndala if he interfered. The complainant, in
desperation, ran into Mr Ndala’s house, only to be pursued by the appellant and his
accomplices who dragged the complainant out of the house and into a nearby street
where he was repeatedly stabbed, until he lost consciousness. He only regained
consciousness in hospital. The J88 medical report, which was admitted into
evidence, is consistent with the evidence of the complainant as to the location and
extent of his injuries, revealing wounds to the chest, head, neck and multiple
lacerations to the back.
[5] The version of the appellant was that the complainant was assaulted by
someone else and that he had mistakenly identified the appellant as the person who
attacked and robbed him. This version was rightly rejected by the trial court in light of
the evidence by the State witnesses, as well as the fact that the appellant was
known to the complainant and Mr Dlamini. There could be no case of mistaken
identity.
[6] It bears noting that the trial court observed that the circumstances of this
attack were ‘different from the normal robberies’ it dealt with, in that after the
complainant’s possessions were taken, he fled the scene to seek help. Not satisfied
that they had robbed him, his attackers, including the appellant who by all indications
was the leader of the pack, pursued him into the property of Mr Ndala where the
complainant had sought refuge, dragged him outside and continued to repeatedly
assault him.
[7] Against this backdrop, the trial court concluded that despite the appellant
being relatively young at 20 years’ old, when weighed against the circumstances of
the offences and the interests of the community, the latter criteria displaced the
personal circumstances of the appellant.
[8] It is well established that the power of an appellate court to interfere with a
sentence imposed by a lower court is limited. In S v Rabie,1 this Court noted that
punishment is ‘pre-eminently a matter for the discretion of the trial court’, and that an
appeal court ‘should be careful not to erode such discretion’. Consequently, a
sentence imposed by the trial court may only be interfered with where it is ‘vitiated by
irregularity or misdirection or is disturbingly inappropriate’. Even where a sentence is
not shockingly inappropriate, an appellate court is entitled to interfere, or at least
consider, the sentence afresh, if there has been a material misdirection in the
exercise of the sentencing discretion.2 Counsel who appeared on behalf of the
appellant was unable to point to any misdirection in the high court’s confirmation of
1 S v Rabie 1975 (4) SA 855 (A) at 857; S v Sadler 2000 (1) SACR 331 (SCA); S v Shaik and Others
[2008] ZACC 7; 2008 (5) SA 354 (CC) para 66.
2 S v Jimenez [2003] ZASCA 2; [2003] 1 All SA 535 (SCA) para 7.
the sentence. As the high court correctly noted with reference to S v Kgosimore,3 the
critical enquiry is whether there was a ‘proper and reasonable exercise of the
discretion’ by the trial court. In the absence of a finding to the contrary, the appeal
court has no power to interfere.
[9] Counsel for the appellant contended that the trial court erred in referring only
to the appellant’s age when it ought to have considered the totality of his personal
circumstances in the context of sentencing. This criticism is without merit. The
learned magistrate prefaced his judgment by stating that he is required to take into
account ‘numerous factors’ in determining a suitable sentence. He added ‘I will take
into account everything which was stated by Mr Kathrada [the attorney] on your
behalf’. The record indicates that the trial court had earlier been appraised that the
appellant was 20 years old at the time, he was a first offender, completed standard
10 at school and was unemployed. This argument therefore must fail.
[10] Insofar as the prevalence of these crimes is concerned, the trial court noted
that in its experience, almost every matter involving robbery with aggravating
circumstances in its area of jurisdiction is committed by persons of an age similar to
the appellant. In S v Matyityi 4 this Court stated that an offender of ‘20 years or more
must show by acceptable evidence that he was immature to such an extent that his
immaturity can operate as a mitigating factor’.5 There is nothing on record to suggest
that the appellant’s relative youth was a factor which contributed to him committing
the offences in question or that he was influenced by others to do so.
[11] Having found that there were no substantial and compelling circumstances to
deviate ‘downwards’ from the prescribed penalty of 15 years’ imprisonment, the trial
court turned its attention to what it considered the aggravating features of the
offences, ‘where the facts call for it’. Despite the appellant’s counsel initially
contending that the trial court should have taken the appellant’s age and his status
as a first offender into account as constituting substantial and compelling
circumstances in terms of s 51(3)(a) of the CLA, he later conceded that, at best, the
3 S v Kgosimore [1999] ZASCA 63; 1999 (2) SACR 238 (SCA) para 10.
4 S v Matyityi [2010] ZASCA 127; 2011 (1) SACR 40 (SCA).
5 Ibid para 14.
appellant should have been sentenced to the minimum sentence of 15 years in
terms of s 51(2)(a), with the entire sentence of five years for attempted murder being
made to run concurrently with the sentence for robbery. Essentially, it was submitted
that the appellant should have been sentenced to 15 years’ imprisonment.
[12] The trial court misconstrued the provisions of s 51(2) of the CLA in stating that
its penal jurisdiction was increased to 20 years’ imprisonment. I do not, however,
consider this an irregularity justifying an interference as the sentence ultimately
imposed was within the range of permissible sentences in s 51(2). That section
reads:
‘Provided that the maximum term of imprisonment that a regional court may impose in terms
of this subsection shall not exceed the minimum term of imprisonment that it must impose in
terms of this subsection by more than five years.’
[13] As regards the argument based on the concurrency of sentences, the default
position in s 280(2) of the CPA is that sentences of imprisonment imposed for two or
more offences will run consecutively, unless the court directs that they run
concurrently. The purpose is to ensure that the cumulative effect of several
sentences imposed in one trial is not too severe in the light of the aggregate
sentence6 or unduly harsh,7 but at the same time does not underestimate the
seriousness of the offence.8
[14] I am in agreement with counsel for the respondent that to order the entire
sentence for attempted murder to run concurrently with the sentence for robbery
would be to negate the seriousness of the attack on the complainant. I am unable to
agree with counsel for the appellant that the injuries sustained by the complainant
were not the most serious or life threatening, hence the entire sentence for
attempted murder should have run concurrently with the sentence for robbery. As
counsel for the respondent correctly pointed out, the J88 medical report reveals that
the complainant suffered multiple lacerations on the back; two stab wounds on the
chest, one on the neck and he had difficulty in breathing to the extent that an
6 S v Cele 1991 (2) SACR 246 (A) at 248j.
7 Moswathupa v S [2011] ZASCA 172; 2012 (1) SACR 259 (SCA); S v Dube 2012 (2) SACR 579
(ECG) para 11.
8 S v Maraisana 1992 (2) SACR 507 (A) at 511g.
intercostal drain was inserted. In the trial court, it was conceded that the complainant
was ‘very, very severely stabbed’. In any event, it is clear that the trial court, in
ordering two years of the sentence for attempted murder to run concurrently with that
for robbery, must have applied its mind to the aspect of concurrency as a means to
ameliorate the impact of a cumulative lengthy sentence. In doing so, the trial court
was exercising its sentencing discretion. The appellant can point to no failing by the
trial court in the exercise of its discretion in allowing only a portion of the sentence to
run concurrently.9 This contention must fail.
[15] While it was not disputed that the appellant was aware of the implications of
the prescribed minimum sentence being applicable, in the event of his conviction for
an offence falling within the ambit of s 51(2), it was submitted on his behalf that the
trial court erred in failing to alert the appellant to the possibility of him receiving a
sentence in excess of the prescribed minimum of 15 years’ imprisonment and for not
setting out its reasons for imposing such sentence. A similar argument was rejected
by this Court in Shubane and Another v S10 which held:
‘In any event, when an accused person is at the commencement of a trial apprised of the
sentencing provisions in sections 51 and 52 of the Act, read with Schedule 2, that by
necessary implication includes the provisions relating to a Regional Magistrate’s power to
impose a sentence not exceeding five years more than the prescribed minimum sentence of
imprisonment.’11
[16] In Mthembu v S12 this Court referred with approval to Swain J’s exposition in
the court below13 on the ‘starting point’ for the imposition of a sentence higher than
the minimum. Swain J stated that:
‘Although the prescribed minimum sentence should be the starting point, this is solely for the
purpose of deciding whether a sentence less than the prescribed minimum sentence should
be imposed. The exercise of a discretion by the presiding officer to impose a sentence
9 S v Malgas 2001 (1) SACR 469 (SCA) at para 12: ‘A court exercising appellate jurisdiction cannot, in
the absence of material misdirection by the trial court, approach the question of sentence as if it were
the trial court and then substitute the sentence arrived at by it simply because it prefers it. To do
so would be to usurp the sentencing discretion of the trial court'.
10 Shubane and Another v S [2014] ZASCA 148.
11 Ibid para 8.
12 Mthembu v S [2011] ZASCA 179; 2012 (1) SACR 517 (SCA).
13 S v Mthembu 2011 (1) SACR 272 (KZP) para 19.1.
greater than the prescribed minimum sentence, does not have to be justified by reference to
the prescribed minimum sentence.’
I agree with the above statement by Swain J in S v Mthembu.14
[17] Moreover, insofar as it is contended that the trial court failed to provide
reasons for imposing a sentence in excess of the prescribed minimum, the language
used in s 51(2) of the CLA should be contrasted with that in s 51(3)(a) of the CLA
which states that where a presiding officer is satisfied that there are substantial and
compelling circumstances justifying the imposition of a lesser sentence than the
prescribed minimum, ‘it shall enter those circumstances on the record of the
proceedings’. No corresponding obligation exists when ‘deviating upwards’ of the
minimum prescribed. In this regard, s 51(2) contains repeated reference to the words
‘not less than’ in relation to the range of sentences which could be imposed by a
presiding officer.15 Properly interpreted, there can be no basis for the contention that
the magistrate was required to do anything more than exercise his or her discretion
in determining a suitable penalty, even where this results in a sentence greater than
15 years, as in the present case.16
[18] Despite not bearing such a burden, the trial court followed the prudent
practice of explaining why it imposed a heavier sentence than the prescribed
minimum, stating that the violent manner in which the appellant continued his attack
on the complainant, even after the robbery was complete, was purely gratuitous. The
trial court concluded that the present case was of a ‘different category’ to those
which routinely came before it, in that the circumstances were ‘worse than the
normal or everyday trial that we indeed hear’. The appellant’s contention that the trial
court erred in finding that there were aggravating circumstances which justified a
‘heavier’ sentence than the prescribed minimum in s 51(2) of the CLA is without
merit. I can find no misdirection in the trial court’s reasoning.
14 Ibid para 19.5.
15 Footnote 12 para 8.
16 See fn 13: ‘Once the presence or absence of substantial and compelling circumstances is
determined, then the exercise of the discretion required of the presiding officer, by the Act, is
complete’.
[19] The present case is one in which the personal circumstances of the appellant
are overshadowed by the seriousness of the crime and the interests of society.17 The
appellant showed no remorse for his conduct. The sentence is not considered
manifestly unjust, justifying interference.
[20] In the result, the following order is made:
The appeal is dismissed.
_______________________
M R CHETTY
ACTING JUDGE OF APPEAL
17 S v Segole and Another 1999 (2) SACR 115 (W) at 124-125; S v Vilakazi [2008] ZASCA 87; [2008]
4 All SA 396 (SCA).
APPEARANCES
For appellant:
F F Jacobs
Instructed by:
Honey Attorneys, Bloemfontein
For respondent:
M J Makgwatha
Director of Public Prosecutions, Pretoria
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
26 September 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
Nhlapo v The State (Case no 835/2021) [2022] ZASCA 125 (26 September 2022)
Today the Supreme Court of Appeal (SCA) dismissed an appeal from the Gauteng Division of the High
Court, Pretoria (high court). The appellant was convicted of attempted murder and robbery with
aggravating assault in the regional court (trial court), and sentenced to 17 years’ imprisonment on the
count of robbery and five years’ imprisonment on the count of attempted murder. The effective sentence
was 20 years’ imprisonment. Two years of the sentence for attempted murder was ordered to run
concurrent with the sentence for robbery. The appellant applied for leave to appeal his sentence to this
Court.
The appellant stabbed and robbed his victim, Mr Ntuli (Ntuli). Ntuli had exited a tavern upon which he
and a friend were accosted by the appellant and his co-accused. The friend managed to escape, but Ntuli
ran into the yard of a neighbour, who offered to provide assistance. However, the appellant threatened
to assault the neighbour if he interfered, upon which Ntuli desperately ran into his house. The appellant
and his co-accused rushed into the house and dragged Ntuli outside, whereupon the appellant stabbed
Ntuli numerous times in the chest, head, neck and back.
The trial court observed that the circumstances of the present matter were different than the normal
robberies it dealt with. The reasoning was that the appellant was not satisfied with merely robbing the
victim – he pursued his victim and repeatedly assaulted him after he had fled. The trial court held that
the interests of the appellant weighed against the interests of the community as well as the circumstances
of the offences, displaced the personal circumstances of the appellant, such as his relatively young age
of 20 years. The trial court found that there were no substantial and compelling circumstances to deviate
downwards from the prescribed minimum sentence.
It was submitted on behalf of the appellant that the trial court failed to provide appropriate reasons why
a sentence in excess of the minimum was imposed. The trial court applied its discretion in light of s
51(2) of the Criminal Law Amendment Act 51 of 1977 and this Court found that, properly interpreted,
there was no basis for the contention that the presiding officer ought to have done anything, more than
exercise his discretion to determine a suitable penalty, even in excess of the prescribed minimum.
Having exercised its inherent jurisdiction, the trial court applied its mind to the aspect of concurrency
as a means to ameliorate the impact of a cumulative lengthy sentence. Despite not having the burden to
do so, the trial court followed the prudent practice of explaining why it imposed a heavier sentence than
the prescribed minimum, stating that the violent manner in which the appellant continued his attack on
Ntuli was purely gratuitous. The personal circumstances of the appellant were overshadowed by the
seriousness of the crime and the interests of society. Additionally, the appellant displayed no remorse
for his conduct. This Court did not find the sentence manifestly unjust, justifying interference.
In the result, the SCA dismissed the appeal.
--------oOo--------
|
2499
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 228/2013
Reportable
In the matter between:
ABSA BANK LIMITED APPELLANT
and
PETER JACOBUS JANSE VAN RENSBURG FIRST RESPONDENT
GINA MARI JANSE VAN RENSBURG SECOND RESPONDENT
and
ABSA BANK LIMITED APPELLANT
and
ELIZABETH FRANCINA MAREE FIRST RESPONDENT
STEFANUS MAREE SECOND RESPONDENT
Neutral citation:
Absa Bank Ltd v Van Rensburg (228/13) [2014] ZASCA 34 (28 March
2014)
Coram:
Maya, Shongwe, Leach, Saldulker JJA and Mathopo AJA
Heard:
10 March 2014
Delivered:
28 March 2014
Summary:
Appeal – s 21A of the Supreme Court Act 59 of 1959 – a court of appeal
will not entertain an appeal where the disputes between the parties have
been settled and the order sought will have no practical effect or result –
Appealability – an order postponing an application for default judgment to
afford the plaintiff an opportunity to annex underlying documents to its
simple summons is not appealable.
__________________________________________________________________
ORDER
On appeal from: Western Cape High Court, Cape Town (Griesel J, Fourie and
Saldanha JJ concurring) sitting as court of appeal.
The appeal is struck from the roll.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Maya JA: (Shongwe, Saldulker JJA and Mathopo AJA concurring)
[1] This is an unopposed appeal against a postponement order of the full court
of the Western Cape High Court, Cape Town (Griesel J, Fourie and Saldanha JJ
concurring), with its leave. The appeal was heard and struck off the roll on 10
March 2014 and the court undertook that its reasons would follow. These are the
reasons.
[2] The background facts are simple. The appellant (Absa) launched action
proceedings against the respondents in the high court based on mortgage bonds
registered in its favour over immovable properties belonging to the respondents.
The respective claims were commenced by way of simple summonses to which
were annexed copies of the relevant mortgage bonds and the deeds of suretyship
signed by the spouses of the respective owners. In due course, the claims were set
down for hearing as unopposed applications for default judgment. In those
proceedings, a question arose whether or not it was necessary to attach to the
simple summonses the underlying credit agreements secured by the bonds and
suretyships as had been required in some cases of that division.
[3] In light of divergent views on the question in the division, the matters were
referred for hearing by the full court to obtain clarity as to the correct procedure to
be followed. Absa denied the need to annex the underlying agreements to the
summonses. It relied for its stance mainly on the absence of such a requirement in
the Uniform Rules of Court (the rules) and the Consolidated Practice Note of the
Western Cape High Court. It contended that the establishment of such a practice by
the full court would effectively usurp the powers of the Rules Board which is
constituted to make relevant prescriptions in the rules and specify the requirements
applicable to a simple summons. And, in defended matters, the practice would
necessitate the attachment of voluminous documentation both to simple
summonses and the subsequent declarations. This would result in unnecessary
duplication and expense, it was argued.
[4] The full court considered various authorities on the issue including
judgments of its division and relevant practice in other large divisions. It came to
the conclusion that the weight of authority favoured a view, which it adopted, that
„although a simple summons is not a pleading, it is nevertheless necessary, on a
proper interpretation of [Uniform] rule 17(2)(b), read with Form 9, to attach a
written agreement where the plaintiff‟s cause of action is based on such
agreement‟. To this finding the full court added two riders – that (a) it would not be
compulsory for a plaintiff seeking a default or summary judgment to file the
original agreement unless so directed by the court and (b) a plaintiff who relied on
portion only of a voluminous written agreement could attach only such portion to
the summons. The court then postponed the matters sine die with no order as to
costs. The matters were postponed to afford Absa an opportunity to amend its
summonses so as to refer to the underlying credit agreements and annex them. It is
the full court‟s reason for the postponement orders to which Absa objects.
[5] However, subsequent to the lodging of the appeal, Absa settled the two
matters with the respective respondents. But this notwithstanding, it persisted with
the appeal despite the resolution of all disputes between the parties.1 It contended
that the question of law at issue (ie whether it is necessary for a plaintiff who
institutes action by way of an ordinary summons to annex the written agreement
upon which its cause of action is based) is not confined to the parties inter se as the
issue is likely to arise frequently. Thus, this court‟s judgment would still have a
practical effect or result, so it claimed.
[6] Two preliminary issues that may each decide the fate of the appeal arise for
determination. One is whether this court should hear the appeal at all in light of s
21A(1) of the Supreme Court Act 59 of 1959 (the Act).2 The other is whether the
matter is, in any event, appealable having regard to the nature of the orders
appealed against.
[7] According to s 21A(1), if the issues in an appeal „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‟. These provisions set a direct and positive test:
whether the judgment or order will have a practical effect or result and not whether
it might be of importance in a hypothetical future case.3 As a result, this court will
not „make determinations on issues that are otherwise moot merely because the
1 It did withdraw the appeal partially in respect of the Van Rensburg matter but proceeded against the order granted
in the Maree application.
2 The Act has since been repealed and replaced by the Superior Courts Act 10 of 2013 which was assented to on 12
August 2013, after the institution of these proceedings. In terms of s 52 of the latter Act, the Act applies to appeals
pending in any court at its commencement as if it had not been passed. Thus, the appeal must be decided under the
provisions of the Act.
3 Premier, Provinsie Mpumalanga, en ‘n ander v Groblersdalse Stadsraad 1998 (2) SA 1136 (SCA) at 1141E.
parties believe that, although the decision or order will have no practical result
between them, a practical result could be achieved in other respects‟.4
[8] But the section confers a discretion on this court.5 Thus, in The Merak S: Sea
Melody Enterprises SA v Bulktrans,6 this court found that allowing the appeal
would have no practical effect but nonetheless decided the merits of appeal. The
court reasoned as follows:
„In view of the importance of the questions of law which arise in this matter, the frequency with
which they arise and the fact that at the time of the decision in the Court a quo and of the
granting of leave to appeal those questions were … “live issues”, I am satisfied that this is an
appropriate matter for the exercise of this Court‟s discretion to allow the appeal to proceed: Coin
Security Group (Pty) Ltd v SA National Union for Security Officers and Others 2001 (2) SA 872
(SCA) at 875 (para [8]) and Natal Rugby Union v Gould 1999 (1) SA 432 (SCA)‟.
In Land en Landbouontwikkelingsbank van Suid-Afrika v Conradie,7 this court
once more decided the merits of an appeal – whether the termination of the right of
residence of an occupier was just and equitable within the meaning of the s 8(1) of
the Extension of Security of Tenure Act 62 of 1997 – where the occupier had
vacated the property by the time the appeal was heard and had no interest in its
outcome, which would have no practical effect for the parties inter se. The court
considered the question of law involved, which arose frequently, important. It
further took into account that the judgment appealed against, which was found
wrong, had already been followed in a reported judgment.
So, depending on the facts of each case, while the parties may have resolved all
their differences, a court of appeal may nevertheless entertain the merits of the
4 Land en Landbouontwikkelingsbank van Suid-Afrika v Conradie 2005 (4) SA 506 (SCA) para 6. See also, Radio
Pretoria v Chairman, Independent Communications Authority of South Africa 2005 (1) SA 47 (SCA); Coin Security
Group (Pty) Ltd v SA National Union for Security Officers 2001 (2) SA 872 (SCA).
5Coin Security Group (Pty) Ltd above para 8; President, Ordinary Court Martial, & others v Freedom of Expression
Institute & others 1999 (4) SA 682 (CC) para 13; Land en Landbouontwikkelingsbank van Suid-Afrika above, para
7.
6 2002 (4) SA 273 (SCA) para 4.
7 Fn 4.
appeal if, for example, important questions of law which are likely to arise
frequently are at issue and their determination may benefit others.8
[9] Elsewhere, utmost caution in exercising that discretion has been advocated.
In an English decision, R v Secretary of State for the Home Department, Ex Parte
Salem,9 which has been considered by this court albeit without pronouncing a final
view on its dictum,10 as here, the discretion to adjudicate an appeal, where there is
no longer a dispute between the parties, was strictly limited to the area of public
law. And that court further circumscribed the discretion as follows:
„the discretion to hear disputes, even in the area of public law, must, however, be exercised with
caution and appeals which are academic between the parties should not be heard unless there is a
good reason in the public interest for doing so, as for example (but only by way of example)
when a discrete point of statutory construction arises which does not involve detailed
consideration of facts and where a large number of similar cases exist or are anticipated so that
the issue will most likely need to be resolved in the near future.‟11
[10] Notably, the decisions in which our courts exercised their discretion in the
appellants‟ favour and considered the merits of the appeals invariably concerned
frequently arising questions of statutory construction and application.12 In Sebola v
Standard Bank,13 upon which Absa relied, the Constitutional Court was requested
to interpret and assess the constitutional impact of a statutory provision about
which there had long been uncertainty which resulted in many conflicting high
8 See also Rand Water Board v Rotek Industries (Pty) Ltd 2003 (4) SA 58 (SCA) paras 18 to 21.
9R v Secretary of State for the Home Department, Ex Parte Salem [1999] 2 WLR 483 (HL) ([1999] 2 All ER 42
(HL)).
10 In Port Elizabeth Municipality v Smit 2002 (4) SA 241 (SCA) at 247E-I.
11 Above n7, at 487 and 47c, respectively.
12 In The Merak S Sea Melody Enterprises SA v Bulktrans (Europe) Corporation 2002 (4) SA 273 (SCA), the issue
considered important and arising frequently by the court was whether a bank guarantee given to secure the release of
an arrested vessel constituted „security‟ for purposes of s 5(2) of the Admiralty Jurisdiction Regulation Act 105 of
1983. Land en Landbouontwikkelingsbank van Suid-Afrika v Conradie concerned the interpretation and application
of s 8(1) of the Extension of Security of Tenure Act 62 of 1997, as indicated.
13 Sebola v Standard Bank of South Africa 2012 (5) SA 142 (CC).
court decisions. The court came to the decision that it was in the interests of justice
to hear the appeal on its merits.14 In reaching that decision, the court noted that the
appellants‟ costs incurred in resisting the sale of their home, the subject of the
dispute, which the bank did not tender, and the bank‟s own costs in the
Constitutional Court which it threatened to recover if they persisted with the
appeal, remained a live issue for them. But the court reiterated that a dispute about
costs alone is insufficient reason to hear an appeal whose issues have gone dead.
What it considered pivotal in the enquiry was the meaning it would assign to the
statutory provisions, which would have a significant practical impact.15 And the
court took into account that the Supreme Court of Appeal, whose controversial
decision was appealed against, had not had the benefit of the wide-ranging
submissions made to it on the constitutional impact of the various interpretations
contended for. These factors vastly distinguish the case from the present one.
[11] At stake here is the precise requirement of a rule of court procedure. Bearing
in mind that s 21A was aimed at reducing the heavy workload of appellate courts,16
it is very relevant that there is a statutory body specially created to deal with all
issues pertaining to matters of this nature, as pointed out by Absa itself. The Rules
Board for Courts of Law Act 107 of 1985 (the Rules Board Act) is chiefly aimed at
providing „for the making of rules for the efficient, expeditious and uniform
administration of justice in the Supreme Court of Appeal, High Courts and lower
courts‟.17 This object is achieved through the Rules Board for Courts of Law (the
Rules Board)18 which is empowered, inter alia, „from time to time on a regular
14 The provisions of the Act, including s 21A, did not apply to the Constitutional Court which uses a different
yardstick, the interests of justice test, in deciding whether to hear an appeal whose issues have gone dead.
15 See also MEC for Education, KwaZulu-Natal & others v Pillay 2008 (1) SA 474 (CC) paras 32 to 35; National
Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs & others 2000 (2) SA 1 (CC) at fn 18;
JT Publishing (Pty) Ltd v & another v Minister of Safety and Security & others 1997 (3) SA 514 (CC) para 15.
16 Premier, Provinsie Mpumalanga, en ‘n ander v Groblersdalse Stadsraad, fn3 at 1141D.
17 As set out in its preamble.
18 Established under s 2 of the Rules Board Act.
basis [to] review existing rules of court and subject to the approval of the Minister,
make, amend or repeal rules … regulating the practice and procedure in connection
with litigation … [and] the form, contents and use of process‟.19 The present
question falls squarely within this ambit and any uncertainty relating to the
relevant rule‟s application should rightly be resolved by the Rules Board.
[12] Furthermore, this court has repeatedly cautioned against deciding a matter
without the benefit of tested argument from both sides on questions that are
necessary for the decision of the case.20 A decision on the merits of this appeal
would be based on the argument of only one of the parties. In these circumstances,
Absa has established no reason for this court to exercise its discretion in its favour
and entertain the merits of the appeal.
[13] Despite this finding, which effectively disposes of the appeal, it is necessary
to deal briefly with the other fundamental hurdle faced by Absa. Recently, in an
analogous judgment in Absa Bank v Mkhize,21 this court had occasion to pronounce
on the nature and effect of an order postponing the hearing of an application for
default judgment in order to give the plaintiff an opportunity to take further steps
to augment its case, as was done here. The majority held that such an order is
merely a direction from the high court, before the main action can be entered into,
as to the manner in which the matter is to proceed; it does not amount to a refusal
of default judgment nor does it directly bear upon or dispose of any of the issues in
the main action and is thus not a dismissal of the action.22 Reiterating the trite fact
that an appeal lies against the substantive order made by the court and not the
19 Section 6(1)(a) and (b) of the Rules Board Act.
20 See, for example, Western Cape Education Department & another v George 1998 (3) SA 77 (SCA) at 84E; Port
Elizabeth Municipality v Smit 2002 (4) SA 241 (SCA) para 11.
21 Absa Bank v Mkhize [2014] All SA 1 (SCA).
22 Paras 59, 62 and 63.
reasons for the judgment,23 the majority concluded that the order was therefore not
appealable. Needless to say, this judgment binds us and the appeal must fail on this
ground too.
[14] For these reasons the appeal was struck from the roll.
____________________________
MML MAYA
JUDGE OF APPEAL
Leach JA:
[15] My conclusion that the matter had to be struck from the roll was reached by
a somewhat different route from that followed by my learned colleague, Maya JA.
She has concluded that the issues raised upon appeal became moot when the
parties settled their litigation and that the order of the court below was in any event
not appealable. I agree with the latter conclusion for the detailed reasons she has
given. But, in my view, the effect of the settlement was not to render the issues
between the parties moot; instead it brought an end to the litigation, thereby
removing the disputes that had existed from the jurisdiction of the court.
[16] Had the claims been dismissed, that would have constituted a final judgment
that was appealable; but the order granted was no more than interlocutory in
nature. Consequently, although the appellant may have had reason to feel
23 Para 64; Western Johannesburg Rent Board & another v Ursula Mansions (Pty) Ltd 1948 (3) SA 353 (A) at 355.
aggrieved, it could not appeal against the order of postponement for the reasons
given by Maya JA. Moreover, the court below erred in granting leave to appeal to
this court; and its reason for doing so, namely, that the order was of final effect in
that „default judgment on the papers as they stand had to be refused‟ is
insupportable.
[17] However, the appeal was overtaken by events when the parties settled the
action. In my view, that was the end of the matter and, in truth, the issue whether
leave to appeal ought or ought not to have been granted in itself became moot.
[18] In reaching that conclusion, I found the reasoning of this court in Port
Elizabeth Municipality v Smit 2002 (4) SA 241 (SCA) to be most persuasive. In
that matter the appellant had been sued by the respondent for damages suffered as
a result of injuries sustained by her when she fell into a manhole. The respondent
succeeded both in a magistrate‟s court as well as on appeal to the high court. After
leave to appeal further to this court had been granted, the parties concluded a
settlement agreement that effectively resolved all their differences resulting in
there being no longer any dispute or lis between them. The preliminary question
which then arose before this court was whether the appeal should be entertained at
all. In regard to that question and the provisions of s 21A(1) of the Supreme Court
Act 59 of 1959, Brand JA, in delivering the unanimous judgment of this court,
stated the following:24
„It can be argued, I think, that s 21A is premised upon the existence of an issue subsisting
between the parties to the litigation which requires to be decided. According to this argument s
21A would only afford this Court a discretion not to entertain an appeal when there is still a
24 At para 7.
subsisting issue or lis between the parties the resolution of which, for some or other reason, has
become academic or hypothetical. When there is no longer any issue between the parties, for
instance because all issues that formerly existed were resolved by agreement, there is no
“appeal” that this Court has any discretion or power to deal with. This argument appears to be
supported by what Viscount Simon said in Sun Life Assurance Company of Canada v Jervis
[1944] AC 111 (HL) at 114, when he said, with reference to facts very similar to those under
present consideration:
“. . . I think it is an essential quality of an appeal fit to be disposed of by this House that there
should exist between the parties a matter in actual controversy which the House undertakes to
decide as a living issue.”
Consequently, he found that in a matter where there was no existing lis between the parties the
appeal should be dismissed on that ground alone (at 115). (See also Ainsbury v Millington [1987]
WLR 379 (HL) at 381.) More recently, however, it was said by Lord Slynn of Hadley in R v
Secretary of State for the Home Department, Ex parte Salem [1999] 2 WLR 483 (HL) at 487H
([1999] 2 All ER 42 at 47c) that:
“. . . I accept . . . that in a cause where there is an issue involving a public authority as to a
question of public law, your Lordships have a discretion to hear the appeal, even if by the time
the appeal reaches the House there is no longer a lis to be decided which will directly affect the
rights and obligations of the parties inter se.”
It is true that Lord Slynn immediately proceeded to confine this discretion to entertain an appeal,
where there is no longer a lis between the parties, to the area of public law and added that the
decisions in the Sun Life case and Ainsbury v Millington must accordingly be read as limited to
disputes concerning private law rights between the parties to the case (at 487H - 488A (WLR)
and 47c - d (All ER)).‟
[19] Although Brand JA went on to leave the point open – the court decided to
assume it could still exercise a discretion to hear the appeal and proceeded to
dismiss it under s 21A(1) – his reasoning set out above seems to me to be
unassailable, especially as in this case there is no issue involving „a public
authority as to a question of public law‟ but a dispute as to procedure.
Consequently, after the settlement, there was no „living issue‟ between the parties
and, in my view, this court could no longer entertain any of the issues that arose
before the settlement.
[20] I am aware of certain decisions, three in particular, that may arguably
support a contrary conclusion. Closer examination however shows that not to be
the case.
(a) The leading example is Sebola v Standard Bank 2012 (5) SA 142 (CC), but
as Maya JA points out in that matter there was in fact a live issue in
respect of costs still in dispute between the parties. Nothing further needs
be said about the decision in that case.
(b) In Land en Landbouontwikkelingsbank van Suid-Afrika v Conradie 2005 (4)
SA 506 (SCA) the appellant appealed against a high court order setting
aside an order granted by a magistrate evicting the respondent from
certain premises. The respondent vacated the property before the appeal in
this court was heard and to that extent allowing the appeal would have no
practical effect. This court, however, declined to dismiss the appeal under
s 21A(1), inter alia as the questions of law it raised were of importance. In
that case, too, however, the matter had not been settled and there were still
live issues between the parties, including the costs in the magistrates‟
court (the respondent had been ordered to pay such costs but that order
had been set aside by the high court) as well as the costs in the appeal
from the high court. This court was therefore called on under s 21(A)(1) to
exercise a discretion it had to determine issues that were still live and had
not been settled by the parties.
(c) In The Merak S: Sea Melody Enterprises SA v Bulktrans (Europe)
Corporation 2002 (4) SA 273 (SCA) the appellant, whose application to a
high court for a reduction of a bank guarantee provided to procure a ship‟s
release from attachment had been dismissed, appealed against that
decision to this court. The ship had been attached to provide security for
claims the respondent intended pursuing against the appellant in
arbitration proceedings in London. After the high court had granted leave
to appeal, it appeared that the respondent did not intend to proceed with
the arbitration proceedings and the appellant obtained an order from
another court that the guarantee it had provided be returned to it. Despite
this, and the fact that in these circumstances the appeal to this court
against the refusal to reduce the guarantee would have no practical effect,
this court heard the appeal and set aside the high court‟s order. It did so as
at the time of the high court‟s order and the granting of leave to appeal the
issues were „live‟ and the matter raised important questions of law that
frequently arise.25 Not only was there no settlement between the parties of
the dispute that was the subject of the appeal but, as in both the cases
previously mentioned, the costs that had been incurred on appeal was still
a live issue at the hearing of the appeal. And although the costs in the
court of first instance were not mentioned in the judgment of this court,
the appellant had been ordered to pay them as appears from the reported
judgment of the court a quo26, and that order was set aside by this court at
the end of the day. Thus in this case, too, the issue of costs was still live
issues between the parties when the matter came before this court.
[21] In the present case there are no live issues between the parties after the
settlement. This distinguishes the matter from all three of the decisions I have
mentioned, in each of which there had been no settlement after leave to appeal had
25 Para 4.
26 See Sea Melody Enterprises SA v Bulktrans (Europe) Corporation (The “Merak S”) [2000] 1 Lloyd’s
Rep 619 [SA Ct].
been granted and in which there were still live issues when the appeal came before
this court. They therefore throw no doubt upon the reasoning of Brand JA in Port
Elizabeth Municipality v Smit to which I have referred, and I have been unable to
find any other authorities that do. Whilst I accept that the views of Brand JA on
this issue were obiter, I see no reason not to follow them. Indeed I did not
understand counsel for the appellant to dispute that this court could not entertain
the appeal post settlement.
[22] Accordingly, in my view, once the parties settled, the litigation terminated
and there were thereafter no disputes between them upon which this court could
exercise its appellate jurisdiction. That being so, there was no room for this court
to exercise its discretion under s 21A(1) to dismiss the appeal as there was no
appeal before it to dismiss. All it could do was to remove the matter from its roll.
[23] In the light of what I have said, I am of the view that had the parties not
settled the action, this court would probably have refused to hear the appeal as the
order of the court below was not appealable. But in the light of their settlement
after leave to appeal had been granted, the litigation between them came to an end
and there was thereafter nothing for the court to adjudicate upon (including, for
that matter, any dispute as to whether the order was appealable or not). It is simply
for this reason that, in my view, the appeal had to be struck from the roll.
__________________
L E Leach
Judge of Appeal
APPEARANCES:
For Appellant:
LM Olivier SC (with FSG Seivers)
Instructed by:
Marais Muller Yekiso Inc., Cape Town
Symington De Kok, Bloemfontein
No appearance for the respondents
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 March 2014
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
ABSA BANK LIMITED v PETER JACOBUS JANSE VAN RENSBURG AND
OTHERS
The Supreme Court of Appeal (SCA) today, struck off the roll, an unopposed appeal
against the order of the Western Cape High Court, Cape Town, granting an order of
postponement.
The appellant (Absa) had launched action proceedings against the respondents in the high
court based on mortgage bonds registered in its favour over immovable properties
belonging to the respondents. The respective claims were commenced by way of simple
summonses to which copies of the relevant mortgage bonds and the deeds of suretyship
signed by the spouses of the respective owners were annexed.
In those proceedings, the high court had to decide whether or not it was necessary to attach
to the simple summonses the underlying credit agreements secured by the bonds and
suretyship agreements as had been required in some cases of that division. It decided that
it was necessary to do so and then postponed the matters sine die with no order as to costs
to afford Absa an opportunity to amend its summonses so as to refer to the underlying
credit agreements and annex them. It is the reason for the postponement order which is the
subject of this appeal.
Two preliminary issues arose for determination. One was whether this court should hear
the appeal at all in light of s 21A(1) of the Supreme Court Act 59 of 1959 (the Act). The
other is whether the matter is, in any event, appealable having regard to the nature of the
orders appealed against.
With regards to the first question, this court found that in these circumstances, Absa had
established no reason for this court to exercise its discretion in its favour and entertain the
merits of the appeal. With regards to the second, this court reiterated the trite fact that an
appeal lies against the substantive order made by the court and not the reasons for the
judgment and that the postponement order was therefore not appealable.
|
1406
|
non-electoral
|
2010
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 546/09
In the matter between:
KHOOSIAL SINGH Appellant
v
BMW FINANCIAL SERVICES (SA) (PTY) LTD First Respondent
SMG AUTO DURBAN (SA) (PTY) LTD Second Respondent
Neutral citation:
Singh v BMW Financial Services (546/2009) [2010] ZASCA
121 (30 September 2010).
Coram:
Mpati P, Cloete, Cachalia, Mhlantla JJA, Bertelsmann AJA
Heard:
13 September 2010
Delivered:
30 September 2010
Summary: Sale Agreement providing for motor vehicle to have a ‘year of
registration 2006’ – whether an essential term of the contract – Where an order
for restitution requires a seller to repay to the buyer the instalment payments
made under a sale agreement, mora interest is only payable on those
instalments paid pursuant to a legal obligation.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: KwaZulu-Natal High Court, Pietermaritzburg (Niles-Dunér,
K. Pillay JJ and Lopes AJ sitting as full court).
The following order is made:
1.
The appeal is upheld with costs.
2.
The order of the full court is set aside, and the following order is
substituted:
‘2.1
Save for the costs orders in paras 3, 4, 5 and 6, the order of the
court below is set aside.
2.2
The agreement between the applicant and the first respondent is
declared to be cancelled;
2.3
The applicant is directed to return to the first respondent the BMW
vehicle currently in his possession bearing registration letters and
numbers ND 595 676, by delivering it to the second respondent,
against payment in terms of paragraph 2.4.
2.4
The first respondent is directed to:
2.4.1 repay to the applicant the sum of R236 653.81, being the
initial payment the applicant made to it in terms of the
agreement together with interest at the rate of 15,5 per cent
per annum from 3 May 2007 to date of payment;
2.4.2 repay to the applicant the 16 instalments totalling
R127 552.11 paid to it before 3 May 2007 in terms of the
agreement together with interest at the rate of 15,5 per cent
per annum from 3 May 2007 to date of payment;
2.4.3 repay to the applicant all instalments paid by the applicant to
it in terms of the agreement after 3 May 2007, together with
interest at 15,5 per cent per annum from the date of this
judgment to the date of payment;
2.5
The first and second respondents are ordered jointly and severally
to pay the costs of the appeal.’
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Mpati P, Cloete, Mhlantla JJA, Bertelsmann AJA concurring):
[1] This appeal concerns a claim for restitution of monies paid and goods
delivered under an instalment sale agreement. The dispute arose when the
appellant, Mr Khoosial Singh, decided to buy a new BMW X5 4.41 automatic
motor vehicle, which he had seen on display at the premises of the second
respondent, a dealership trading as SMG Auto Durban (Pty) Ltd (‘SMG’) in
December 2005. He agreed with a sales-representative at SMG that the vehicle
would be ‘first registered’ in 2006, and was led to believe that the process of
registering the vehicle would happen in January 2006. When the vehicle was
delivered to Mr Singh, it transpired that it had previously been registered – more
than once – in 2005. Thus began the quarrel between the parties.
[2] The purchase price of the vehicle was agreed to be R609 850. Mr Singh
paid a deposit of R236 653.81, leaving a balance of some R373 000. To finance
the balance Mr Singh entered into an instalment sale agreement with the first
respondent, BMW Financial Services (Pty) Ltd (‘BMW’), which has its place of
business in Midrand, Gauteng. The document embodying the agreement was
completed by the sales representative at SMG and Mr Singh signed it on
22 December 2005. The agreement specified, as agreements of this nature
invariably do, that the finance house would retain ownership of the vehicle until
Mr Singh had met his obligations, which included settling the principal debt and
finance charges.
[3] The cover page of the three-page agreement included a description of the
make of the vehicle, details of the purchase price, its chassis and engine
numbers, registration (licence) number, and a reference to the ‘year of first
registration 2006’ ie the requirement that it be ‘first registered’ in 2006.
[4] Clause 2.2 of the agreement provided that SMG, which acted as the agent
for BMW Finance ‘for the purposes of delivery’, would deliver the vehicle to
Mr Singh within 30 days of the agreement being signed. On 31 December 2005,
nine days after the agreement was signed, the vehicle was delivered with
temporary licence plates to permit its usage for 21 days pending its registration.
[5] Early in January 2006, SMG realized that the vehicle had previously been
registered in 2005. It notified Mr Singh of this fact and undertook to rectify the
‘licensing error’ with the licensing office by reversing the prior registration. By
21 February 2006, despite Mr Singh having had several discussions with SMG
concerning the problem, it remained unsolved. Mr Singh decided to investigate
the matter himself and contacted the Pinetown Registering Authority to this end.
He discovered that the vehicle had been registered on three previous occasions
in 2005, on one occasion in SMG’s name.
[6] Mr Singh then consulted his attorney who, on 2 March 2006, wrote to
SMG demanding delivery of a vehicle, which accorded with the description of the
vehicle he had purchased – in particular one that was registered for the first time
in 2006. On 17 March 2006, after SMG had not responded to the letter,
Mr Singh’s attorney wrote another letter informing SMG that his client would not
renew the temporary permit, which had already been renewed several times and
was to expire on 20 March 2006. The letter went on to tender return of the
vehicle that had been delivered to Mr Singh and demanded that it be replaced.
Again, SMG did not respond. Two further letters to SMG on 1 and 3 April 2006
also failed to elicit a response.
[7] On 5 April 2006 Mr Singh queried the registration status of the vehicle with
the Motor Licensing Bureau of Windsor Park, Durban. He established that he had
been registered as the owner as of 4 April 2006 and that the vehicle’s current
licence number and two previous licence numbers bore no resemblance to the
licence number that appeared on the agreement. Importantly, a confirmation
certificate issued by the Bureau reflected the ‘date of liability for first licensing’ as
21 October 2005 and the vehicle’s status as ‘used’ even though he had
purchased it as ‘new’.
[8] On 21 April 2006 SMG informed Mr Singh that ‘the correct licensing had
now been received from the licensing department’. This was a reference to a new
Certificate of Registration that SMG had obtained from another licencing body,
the Umhlanga Rocks Registering Authority. The certificate reflected Mr Singh as
the owner, the ‘date of liability for first licensing (not year model)’ and the ‘date
liable for registration’ as 4 April 2006, and the status of the vehicle as ‘new’,
which contradicted the documentation that Mr Singh had acquired indicating that
the vehicle was used. The name of the title holder was given as ‘BMW Finanz
(Pty) Ltd Umhlanga Rock’ (sic) and the vehicle’s previous three licence numbers,
which I referred to in the previous paragraph, were also displayed on the
certificate.
[9] In summary Mr Singh was unhappy that:
(a)
the vehicle was ‘first registered’ in 2005 in the name of SMG and other
persons unknown to him before being registered in his name in 2006;
(b)
his investigations had revealed that the vehicle’s status was ‘used’
whereas the certificate that SMG had obtained from the Umhlanga Rocks
Registering Authority stated that the vehicle was ‘new’; and that
(c)
the registration (licence) number on the agreement differed from any of
the vehicle’s previous licence numbers.
[10] He now believed that the vehicle that had been delivered to him was not
the one he had contracted for. So he instituted proceedings in the Durban High
Court against BMW and SMG on 11 May 2006 in which he sought an order for
specific performance, namely delivery of a new BMW X5 4.41 automatic motor
vehicle, first registered in the year 2006, and bearing the same registration
number as reflected in the sale agreement. On 13 June 2006, to protect itself
against any possible wrongdoing on the part of its agent SMG, BMW served a
third party notice on SMG claiming a contribution and indemnification from it.
SMG did not oppose this application. On 27 June 2006 BMW filed its answering
affidavit. Its answer to Mr Singh’s claim for specific performance was that he had
contracted for a ‘used’ vehicle registered in 2006 and this is what he had
received. To support its stance that the vehicle was a used one it attached an
invoice from SMG dated 9 January 2006 indicating as much. And it also denied
that it was the title holder of the vehicle because the registration certificate
identified the title holder incorrectly as being ‘BMW Finanz (Pty) Ltd Umhlanga
Rock’ (sic) instead of ‘BMW Financial Services (Pty) Ltd’, which has its place of
business in Midrand, Gauteng. In his replying affidavit, which is dated 25 July
2006, Mr Singh expressed astonishment that it was now being alleged that he
had not bought a new vehicle.
[11] On 18 January 2007 SMG filed its answering affidavit. Regarding the
vehicle’s multiple registrations, it explained that the vehicle had initially been
erroneously registered in the name of another customer, a Mr Merrick, on
21 October 2005 with the licence number ND 164772. When the error was
detected the vehicle was re-registered in its name on 27 October 2005 under a
different licence number. The vehicle remained part of SMG’s stock. Thereafter
one of SMG’s directors arranged for the new registration number to be allocated
to another vehicle. This meant that the vehicle had to be re-registered yet again –
this time under another licence number. It had thus been registered three times.
SMG states that its salesman who sold the vehicle to Mr Singh was unaware of
this history. In summary SMG’s defence, in contrast to the stance adopted by
BMW, was that the vehicle was new and registered in 2006 (having been
erroneously registered previously). However, when the matter came to be argued
in the high court, BMW accepted SMG’s facts and also did not persist with its
denial that it was not the title holder of the vehicle.
[12] SMG does not, however, explain how its invoice to BMW dated 9 January
2006 came to describe the vehicle as ‘used’. Nor does it explain the origin of the
licence number on the agreement, which differs from all the vehicle’s other
licence numbers.
[13] A year after Mr Singh had instituted proceedings the matter had not yet
been heard, and it was no longer possible for the respondents to comply with an
order for specific performance. So, Mr Singh amended his notice of motion. He
now sought a declaration that the agreement was of no force and effect. He
tendered return of the vehicle in his possession and claimed repayment of the
monies he had paid thus far.
[14] The high court (Rowan AJ) granted the relief claimed. The learned judge
found that having been registered on three previous occasions in 2005 the
vehicle was thereafter not capable of being ‘first registered’ in April 2006. He also
held that, because the registration requirement was an essential term of the sale
agreement, Mr Singh had not received the vehicle for which he had contracted.
And it followed, the judge said, that as specific performance was no longer
possible, the appellant was entitled to cancel the contract and assert his right to
claim restitution. However, the full court, sitting in Pietermaritzburg, (Niles-
Dunér J, K. Pillay J and Lopes AJ concurring) reversed that order. Mr Singh now
comes on further appeal with special leave of this court.
[15] The full court approached the matter differently to the high court. First, it
considered that Mr Singh had entered into two contracts: the sale agreement with
BMW for the purchase of the vehicle, and the oral agreement with SMG in terms
of which the latter undertook to register the vehicle on his behalf. And since, in its
view, the contracts were severable, if there was a breach of the oral agreement
this had no bearing on the sale agreement. Accordingly, so it held, there was no
legal basis for Mr Singh to resile from the sale and to claim restitution. Secondly,
it said that even if it was a term of the contract between Mr Singh and BMW that
the vehicle was to be ‘first registered’ in 2006, the certificate was procured in
April of that year. So, it held that the obligation had been fulfilled. Thirdly, the
date of registration, said the full court, had no bearing on the vehicle’s intrinsic
characteristics or qualities, but only on its value. It thus concluded that if the date
of first registration was an essential element of the contract Mr Singh received
what he had contracted for. Finally, it held that even if he did not get what he
contracted for his claim was limited to one for damages against SMG for beach
(of the second contract) – a claim, said the court, he had not and could not make
in these proceedings. The full court accordingly set aside the decision of the high
court and dismissed the claim. It will be convenient to deal with the issues in the
same sequence as the full court did.
[16] I turn to consider the first question, whether the requirement that the
vehicle was to be ‘first registered’ in 2006 was a term of the sale agreement, or a
separate severable oral agreement or arrangement between Mr Singh and SMG.
In finding that there were two agreements the full court reasoned that even
though the description of the vehicle in the sale agreement included a reference
to the year of registration, once the vehicle had been delivered to Mr Singh on
31 December 2005, BMW’s obligation under the sale agreement came to an end.
All that remained were the registration formalities to be undertaken by SMG
afterwards. Moreover, said the full court, because the sale agreement contained
a non-variation clause, there was no room to import a term relating to the
registration of the vehicle into it.
[17] I am unable to agree with the full court in this respect. It was an express
term of the sale agreement that the vehicle which SMG was to deliver to
Mr Singh would be ‘first registered’ in 2006. That much is clear on the face of the
contract itself. As the seller’s agent ‘for purposes of delivery’ SMG was thus
required to deliver a motor vehicle, which bore the registration details provided
for in the sale agreement or was capable of being registered so that it would. I
accept that the delivery of the vehicle and the registration certificate did not have
to take place simultaneously. But this does not mean that SMG had a separate
agreement with Mr Singh concerning the delivery of the certificate. SMG
remained the seller’s agent and was obligated to deliver to the buyer the vehicle
and certificate of registration as contemplated by the sale agreement. There was,
therefore, only one agreement – the sale agreement between Mr Singh and
BMW.
[18] As to whether the term was in any event fulfilled, as the full court found it
had been, by the delivery of the certificate of registration in April 2006 purporting
to show that the vehicle was registered on 4 April 2006, I also respectfully
disagree. Apart from the fact that I have serious reservations regarding the
circumstances of how SMG procured this certificate, and the three-month delay
in doing so, which was not explained, the certificate does not accord with the
common cause facts: The printed certificate has a standard line, which provides
for a ‘date liable for registration’. The date that was filled in, in the space
provided, was 4 April 2006. There is no explanation in the affidavits what the
‘date liable for registration’ refers to, but whatever it means, it does not indicate
that it is the date of ‘first registration’. That much is clear as the certificate allows
for the registration date of both new and used vehicles to be filled in this space.
Furthermore, the certificate provides for the vehicle’s last three licence numbers
to be filled in. This indicates that a vehicle could have had previous licence
numbers and, therefore, a prior registration history. The certificate reveals that
the vehicle in question indeed had three previous licence numbers, none of
which is the number appearing on the sale agreement.
[19] Mr Marnewick, who appeared for both respondents, submitted, though
somewhat faintly, that the errors in the registration had been explained and that
the date 4 April 2006 reflected what the parties had agreed. It may be that the
initial registration in the name of Mr Merrick was done in error. But the vehicle
was thereafter registered twice in 2005 – ‘deliberately and intentionally’, as
Rowan AJ correctly found in the high court. The certificate does not reflect the
true facts. In the circumstances it clearly does not comply with the requirement
that the vehicle was to be ‘first registered’ in 2006.
[20] There are two other troubling aspects arising from the certificate. The
status of the vehicle is described as ‘new’. But the respondents do not provide
any explanation why the receipt from SMG to BMW on 9 January 2006 indicates
that the vehicle was ‘used’. Indeed in its answering affidavit BMW relied on the
very receipt to support its assertion that Mr Singh bought the vehicle as ‘used’.
BMW also initially disavowed the certificate asserting that it was not the title
holder of the vehicle described therein. For present purposes, because of the
rule that in application proceedings the facts averred by the respondents must be
accepted, I accept that the vehicle was purchased as new. But this does not
detract from the fact that BMW made false assertions, on oath, without verifying
the true facts. Its conduct in this regard was reprehensible.
[21] Once it is found, as I have, that the ‘year of first registration 2006’ was an
essential term of the contract it follows that delivery of the vehicle, which did not
meet this requirement, was not in accordance with the terms of the sale
agreement. BMW’s failure therefore meant that it was in breach of the contract.
[22] This brings me to the third issue, whether the breach related to the
intrinsic qualities of the vehicle or, put another way, went to the root of the
contract. If not, as the full court found, Mr Singh was only entitled to claim
damages to compensate him for the shortcomings. This would be the situation
where the breach did not affect the substance of what the buyer expected to
receive.
[23] Again, I must respectfully join issue with the approach of the full court. The
view I take of the contract and of the common cause facts is that Mr Singh
wanted to purchase and was promised a particular vehicle, which was new, and
which had to be registered for the first time in 2006 – probably to secure some
financial advantage in the event he decided to sell the vehicle. It may be that
some would consider the requirement of ‘first registration’ to be trifling. But this is
immaterial. If this term was important to the parties, as it was in this case, BMW
was obliged to comply. It failed to and this entitles Mr Singh to resile from the
contract and to claim restitution.
[24] After the dispute arose Mr Singh continued to perform his obligations
under the contract by meeting his instalment payments as and when they
became due under the agreement. When the matter was argued before us on
13 September 2010 we were informed that only one instalment remained. He
also tendered return of the vehicle on 17 March 2006. We were told that it
remains unused and is parked in his garage.
[25] I turn to consider what the appropriate order should be. The parties
agreed that in the event that the appeal succeeded the costs orders of the court
of first instance should be reinstated. They also concurred that BMW must repay
all the monies that Mr Singh has paid in terms of the agreement against the
return by him of the vehicle that was delivered to him. They, however, disagreed
on what mora interest should be paid.
[26] Ms Julyan, who appeared for Mr Singh, submitted that he is entitled to
repayment of the sum of R236 653.81 being the initial payment made in terms of
the agreement on 22 December 2005 together with interest thereon at the rate of
15,5 per cent calculated from this date to the date of payment; and also to
repayment of all instalments paid by Mr Singh, at the same rate of interest,
calculated from the date of such payment to the date of repayment. Ms Julyan
cites no authority to support her contention. Mr Singh initially sought an order for
specific performance and cancelled the agreement only on 3 May 2007. He is,
therefore, not entitled to mora interest before this date. So, in respect of the initial
payment of R236 653.81 and the 16 instalment payments made until then,
totalling R127 552.11, mora interest is payable only from 3 May 2007. The total
of the two amounts in respect of which mora interest is payable as from 3 May
2007 is therefore R364 205.92.
[27] Concerning the payments made after cancellation of the contract,
Ms Julyan submitted that Mr Singh is entitled to interest on these payments from
the date of payment to the date of repayment. This is, so the submission went,
because the payments were made ‘as a matter of commercial reality . . . under
protest’. I am not sure what this means but once the contract had been
cancelled, Mr Singh was under no legal obligation to continue making instalment
payments totalling R460 866.05. He is therefore only entitled to claim interest on
this amount from the date of this judgment to the date of repayment.
[28] There remain two other matters. The first relates to whether this court
should order the costs of senior counsel because the Taxing Masters in the high
courts of Pietermaritzburg and Durban apparently refuse to allow such costs
unless specifically ordered to. I accept that this matter involved some complexity
and it was prudent for both parties to engage the services of senior counsel. But
this court does not make orders stipulating that the costs should include the costs
of senior counsel, and the Uniform Rules of Court make no provision for such an
order.
[29] The second issue concerns the condition of the vehicle when it is
returned. Mr Marnewick submitted that an order for the return of the vehicle
presupposes that Mr Singh is able to restore possession in an undamaged and
unused condition, save for its use before the agreement was cancelled. I do not
agree that such an order is competent. Once the agreement was cancelled, and
restitution was sought, the risk of the deterioration of the vehicle’s condition
passed to BMW. It must now take possession of the vehicle in the condition that
it finds it, subject of course to Mr Singh not having used it, after the contract was
cancelled.
[30] The following order is made:
1.
The appeal is upheld with costs.
2.
The order of the full court is set aside, and the following order is
substituted:
‘2.1
Save for the costs orders in paras 3, 4, 5 and 6, the order of the
court below is set aside.
2.2
The agreement between the applicant and the first respondent is
declared to be cancelled;
2.3
The applicant is directed to return to the first respondent the BMW
vehicle currently in his possession bearing registration letters and
numbers ND 595 676, by delivering it to the second respondent,
against payment in terms of paragraph 2.4.
2.4
The first respondent is directed to:
2.4.1 repay to the applicant the sum of R236 653.81, being the
initial payment the applicant made to it in terms of the
agreement together with interest at the rate of 15,5 per cent
per annum from 3 May 2007 to date of payment;
2.4.2 repay to the applicant the 16 instalments totalling
R127 552.11 paid to it before 3 May 2007 in terms of the
agreement together with interest at the rate of 15,5 per cent
per annum from 3 May 2007 to date of payment;
2.4.3 repay to the applicant all instalments paid by the applicant to
it in terms of the agreement after 3 May 2007, together with
interest at 15,5 per cent per annum from the date of this
judgment to the date of payment;
2.5
The first and second respondents are ordered jointly and severally
to pay the costs of the appeal.’
____________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
APPELLANTS:
J A Julyan SC
Instructed by Gounder & Associates, Durban
Claude Reid Inc, Bloemfontein
RESPONDENT:
C G Marnewick SC (1st and 2nd respondents)
Instructed by John Hudson Attorneys, Durban
Lovius Block, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 September 2010
Status:
Immediate
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.
* * *
SINGH V BMW FINANCIAL SERVICES
The Supreme Court of Appeal (SCA) today held that a term in a sale agreement that
a motor vehicle be ‘first registered in 2006’ was an essential term of the contract.
This meant that if the seller did not comply with this term it was in breach of the
contract.
The full court of the Pietermaritzburg High Court had held that the term was not an
essential term of the contract between the seller (BMW Financial Services) and the
purchaser (Mr Khoosial Singh). It reasoned that the term relating to the registration
of the motor vehicle was a term of the separate contract of services between BMW’s
agent, SMG Auto and Mr Singh, and that it could not be imported into the contract
of sale between BMW and Mr Singh.
The SCA held that there was only one contract, ie between BMW and Mr Singh, and
that the term was an express term of the contract. It held that because BMW had
failed to deliver a motor vehicle which had to be first registered in 2006, it had
breached the contract and that Mr Singh was entitled to resile from the contract and
claim restitution of the payments he had made. It ordered BMW to repay Mr Singh
the payments he had already made against the return of the motor vehicle by Mr
Singh.
|
443
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20625/2014
In the matter between:
ADCOCK INGRAM INTELLECTUAL
First Appellant
PROPERTY (PTY) LTD
ADCOCK INGRAM HEALTHCARE (PTY) LTD
Second Appellant
and
ACTOR HOLDINGS (PTY) LTD
Respondent
Neutral citation: Adcock Ingram Intellectual Property (Pty) Ltd v Actor Holdings
(Pty) Ltd (20625/14) [2016] ZASCA 41 (24 March 2016)
Coram:
Maya AP, Tshiqi, Wallis, Saldulker and Mbha JJA
Heard:
25 February 2016
Delivered: 24 March 2016
Summary: Trade Marks Act 194 of 1993 – s 21 read with s 45(3) thereof empowers
the Registrar of Trade Marks to condone the late filing of opposition to
an application for the registration of a trade mark and extend the three
month period prescribed for the filing of opposition.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: North Gauteng Division of the High Court, Pretoria (LI Vorster
AJ sitting as a court of first instance):
1 The appeal is upheld with costs including the costs of two counsel.
2 The matter is remitted to the North Gauteng Division of the High Court, Pretoria
for determination of the condonation application and the merits of the opposition.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Maya AP (Tshiqi, Wallis, Saldulker and Mbha JJA concurring):
[1] The crisp issue in this is appeal is whether the Registrar of Trade Marks (the
Registrar) has the power to condone the late filing of opposition to an application for
the registration of a trade mark and extend the opposition period, where such an
extension is requested after the expiry of the three month opposition period prescribed
in s 21 of the Trade Marks Act 194 of 1993 (the Act). The appellants appeal, with
leave of this court, against the decision of the North Gauteng Division of the High
Court, Pretoria (LI Vorster AJ). The court a quo dismissed their opposition to the
respondent’s application for the registration of trade mark number 2010/11953
LENTOGESIC, in class 5, in its name.
[2] The appellants are companies within the Adcock Ingram Group of Companies, a
leading South African healthcare group that develops, manufactures, markets and
distributes a wide range of h8ealthcare products in South Africa and the export market.
The first appellant, Adcock Ingram Intellectual Property (Pty) Ltd, is an intellectual
property holding company which owns most of the intellectual property used in the
Adcock Ingram Group of Companies. It was also the registered proprietor in South
Africa of trade mark registration no 1968/00213 LENTOGESIC in class 5 in respect of
analgesic preparations since 1968. The second appellant, Adcock Ingram Healthcare
(Pty) Ltd, is a manufacturer and distributor of pharmaceutical products. It uses the
trade mark LENTOGESIC under licence from the first appellant. The respondent,
Actor Holdings (Pty) Ltd is a South African holding company of a pharmaceutical
company, Actor Pharma (Pty) Limited.
Background
[3] On 23 February 2009 the first appellant’s LENTOGESIC trade mark
registration was removed from the trade mark register by reason of non-renewal.
According to the first appellant the non-renewal of its trade mark registration, which it
always intended to renew, was not due to its mistake but was caused by an
administrative error. That is hardly surprising because it had used the mark on various
products for over 40 years and there was no apparent reason for it to abandon it. The
appellants became aware of the lapse when they were served with a written notice
from the respondent’s attorneys, on 8 January 2013. The notice advised that the
respondent had applied for the LENTOGESIC trade mark with the intention to
‘commercially exploit [it] in earnest in early 2013’. The respondent also demanded that
the appellants cease all use of the trade mark and forthwith remove all LENTOGESIC
products from the market and trade.
[4] As it turned out, the respondent had lodged its trademark registration application
on 4 June 2010. The application was accepted by the Registrar on 10 July 2012 and
thereafter advertised for opposition purposes in the Patent Journal dated 29 August
2012.1 In response to the respondent’s notice, the appellants claimed the trade mark as
theirs. They pointed out that they were unaware of its lapse and would apply to have it
reinstated. (An application to restore the trade mark registration was indeed filed
around the time of the institution of these proceedings.) They demanded the withdrawal
of the respondent’s application failing which they would challenge the respondent’s
use of the trade mark in passing-off proceedings as they believed that it was likely to
deceive or confuse consumers.
[5] The appellants filed their opposition application in the Tribunal of the Registrar
of Trade Marks on 11 January 2013. They sought an order refusing the respondent’s
trademark registration and ancillary relief. They contended, inter alia, that the
respondent’s application was mala fide, because it was lodged in the full knowledge of
the appellants’ proprietorship of an identical, prior and well-established trade mark, in
relation to the same goods for which the respondent sought registration, in breach of ss
10(3) and 10(4) of the Act.2 The appellants also sought the Registrar’s condonation of
1 In terms of s 16(1) and (2) of the Act governing the procedure for applications for registration which ‘shall be made to the
registrar in the prescribed manner’ whereafter ‘[s]ubject to the provisions of th[e] Act, the registrar shall … accept … the
application.’ Section 17 of the Act requires that ‘[w]hen an application for registration of a trade mark has been accepted,
the applicant shall, as soon as may be after acceptance, cause the application as accepted to be advertised in the prescribed
manner.’
2 These provisions respectively prohibit the registration of trade marks ‘in relation to which the applicant for registration has
no bona fide claim to proprietorship’ and ‘a mark in relation to which the applicant for registration has no bona fide
intention of using it as a trade mark, either himself or through any person permitted or to be permitted by him to use the
mark as contemplated by section 38’.
their late opposition which ought to have been filed within three months of the
application’s publication in the Patent Journal ie by 29 November 2012.
[6] The respondent opposed the appellants’ proceedings. It contended that it
brought its trade mark registration application more than 15 months after the removal
of the appellant’s trade mark registration from the trade marks office register. It also
accused the appellants of wilful neglect of their trade mark registration and gross
neglect and ineptitude in dealing with the trade mark by failing to inspect the Patent
Journal and the trade mark register and ignoring renewal reminders and renewal
notifications issued by the Registrar which, the respondent argued, led to the lapse of
their trade mark.
[7] The Registrar did not adjudicate the opposition application. Instead, she
transferred it for hearing to the court a quo in terms of s 59(2) of the Act which allows
that procedure.3 A day before the hearing of the application, the respondent raised a
point in limine that it was not legally competent for the Registrar to condone the late
filing of the opposition where an extension of the opposition period was not requested
before the expiry of the stipulated three month period because the Act does not permit
it. The court a quo upheld the point in limine and accordingly dismissed the appellants’
condonation application on this basis without considering the merits of the dispute.
3 Section 59(2) reads, for relevant purposes: ‘Where proceedings in terms of section 21 … are pending before the Registrar,
the Registrar may in his discretion refer the proceedings to the court, and shall refer the proceedings to the court on written
application of all the parties to such proceedings.’
[8] The court a quo reasoned that s 45(3) of the Act, read with regulations 52(1)
and (3) of the Trade Marks Regulations (the regulations),4 did not ‘provide authority
for the proposition that a late objection can be condoned lawfully by the Registrar of
Trade Marks’. According to the court, s 29(1) of the Act read with regulation 52(1)
made it clear that an ‘objector to the registration of a trade mark has to request the
Registrar not to register the trade mark when requested to do so before the expiry of
the term within which opposition can be lodged’ otherwise ‘the Registrar has no option
but to refrain from issuing a certificate of registration’ for a further period. In the
court’s view s 45(3) read with regulation 52(1) authorised the extension of the period
for opposing registration but only if the request was made before its expiry. And s
29(1)(a) limits this power otherwise ‘the Registrar could never register a trade mark
when Section 29(1)(a) has been complied with, as, in terms of Section 45(3) read with
Regulation 52(3) that trade mark could, at any time after registration of the trade mark
be overturned and opposed [which is] clearly an absurd result and cannot have been
the intention of the legislature.’ The court concluded that the time limit within which
the appellants could lawfully oppose the trade mark registration had expired and could
not be extended.
Further evidence on appeal
4 The Trade Mark Regulations, GN R578, GG 16373, 21 April 1995. Regulation 52 deals with requests and applications
for extension of time and condonation and provides as follows:
‘(1) Any person interested in opposing a trade mark application may request the Registrar, on written notice before the
expiry of the term in which the enter opposition to the application in terms of section 21, not to issue the certificate of
registration for a period of three months from the date of expiry of the aforementioned term, and the Registrar shall not do
so.
(2) In the absence of an agreement between the parties the Registrar may, upon application on notice in terms of regulation
19(4) and on good cause shown, make an order extending or abridging any time prescribed by these regulations or by an
order of the Registrar or fixed by an order extending or abridging any time doing any act or taking any step in connection
with any proceedings of any nature whatsoever upon such terms as to him seems meet.
(3) Any such extension may be ordered although the application is not made until after the expiry of the time prescribed or
fixed, and the Registrar, when ordering any such extension, may make such order as to the recalling, varying or cancelling of
the results flow from the terms of any order or from these regulations.’
[9] On appeal before us, the appellants sought to lead further evidence. It was
submitted on their behalf that the failure to present it in the court a quo was not as a
result of lack of reasonable diligence on their part. They did not adduce it because they
could not have foreseen the objection in limine, which was not raised in the
respondent’s papers and was brought up very late, well out of the time of the filing of
heads (which the respondents did not even file) as prescribed by the practice directives
of the court a quo. It was argued that the evidence was admissible and material to the
issue on appeal.5 Furthermore, the interests of justice demanded its admission because
the decision of the court a quo affected not only the parties but the public at large,
including the manner in which the office of the Registrar of Trade Marks functions.
[10] The evidence sought to be placed before us was an affidavit deposed to by Ms
Fleurette Coetzee, the Trade Marks Senior Manager in the Companies and Intellectual
Property Commission, who fulfils the functions of the Registrar. It was meant to prove
the manner in which the Registrar has, since 1991, interpreted and applied the
provisions of the Act (and its predecessor, the Trade Marks Act 62 of 1963) and the
regulations promulgated thereunder, particularly in relation to the registrar’s powers to
condone non-compliance with time frames prescribed by the Act and the manner in
which the Registrar dealt with applications for extension of the opposition term. We
were urged to admit the affidavit on the strength of authorities which have held that
where an interpretation to be placed on a statute is not clear from its wording, the
manner in which it has been applied by the administering authority can give guidance
5 Botha v Regional Magistrate Cox NO & another [2009] ZASCA 42; [2009] (3) All SA 373 (SCA) para 13; De
Aguiar v Real People Housing (Pty) Ltd [2010] ZASCA 67; 2011 (1) SA 16 (SCA) para 12.
to its meaning.6 However, we dismissed the application (with costs) as we considered
the evidence sought to be introduced irrelevant in the view we take of the matter.
The issue on appeal
[11] Turning to the issue on appeal, the Act provides for opposition to an application
for the registration of a trade mark in s 21. In terms of these provisions, ‘[a]ny
interested person may, within three months from the date of the advertisement of an
application in terms of section 17 or within such further time as the registrar may
allow, oppose the application in the manner prescribed.’ Section 45(3) of the Act,
upon which the appellants relied for their condonation application, provides that
‘[w]henever by this Act any time is specified within which any act is to be performed
or thing is to be done by any person, the registrar may, on application by that person
and unless otherwise expressly provided extend the time either before or after its
expiration’.
[12] It was argued on the respondent’s behalf that these provisions did not permit the
condonation sought by the appellants. Section 45(3) was juxtaposed with ss 20(1) and
(2) of the Act7 which also fix time frames within which an applicant for the registration
of a trade mark must respond to the Registrar’s notice of a non-completed application
and, in addition to such time frames, also permit ‘such further time as the registrar may
6 See for example, Dinkel v Union Government 1929 AD 150 at 165; University of Pretoria, Adams & Adams and South
African Institute of Intellectual Property Law v Registrar of Patents 2002 BIP 68 (T) at 75F.
7 These provisions read:
‘20
Non-completed applications
(1)
If, by reason of default on the part of the applicant, after acceptance of the application, the registration of a trade
mark has not been completed within six months from the date of such acceptance, the Registrar shall give notice of the non-
completion to be applicant, and, if at the expiration of two months from that notice or of such further time as the Registrar
may allow, the registration is not completed, the application shall be deemed to have been abandoned.
(2)
If the application is refused or is conditionally accepted and the applicant, having been advised of the Registrar’s
objection to the application, or of his conditions for acceptance, fails to take such steps as are available to him under this Act
within three months of the date of such advice, or such further time as the Registrar may allow, the application shall be
deemed to have been abandoned.’
allow’ before the application is deemed to have been abandoned. It was contended
that these provisions stipulate default time frames or such times as may be allowed by
the Registrar. They do not envisage an extension of the default time frames, as a time
period that has expired cannot be extended, and s 45(3) conferred no discretion on the
Registrar to do so.
[13] Thus, so continued the respondent’s argument, a late attempt to oppose cannot
prevent the registration of a trade mark, which the Registrar will have accepted under s
16(2) of the Act even before the advertisement of the accepted application under s 17
thereof. And to achieve finality and certainty, the Act rather makes provision for
various ways in which a registered trade mark may be expunged from the register – (a)
under s 53;8 (b) by rectification of entries in the register by the Registrar or a court in
terms of s 24;9 and (c) by removal from the register by a court or the Registrar on
ground of non-use under s 27. Accordingly it was submitted that there were other
remedies available to the appellants once the mark had been registered in the name of
the respondent. Moreover, s 29(1) of the Act, which makes no reference at all to the
Registrar’s power to extend the opposition period but merely deals with the
consequences where there is no opposition, clearly limited the Registrar’s power set
out in ss 21 and 45(3). Reference was also made to the European Union’s Directive on
the Harmonisation of Trade Marks laws. This has been applied by the United
Kingdom, upon whose legislation South African trade marks law was based. To that
8 Which provides for ‘recourse to court, and appeals’ and reads in relevant part as follows:
‘(1) Without derogating from the provisions of subsection (2), any person aggrieved by any decision or order of the
Registrar may, within a period of three months after the date of any such decision or order, apply to the Transvaal Provincial
Division of the Supreme Court [renamed the Gauteng Division of the High Court] for relief, and the said court shall have the
power to consider the merits of any such matter, to receive further evidence, and to make any order as it may deem fit.’
9 Section 24(1) provides that: ‘In the event of non-insertion in or omission from the register of any entry or of an entry
wrongly made in or wrongly remaining on the register, or of any error or defect in any entry if the register, any interested
person may apply to the court or, at the option of the applicant and subject to the provisions of s 59, in the prescribed
manner, to the Registrar, for the desired relief, and thereupon the court or the Registrar, as the case may be, may make such
end we were referred to similar statutory provisions in various foreign jurisdictions
which do not allow extensions of the period of opposition on a request made after the
expiry of the statutory period, except in ‘a limited and well-defined sense’. To allow
what the appellants sought would serve to protract the registration process indefinitely,
arbitrarily and cause uncertainty contrary to the legislature’s intention.
[14] In my view, the respondent’s contentions not only ignore the express wording of
the relevant provisions but render the provisions of s 45(3) of the Act superfluous.
There is no ambiguity either in s 21 or s 45(3). They mean precisely what they say.
The ordinary wording of s 21 places no limitation on the Registrar’s power to extend
the opposition period. Section 45(3), in the plainest of terms, governs ‘any time’
specified in the Act ‘within which an act is to be performed’ and empowers the
Registrar to extend that time, here the three-month period prescribed for the lodging of
opposition to an application for the registration of a trade mark, either before or after
its expiration, unless otherwise expressly provided. Neither the argument nor the
judgment of the court a quo paid any attention to the requirement that the power in s
45(3) could only be limited if it was ‘otherwise expressly provided’. It cannot be
restricted or limited unless there is an express provision saying it will not apply in a
particular situation. A limitation by implication is not what s 45(3) contemplates.
[15] Section 29(1), which forms part of a suite of provisions dealing with registration
and its effects, has no limiting effect on the Registrar’s power to extend the opposition
as found by the court a quo. It reads:
‘(1) When an application for registration of a trade mark has been accepted and advertised in the
prescribed manner and either–
(a) the application has not been opposed and the time for notice of opposition has expired; or
order for making, removing or varying the entry as it or he may deem fit.’
(b) the application has been opposed and has been granted,
the registrar shall register the trade mark as on the date of the lodging of the application for
registration, and that date shall, subject to the provisions of section 63, for the purposes of this Act
be deemed to be the date of registration: Provided that where it appears to the registrar, having
regard to matters which came to his notice after acceptance of an application, that the trade mark has
been accepted in error, he may withdraw the acceptance and proceed as if the application had not
been accepted.’
[16] To my mind, what these provisions seek to do is merely to mark the date of
registration, where there has been no successful opposition thereto, as the date when
the application was lodged unless the application was erroneously accepted, in which
case the acceptance will simply be withdrawn. Clearly, the words ‘the time for notice
of opposition’ in s 29(1)(a) necessarily include an extension of that time. The ‘absurd
result’ adverted to by the court a quo on this interpretation has no basis. Once the
Registrar has issued the registration certificate in respect of a trade mark application,
she becomes functus officio and cannot withdraw it even where it was issued in error.
An affected party would, in those circumstances, have to approach and satisfy the
Registrar or the court that it was proper to rectify the register accordingly in terms of
s 24 of the Act.10
[17] The Court a quo committed a cardinal error, which led to its misinterpretation of
the Registrar’s powers, by impermissibly using regulations (which it incidentally also
misconstrued), in particular regulation 52, as an aid to interpret the provisions of the
Act.11 I find nothing arbitrary, unlawful or unreasonable about the above reading
10 Colgate Palmolive Co v Smith Kline Beecham PLC & another 2004 BIP 122 (T); The Open Africa Initiative v Izinyawo
Productions (Pty) Ltd t/a Richard Loring Enterprises 2004 BIP 13 (RTM); Home Hyper City (Pty) Ltd v Homemark (Pty)
Ltd 2003 BIP 67 (RTM) at 70A.
11 Moodley & others v Minister of Education and Culture, House of Delegates & another 1989 (3) SA 221 (A) at 233E-F;
Minister of Health & another NO v New Clicks South Africa (Pty) Ltd & others (Treatment Action Campaign & another
as Amici Curiae) [2005] ZACC 14; 2006 (2) SA 311 (CC) para 446; National Lotteries Board v Bruss NO & others
[2008] ZASCA 167; 2009 (4) SA 362 (SCA); Rossouw & another v Firstrand Bank Ltd [2010] ZASCA 130; 2010 (6)
SA 439 (SCA) para 24.
of ss 45(3) and 29(1)of the Act. This is particularly so bearing in mind that the Act
vests the Registrar with ‘all such powers and jurisdiction as are possessed by a single
judge in a civil action’ in connection with any proceedings before her.12 She is
obviously enjoined to exercise her discretion lawfully in considering an extension
application. And some foreign jurisdictions such as the Australia and New Zealand do
allow the extension of the opposition period albeit in limited circumstances as
acknowledged by the respondent itself. The appellants’ condonation application should
not have been dismissed and the appeal must succeed.
[18] Accordingly, the following order is made:
‘1 The appeal is upheld with costs including the costs of two counsel.
2 The matter is remitted to the North Gauteng Division of the High Court, Pretoria
for determination of the condonation application and the merits of the opposition.
____________________
MML Maya
Acting President
12 In terms of s 45(1) of the Act.
APPEARANCES
Appellant:
R Michau SC (with I Joubert)
Instructed by:
Spoor & Fisher Attorneys, Pretoria
Phatshoane Henney Inc., Bloemfontein
Respondent:
A Subel SC (with O Salmon SC)
Instructed by:
Fluxmans 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
24 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.
Adcock Ingram Intellectual Property (Pty) Ltd v Actor Holdings (Pty) Ltd
(20625/14) [2016] ZASCA xx (24 March 2016)
The Supreme Court of Appeal today upheld an appeal brought against the North Gauteng
Division of the High Court, Pretoria. The respondent was ordered to pay the costs of the
appeal including the costs of two counsel and the matter was remitted to the high court for
the determination of (a) the appellants’ application for condonation of their late opposition to
the respondent’s application for the registration of a trade mark number 2010/11953
LENTOGESIC, in class 5, in its name, and (b) the merits of such opposition.
The SCA held that s 21 read with s 45(3) of the Trade Marks Act 194 of 1993 empowers the
Registrar of Trade Marks to condone the late filing of opposition to an application for the
registration of a trade mark and extend the three month period prescribed for the filing of
opposition.
--- ends ---
|
3669
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 556/2020
In the matter between:
NIMBLE
INVESTMENTS
(PTY)
LTD (FORMERLY KNOWN AS
TADVEST INDUSTRIAL (PTY) LTD
AND OLD ABLAND (PTY) LTD)
APPELLANT
and
JOHANNA (ELSIE) MALAN
FIRST RESPONDENT
DOROTHY MALAN
CHARMAINE MALAN
MOSES MALAN
JACOBUS MALAN
LIZA PLAATJIES
REDEWAAN BOTHA
ASHLEY MALAN
SECOND RESPONDENT
THIRD RESPONDENT
FOURTH RESPONDENT
FIFTH RESPONDENT
SIXTH RESPONDENT
SEVENTH RESPONDENT
EIGHTH RESPONDENT
THOSE PERSONS UNLAWFULLY
OCCUPYING COTTAGE NO. 5,
TOPSHELL PARK BADEN
POWELL ROAD, LYNEDODOCH,
STELLENBOSCH, WITH OR
UNDER, FIRST TO EIGHT
RESPONDENTS
STELLEBOSCH MUNICIPALITY
DEPARTMENT OF RURAL
DEVELOPMENT AND LAND
REFORM
NINTH RESPONDENT
TENTH RESPONDENT
ELEVENTH RESPONDENT
Neutral citation: Nimble Investments (Pty) Ltd v Johanna Malan and Others
(556/2020) [2021] ZASCA 129 (30 September 2021)
Coram:
DAMBUZA, SCHIPPERS AND MBATHA JJA AND CARELSE and
EKSTEEN AJJA
Heard:
14 May 2021
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is deemed to be
10h00 on 30 September 2021.
Summary: Land – land reform – Extension of Security of Tenure Act 62 of 1997
(ESTA) – whether eviction order just and equitable – fundamental breach of
relationship between occupier and owner under s 10(1)(c) – occupier unlawfully
removing building materials and erecting illegal structure on land – fundamental
breach of relationship justifying eviction – opportunity for representations under
s 8(1)(e) of ESTA – not required in the circumstances – appeal upheld.
ORDER
On appeal from: Land Claims Court of South Africa, Randburg (Ncube AJ sitting
as court of first instance):
The appeal succeeds.
The order of the Land Claims Court is set aside and replaced with the
following order:
‘(a) An eviction order is granted against the first to eighth respondents
and all those occupying the farm known as Topshell Park in
Stellenbosch, Western Cape (the farm) under them.
(b)
The first to eighth respondents and all those occupying the farm
under them must vacate the farm on or before 31 March 2022.
(c)
Should the respondents and all those occupying the farm under them
fail to vacate it on or before 31 March 2022, the sheriff of the court
is authorised to evict them from the farm by 14 April 2022.
(d)
The tenth respondent is ordered to provide emergency housing of a
dignified nature with access to services (which may be communal) to
the first to eighth respondents and all those occupying the farm under
them, on or before 31 March 2022.
(e)
There is no order as to costs.’
JUDGMENT
Carelse AJA (Mbatha JA concurring)
[1] This is an appeal against a judgment and order of the Land Claims Court
(LCC) which on automatic review under s 19(3)1 of the Extension of Security of
Tenure Act 62 of 1997 (ESTA) set aside an eviction order granted by the magistrate,
Stellenbosch for the eviction of the first to ninth respondents. The appellant, Nimble
Investments (Pty) Ltd is the registered owner of the farm known as Topshell Park,
Portion 128 of the farm Welmoed Estate, No 468 (the farm), in the district of
Stellenbosch, in the Western Cape. The appeal is with the leave of the LCC (Ncube
AJ).
Background facts
[2] At the outset the appellant submits that the appeal before this Court turns on
whether there was compliance with s 8(1)(e) of ESTA and if so, whether there was
a fundamental breach of the relationship between the appellant and the first
respondent in term of s 10(1)(c) of ESTA. The facts relevant to the determination of
the issues are largely common cause and arise mainly from the events that took place
on 28 November 2016.
1 ‘Any order for eviction by a magistrate’s court in terms of this Act, in respect of proceedings instituted on or before
a date to be determined by the Minister and published in the Gazette, shall be subject to automatic review by the Land
Claims Court, which may -
(a) confirm such order in whole or in part;
(b) set aside such order in whole or in part;
(c) substitute such order in whole or in part; or
(d) remit the case to the magistrate’s court with directions to deal with any matter in such manner as the Land Claims
Court may think fit.’
[3] The first respondent and her husband, the late Mr Malan (the deceased)
arrived on the farm in 1974. Mr Malan was employed on the farm until his death, on
4 October 2005. He was 61 years old at the time of his death. In terms of his
employment contract the deceased was given permission by Mr Le Roux, the
previous owner of the farm to occupy cottage 1 on the farm. The second, third, fourth
and fifth respondents are the adult children of the first respondent. The sixth
respondent is the daughter-in-law of the first respondent. The seventh respondent
and the eighth respondent respectively, are the minor and adult grandsons of the first
respondent. On 25 May 2006, the previous owner launched eviction proceedings
against the respondents. In 2006, assisted by the Stellenbosch University Law Clinic,
the first respondent entered into a lease agreement with the previous owner of the
farm in terms of which she would lease cottage 1 at a monthly rental of R500 which
settled the eviction application. At the same time, she demanded that the electricity
be restored to cottage 1. The first to ninth respondents lived together in cottage 1. In
April 2008, the appellant bought the farm and took over the lease agreement from
the previous owner.
[4] Initially when the appellant first purchased the farm in 2008, it wanted to
convert the farm from an agricultural farm to an Agri-Park and it was conditional
for rezoning purposes that the area where cottage 1 was located be vacated, if the
municipality was to give approval. Due to the extension of the Baden Powell
Highway in 2012, the appellant required the land, on which cottage 1 was located,
to relocate the business of its long-term tenant Topshell Park (Edms) Bpk in order
to meet its obligations. The purpose for the relocation was to facilitate the
expropriation process. During 2012 and 2013 there were negotiations with the first
respondent to vacate the farm, during which the first respondent was represented by
the Stellenbosch law Clinic and that the negotiations came to naught.
[5] On 30 June 2016, a meeting was held between the first respondent and the
appellant’s attorneys. At this meeting, and at a further meeting held on 11 August
2016, the first respondent agreed to relocate to cottage 5. The first respondent was
not legally represented at these two meetings. The appellant launched a relocation
application in terms of s 8(7)2 and s 19(1)(b)(i)3 of ESTA which was heard on an
unopposed basis. The first to ninth respondents were ordered to vacate cottage 1 and
to take up occupation of cottage 5.
[6] On 28 November 2016, the first respondent and her family moved from
cottage 1 to cottage 5. During the relocation process the fourth respondent (the son
of the first respondent) and some unidentified members of the first respondent’s
household removed the roof tiles, roof sheets and trusses (building material) from
cottage 1. In the presence of police officers and the first respondent, Mr Van der
Merwe – the site manager and director of the farm, told the members of the first
respondent’s family that they were not entitled to do so. They refused to stop. It is
not in dispute that the first respondent knowingly permitted an illegal structure to be
built with the appellant’s building material next to cottage 5, without the consent of
the appellant, and further that the first respondent swore and shouted at the farm
manager that cottage 1 belonged to her and that she could do as she wanted with the
building material.
2 Section 8(7) of the Extension of Security of Tenure Act 62 of 1997 (ESTA) provides:
‘If an occupier's right to residence has been terminated in terms of this section, or the occupier is a person who has a
right of residence in terms of subsection (5) -
(a) the occupier and the owner or person in charge may agree that the terms and conditions under which the occupier
resided on the land prior to such termination shall apply to any period between the date of termination and the date of
the eviction of the occupier . . . .’
2 ‘19 Magistrate's courts
. . .
(b) shall be competent-
(i) to grant interdicts in terms of this Act. . . .’
[7] The fourth respondent who lived in cottage 5 was the only respondent that
was identified when the events of 28 November 2016 occurred and thus made
common cause with the first respondent’s actions. On 18 January 2017, the appellant
wrote to the first respondent demanding the return of the building material and told
her that if she did not remedy the breach by demolishing the illegal structures and
return the building material by 1 February 2017, the appellant would launch eviction
proceedings against her. The first respondent refused to return the building material
and to vacate cottage 5. On 1 February 2017, the first to fifth respondents received
notices to vacate cottage 5 and were told that their right to reside was terminated on
the ground that the first respondent committed a fundamental breach of trust as
contemplated in s 10(1)(c) of ESTA, as a result of her misconduct arising out of the
events of 28 November 2016. The first respondent was given one calendar months’
notice to vacate, on or before 28 February 2017. On 28 April 2017, the appellant
launched an application for the eviction of the respondents. At the launch of the
application the first respondent was 68 years’ old.
[8]
In both the appellant’s heads of argument and in its application for leave
to appeal, the appellant concedes that the first respondent was not invited to make
representations before her right to reside was terminated. I imagine that the same
applies to the other respondents who reside in cottage 5. It is common cause that the
first respondent was not afforded an effective opportunity to make representations
before her right of residence was terminated as contemplated in terms of s 8(1)(e) of
ESTA.
[9] On 28 April 2017, the appellant applied for the eviction from the farm of the
first to ninth respondents. The application was opposed by the respondents. The tenth
respondent filed a report. There is no indication in the record if the tenth and eleventh
respondents opposed the application. After considering the affidavits and the various
reports and the hearing of oral evidence on 23 September 2019, the Stellenbosch
Magistrate’s Court, granted an eviction order against the first to ninth respondents.
[10] The eviction order came before the LCC on automatic review in terms of
s 19(3) of ESTA,4 Ncube AJ, after considering the matter, and in a written judgment
dated 7 November 2019, found that the first respondent was a long-term occupier
under s 8(4)5 of ESTA and stated that:
‘. . . the Applicant is basing the eviction on section 10(1)(c). In terms of that section, the right of
residence of Mrs. Malan may be terminated if she has committed such a fundamental breach of
the relationship between her and the owner or person in charge that it is not practically possible to
remedy it, either at all or in a manner which could reasonably restore the relationship.
The Applicant contends that the removal of building material from cottage No 1 constitutes a
fundamental breach of relationship and it is not practically possible to restore such relationship. I
do not agree. The Applicant has the option of claiming compensation for his building material if
he so wishes. The other distinguishing feature in this case is that it does not appear on the papers
that Mrs. Malan was given the opportunity to make representations – notices of termination of
4 ‘. . . Any order for eviction by a magistrate's court in terms of this Act, in respect of proceedings instituted on or
before a date to be determined by the Minister and published in the Gazette, shall be subject to automatic review by
the Land Claims Court, which may-
(a) confirm such order in whole or in part;
(b) set aside such order in whole or in part;
(c) substitute such order in whole or in part; or
(d) remit the case to the magistrate's court with directions to deal with any matter in such manner as the Land Claims
Court may think fit.’
5 Section 8(4) of ESTA provides:
‘Termination of right of residence –
(1) Subject to the provisions of this section, an occupier’s right of residence may be terminated on any lawful ground,
provided that such termination is just and equitable, having regard to all relevant factors and in particular to–
. . .
(4) The right of residence of an occupier who had resided on the land in question or any other land belonging to the
owner for 10 years and –
(a) has reached the age of 60 years; or
(b) is an employee or former employee of the owner or person in charge, and as a result of ill health, injury or disability
is unable to supply labour to the owner or person in charge, may not be terminated unless that occupier has committed
a breach contemplated in section 10(1)(a), (b) or (c). Provided that for the purposes of this subsection, the mere refusal
or failure to provide labour shall not constitute such a breach.’ (My emphasis.)
right of residence did not draw her attention to the fact that she can make representations in terms
of section 8 (1)(e) of the Act. Under these circumstances I am unable to confirm the eviction.’ (My
emphasis.)
[11] A long-term occupier is a protected class of occupiers under ESTA. The
appellant accepts that the first respondent is a long-term occupier6. The first
respondent was an occupier on the land on 4 February 1997 and her eviction is
governed by s 10 of ESTA.7 ESTA is regarded as social legislation, intended to
regulate the eviction of vulnerable occupiers under certain conditions and
circumstances, at the same time recognising the rights of landowners to seek eviction
orders under certain circumstances. The second to ninth respondents’ right of
residence was terminated but neither the Stellenbosch Magistrate’s Court nor the
LCC considered the right of residence of the second to ninth respondents. They may
well be occupiers in their own right. The appellant did not allege that any of the other
6 Klaase and Another v Van Der Merwe N O and Others [2016] ZACC 17; 2016 (6) SA 131 (CC): Matojane AJ held
the following at para 60:
‘It is undisputed that Mrs Klaase lived on the premises continuously for many years with the knowledge of the second
respondent and his father before him. By his own admission in the answering affidavit, the second respondent said
that Mrs Klaase came to live with her prospective husband in a house that had been made available to him on the
premises. There is no evidence to rebut the presumption that the respondents consented to Mrs Klaase’s residing on
the farm. The respondents’ failure to object to Mrs Klaase’s residing on the farm for decades or taking steps to evict
her is telling. It implies that they consented to her occupancy. But prior to the enactment of ESTA that was always
with the consent of the landowner or farmer.’
7 10 Order for eviction of person who was occupier on 4 February 1997
(1) An order for the eviction of a person who was an occupier on 4 February 1997 may be granted if-
(a) the occupier has breached section 6 (3) and the court is satisfied that the breach is material and that the occupier
has not remedied such breach;
(b) the owner or person in charge has complied with the terms of any agreement pertaining to the occupier's right to
reside on the land and has fulfilled his or her duties in terms of the law, while the occupier has breached a material
and fair term of the agreement, although reasonably able to comply with such term, and has not remedied the breach
despite being given one calendar month's notice in writing to do so;
(c) the occupier has committed such a fundamental breach of the relationship between him or her and the owner or
person in charge, that it is not practically possible to remedy it, either at all or in a manner which could reasonably
restore the relationship; or
(d) the occupier-
(i) is or was an employee whose right of residence arises solely from that employment; and
(ii) has voluntarily resigned in circumstances that do not amount to a constructive dismissal in terms of the Labour
Relations Act.’
respondents were invited to make representations on why their right of residence
should not be terminated.
[12] Against this background two main issues arise in this appeal. The first is
whether the termination of the right of residence was just and equitable both in
substance and in procedure.8 The second is, if the termination was just and equitable,
would the eviction be just and equitable? ESTA envisages a two-stage eviction
procedure: first, a notice of termination of the right of residence in terms of s 8, and
second the notice of eviction in terms of s 9(2)(d).9 If it is found that the termination
of the right of residence was not just and equitable due to non-compliance with s
8(1)(e) then there is no need to determine the second issue. Eviction proceedings
can only commence after the right of residence is terminated.10 For the purposes of
8 In Snyders and Others v De Jager and Others (Appeal) [2016] ZACC 55; 2017 (5) BCLR 614 (CC); 2017 (3) SA
545 (CC).
9 In Aquarius Platinum (SA) (Pty) Ltd v Bonene and Others [2019] ZASCA 7; [2020] 2 All SA 323 (SCA); 2020 (5)
SA 28 (SCA) the Supreme Court of Appeal at paras 10 and 11 held:
‘Approximately two decades ago, this Court found in Mkangeli and Others v Joubert and Others that there had to be
a proper termination of the right of residence. It stated:
“Once an occupier's right to reside has been duly terminated, his refusal to vacate the property is unlawful.
Nevertheless, it does not mean that the remedy of eviction will necessarily be available. This remedy is limited by
those provisions of ESTA to which I will presently return. On the other hand, ESTA places no limitation on the other
remedies attracted by unlawful occupation. It must therefore be accepted, I think, that the other remedies, such as the
owner's delictual claim for his patrimonial loss caused by the unlawful occupation of his land (see, for example, Hefer
v Van Greuning 1979 (4) SA 952 (A)) are still available to him. As to the remedy of eviction s 9(2) provides that a
court may only issue an eviction order if certain conditions are met. The first such condition is that the occupier's right
to residence must have been properly terminated under s 8. Other conditions prescribed by s 9(2) include the giving
of two months' notice of the intended eviction application after the right to reside has been terminated under s 8 (s
9(2)(d)). In a case such as the present, where the appellants took occupation of Itsoseng after 4 February 1997, s 11
also finds application. This section provides that a court may only grant an eviction order if it is of the opinion that it
is just and equitable to do so. In deciding whether it is just and equitable to grant an eviction order the court must have
regard to the considerations listed in s 11(3), but it is not limited to them. Included amongst these is the consideration
'whether suitable alternative accommodation is available to the occupier' (s 11(3)(c)) and 'the balance of the interests
of the owner . . . the occupier and the remaining occupiers on the land' (s 11(3)(e)).”
In Sterklewies this Court said the following:
“The Act contemplates two stages before an eviction order can be made. First the occupier's right of residence must
be terminated in terms of s 8 of the Act. The manner in which this is to be done is not specified. Once the right of
residence has been terminated then, before an eviction order can be sought, not less than two months' notice of the
intention to seek the occupier's eviction must be given to the occupier, the local municipality and the head of the
relevant provincial office of the Department of Land Affairs in terms of s 9(2)(d) of the Act. That notice is required
to be in a form prescribed by regulations made in terms of s 28 of the Act”.’
10 Cosmopolitan Projects Johannesburg (Pty) Ltd v Leoa & Others [2019] ZALCC 1 para 34, The LCC held:
this appeal the basis upon which the appellant terminated the first respondent’s right
of residence was on the ground that the first respondent committed a fundamental
breach of trust as contemplated in s 10(1)(c) of ESTA.
[13] I will now proceed to consider whether the termination of the right of
residence was just and equitable, both procedurally and in substance. Section 8(1)
of ESTA provides:
‘Termination of right of residence –
(1)
Subject to the provisions of this section, an occupier's right of residence may be terminated
on any lawful ground, provided that such termination is just and equitable, having regard to all
relevant factors and in particular to-
(a)
the fairness of any agreement, provision in an agreement, or provision of law on which the
owner or person in charge relies;
(b)
the conduct of the parties giving rise to the termination;
(c)
the interests of the parties, including the comparative hardship to the owner or person in
charge, the occupier concerned, and any other occupier if the right of residence is or is not
terminated;
(d)
the existence of a reasonable expectation of the renewal of the agreement from which the
right of residence arises, after the effluxion of its time; and
(e)
the fairness of the procedure followed by the owner or person in charge, including whether
or not the occupier had or should have been granted an effective opportunity to make
representations before the decision was made to terminate the right of residence.’ (My emphasis.)
[14] There are four requirements which must be met in order for an eviction
application to be granted under ESTA. These grounds are located in s 9(2) of ESTA.
‘What is immediately apparent is that this is a Notice in terms of section 9(2)(d) of ESTA which purports also to
terminate the first to fiftieth respondents’ rights of residence in terms of section 8 of ESTA. As Mr Botha who appeared
for the thirty fifth to fiftieth respondents correctly submitted, this sort of hybrid approach is impermissible. A section
9(2)(d) Notice is correctly and appropriately issued only after an ESTA occupier’s right of residence has been validly
and fairly terminated in terms of section 8.’
The first is whether the respondents right of residence had been terminated in
accordance with s 8; second whether the respondents have vacated the farm within
the one calendar month as prescribed; third whether the conditions under ss 10 or
11 were complied with; and fourth whether the requisite two months’ written notice
of the appellant’s intention to obtain an eviction order had been given to the
respondents, the relevant municipality and the head of the relevant provincial office
of the Department of Rural Development and Land Reform.11 The two month’s
written notice is subject to a proviso which, if applicable will render the notice
unnecessary.
[15] In determining whether the termination was just and equitable ‘all relevant
factors’ in particular, the criteria set out under s 8(1)(a) to (e) must be considered.
In Snyders and Others v De Jager and Others [2016] ZACC 55; 2017 (3) SA 545
(CC) para 56, the Constitutional Court held that:
‘Section 8(1) makes it clear that the termination of the right of residence must be just and equitable
both at a substantive level as well as at a procedural level. The requirement for the substantive
fairness of the termination is captured by the introductory part that requires the termination of a
11 ‘9. Limitation on eviction –
(1) Notwithstanding the provisions of any other law, an occupier may be evicted only in terms of an order of court
issued under this Act.
(2) A court may make an order for the eviction of an occupier if-
(a) the occupier's right of residence has been terminated in terms of section 8;
(b) the occupier has not vacated the land within the period of notice given by the owner or person in charge;
(c) the conditions for an order for eviction in terms of section 10 or 11 have been complied with; and
(d) the owner or person in charge has, after the termination of the right of residence, given-
(i) the occupier;
(ii) the municipality in whose area of jurisdiction the land in question is situated; and
(iii) the head of the relevant provincial office of the Department of Rural Development and Land Reform, for
information purposes, not less than two calendar months' written notice of the intention to obtain an order for eviction,
which notice shall contain the prescribed particulars and set out the grounds on which the eviction is based: Provided
that if a notice of application to a court has, after the termination of the right of residence, been given to the occupier,
the municipality and the head of the relevant provincial office of the Department of Rural Development and Land
Reform not less than two months before the date of the commencement of the hearing of the application, this paragraph
shall be deemed to have been complied with.’
right of residence to be just and equitable. The requirement for procedural fairness is captured in
section 8(1)(e).’
The appellant accepts that what is required for procedural fairness as contemplated
in subparagraph (e) is set out in Snyders. The Constitutional Court held at paras 73
and 75 as follows:
‘In any event, even if it were to be accepted that Ms De Jager terminated Mr Snyders' right of
residence, she has failed to show, as is required by s 8(1) of ESTA, that there was a lawful ground
for that termination and that, in addition, the termination was just and equitable. At best for Ms De
Jager, she purported to show no more than that there was a lawful ground for the termination of
the right of residence. She did not go beyond that and place before the magistrates' court evidence
that showed that the termination of Mr Snyders' right of residence was just and equitable.
. . .
Counsel for the Snyders family also contended that the Magistrate’s Court should not have issued
an eviction order because the Snyders family had not been afforded any procedural fairness by
way of an opportunity to be heard before they were required to vacate the property. It is common
cause that the Snyders family were never invited to make representations to Ms de Jager on why
they should not be required to vacate the house before they were actually required to vacate it. In
my view, the submission by counsel for the Snyders family has merit. ESTA requires the
termination of the right of residence to also comply with the requirement of procedural fairness to
enable this person to make representations why his or her right of residence should not be
terminated. This is reflected in section 8(1)(e) of ESTA. A failure to afford a person that right will
mean that there was no compliance with this requirement of ESTA. This would render the
purported termination of the right of residence unlawful and invalid. It would also mean that there
is no compliance with the requirement of ESTA that the eviction must be just and equitable.’ (My
emphasis.)
[16] To determine whether the termination is just and equitable, a consideration of
all relevant factors and the specific criteria set out under subparagraphs (a) to (e)12
is required. Subparagraph (a) is not applicable because the reasons given for seeking
12 See para 11 above.
the eviction of the respondents is not founded on ‘any agreement, provision of an
agreement, or provision of law’. In light of my findings in respect of subparagraph
(e), I express no view on subparagraphs (b), (c) and (d).
[17] According to Snyders, a mere failure to comply with the procedural fairness
that is required by subparagraph (e) would render the purported termination of the
right of residence unlawful and invalid.
[18] The appellant conceded that after the events of 28 November 2016 and prior
to the termination of the right of residence of the first to ninth respondents there were
no discussions and negotiations between the appellant and the first respondent. The
first to ninth respondents were not legally represented before their right to reside was
terminated. To avoid the consequences of Snyders, the appellant submitted that the
first respondent had adequate opportunity before her occupation was terminated and
even after, but prior to being required to vacate, to approach the appellant.
[19] The appellant relies on the decision in Le Roux NO and Another v Louw and
Another [2017] ZALCC 10 paras 91-93. In that case the LCC referred to Snyders
and made the following remarks:
‘These comments must be read in the context of the particular factual situation in Snyders. Section
8(1)(e) does not contemplate that it will be appropriate in every case that an opportunity be given
to make representations before the decision to terminate the right of residence. This is clear from
the wording of section 8 (1)(e) which reads as follows: “The fairness of the procedure followed by
the owner or person in charge, including whether or not the occupier had or should have been
granted an effective opportunity to make representations before the decision was made to terminate
the right of residence.”
In our view, in circumstances where, unlike in Snyders, the right of residence did derive solely
from the contract of employment, procedural fairness in relation to the possible loss of the right of
residence will have been a natural consequence of the procedural fairness afforded in the process
of terminating the contract in accordance with provisions of the Labour Relations Act as envisaged
in section 8(2) of ESTA. For that reason, it was not necessary for the third appellant to have
afforded Louw a distinct and separate opportunity to make representations before the decision was
made to terminate the right of residence. This appears to us to be one of the situations contemplated
in section 8 (1)(e) where the words “or not” and “should have been” apply.
Even if we are wrong in stating that as a general proposition, we are satisfied that in this particular
case, it was not necessary to afford Louw a distinct and separate opportunity to make
representations before his right of residence was terminated, as contemplated in section 8 (1)(e).
Procedural fairness was afforded through the disciplinary procedures followed in relation to
Louw’s employment and its eventual termination . . . if he had any compelling reason why the third
appellant should not terminate his right of residence, notwithstanding termination of his
employment, it was up to him to raise it at the disciplinary enquiry.” (My emphasis.)
In the case before this Court, there was no enquiry or procedure during which the
first respondent (or any of the other respondents who lived on the farm) could have
given reasons why their right of residence should not be terminated.
[20] In Timothy v Sibanyoni and Others [2020] ZALCC 8 para 56, the court held:
‘One of the factors which the court is expressly required to take into account when considering
this question is the fairness of the procedure followed by the owner in terminating a right of
residence. This is required by 10(1)(e), which in its terms accepts that the occupier need not
necessarily be afforded an opportunity to make representations. The wording of the subsection is
clear on this point: it provides that when considering the fairness of the procedure followed by the
owner a factor to be taken into account is “whether or not the occupier had or should have been
granted and effective opportunity to make representations before the decision was taken to
terminate the right of residence.” (Emphasis added.)
The first highlighted portion expressly acknowledges that it is not in every case that the affected
person needs to be invited to make representations. By way of illustration, an equivocal statement
or conduct by the resident in the owner’s presence may in appropriate circumstances obviate such
a requirement in which case the owner may stand or fall by his claim as to what transpired.’
In this case before me there was no equivocal statement or conduct by the first
respondent which could obviate an invitation to make representations. This,
however, may not apply to other respondents living on the farm who could be
occupiers in their own right.
[21] This Court is bound by Snyders. For the reasons stated above, the facts in Le
Roux and Sibanyoni are clearly distinguishable from the facts in this case. It is
common cause that the appellant did not invite the first to ninth respondents to make
representations before terminating the respondents’ right of residence.
[22] The appellant had previously attempted to persuade the first respondent and
her family members to leave the farm voluntarily against payment of R100 000
compensation, but through discussions and negotiations the first to ninth respondents
were relocated on the same land. There were no discussions or negotiations prior to
the termination of the first to ninth respondents’ right to reside. The first to ninth
respondents should have been granted an effective opportunity to make
representations before the date on which their right of residence was to be
terminated, in view of the hardship they would endure if evicted.
[23] As a result hereof, it is not necessary to decide whether there was a
fundamental breach of trust as contemplated in s 10(1)(c) of ESTA. Neither the first
respondent nor any of the other respondents living on the farm have been granted an
effective opportunity to make representations as required in terms of s 8(1)(e) of
ESTA.
[24] The President of this Court appointed an amicus curiae to make submissions
on the issues raised in this appeal. We are grateful for the heads of argument and
submissions that were prepared. No costs are sought by them.
___________________
Z CARELSE
JUDGE OF APPEAL
Schippers JA (Dambuza JA and Eksteen AJA concurring):
[26] I have read the judgment of my colleague Carelse AJA in which she has come
to the conclusion that the appeal should be dismissed as the respondents had not been
given an opportunity to make representations before their rights of residence were
terminated, as contemplated in s 8(1)(e) of the Extension of Security of Tenure Act
62 of 1997 (ESTA). I take a different view. In my respectful opinion the issues
raised by this appeal are twofold. The first is whether an order for the eviction of
the respondents from the relevant property was justified on the ground of a
fundamental breach of the relationship between the first respondent, Mrs Johanna
Malan and the person in charge, Mr Deon van der Merwe (the site and farm
manager), which was not practically possible to remedy as envisaged in s 10(1)(c)
of ESTA. The second is whether the eviction order was just and equitable in terms
of the provisions of ESTA.
The facts and proceedings below
[27] The facts are largely common ground. The appellant is the registered owner
of the farm Topshell Park in Stellenbosch, Western Cape (the farm). In September
2019 it obtained an order in the Stellenbosch Magistrates’ Court for the eviction of
the first to ninth respondents, in terms of ESTA. The case went on automatic review
to the Land Claims Court (LCC) under s 19(3) of ESTA.13 The LCC (Ncube AJ) set
aside the eviction order. The appeal is with its leave.
[28] Mrs Malan, is a widow and pensioner who lives on the farm, together with the
second to ninth respondents. The second to fifth respondents are Mrs Malan’s adult
13 Section 19(3) of Extension of Security of Tenure Act 62 of 1997 (ESTA) provides, inter alia, that any eviction order
by a magistrate’s court shall be subject to automatic review by the Land Claims Court.
children. The sixth respondent is Mrs Malan’s daughter-in-law. The seventh and
eighth respondents are the minor and adult grandsons respectively, of Mrs Malan.
[29] Mrs Malan and her husband, the late Mr Moos Malan, moved to the farm in
1974 when Mr Malan was employed as a driver by the appellant’s predecessor in
title. In terms of his employment contract, he was provided with accommodation in
Cottage 1 on the farm where he lived until he passed away on 4 October 2005. Mrs
Malan continued to live on the farm and in 2006 concluded a lease agreement with
the appellant’s predecessor in title, in terms of which she leased Cottage 1 at a rental
of R500 per month.
[30] Neither Mrs Malan nor any of the respondents however paid any rent to the
appellant. This was not disputed. It appears from the founding papers that during the
tenure of the lease she was legally assisted regarding payment of arrear rental. Not
much turns on this, since before us the appellant contended that the ultimate reason
for the termination of the right of residence, was a fundamental breach of the
relationship between Mrs Malan and Mr Van Der Merwe.
[31] In 2012 the appellant was compelled to forgo a portion of the farm because of
the widening of the R310, a provincial road in Stellenbosch. As a result, the land
required by the appellant’s anchor tenant, Topshell (Pty) Limited (Topshell), under
a long-term lease was reduced and it was forced to provide Topshell with a portion
of land on which a number of cottages including Cottage 1, were located.
[32] The appellant then entered into negotiations with Mrs Malan and eight other
households whose cottages were on the same land as Cottage 1, with a view to their
voluntary relocation to other property with the appellant’s assistance, by way of a
cash amount and the provision of building materials. The negotiations with Mrs
Malan which took place over a period of one year, were unsuccessful.
[33] At a meeting with the appellant’s attorney on 11 August 2016, Mrs Malan
agreed to move to Cottage 5 and stated that she understood the process that had to
be followed under ESTA in that regard. On 2 September 2016 Mr Van Der Merwe
and Mrs Malan agreed upon the repairs, changes and improvements that had to be
effected to Cottage 5. These included removing a tree and an interior drywall;
installing a kitchen sink, wall plugs, and switches; and painting the roof, interior and
exterior of the cottage, Mrs Malan undertook to move to Cottage 5 as soon as the
repairs and improvements were completed.
[34] However, after the completion of the repairs Mrs Malan refused to move to
Cottage 5. The appellant then applied to the Stellenbosch Magistrate’s Court for the
relocation of the respondents. On 20 October 2016 that court issued an order in terms
of which Mrs Malan and all those occupying Cottage 1 under her, were directed to
vacate Cottage 1 and take occupation of Cottage 5 (the relocation order).
[35] On 28 November 2016 Mrs Malan moved to Cottage 5. What happened that
day was the subject of oral evidence before the magistrate. The fourth respondent
(Mrs Malan’s son) and other members of her household removed building materials
consisting of roof sheets and rafters (which the appellant had promised to its
employees), window frames and various fixtures from Cottage 1. This happened in
the presence of Mrs Malan, Mr Van der Merwe and police officers whom the latter
had called to the scene while the building materials were being removed.
[36] Photographs annexed to the founding papers showed that only the brick-and-
mortar shell of Cottage 1 remained. The building materials were then used to erect
an unlawful structure right next to Cottage 5, without the appellant’s consent. Mrs
Malan did nothing to stop the unlawful removal of the appellant’s building materials.
On the contrary, she swore at Mr Van Der Merwe and shouted at him that Cottage 1
was her house and she could do with it whatever she wanted. The illegal structure,
Mrs Malan testified, had been erected to store her things because Cottage 5 was too
small – it was in fact 9.4 square metres bigger than Cottage 1. That structure
however, was used to house persons who previously had not lived with Mrs Malan
on the farm.
[37] On 18 January 2017 the appellant’s attorneys sent Mrs Malan a notice that her
right of occupation had been terminated on the following grounds. The unlawful
removal and theft of the building materials (the appellant had laid a charge of theft
with the police) constituted a material breach of the relationship between the parties.
Mrs Malan had further breached the relationship by using the materials to erect an
unauthorised and unlawful structure on the farm in contravention of building
regulations as well as s 6(3)(d) of ESTA.14 That structure was being used to
accommodate members of her family who had not lived with her before. The
appellant demanded that Mrs Malan demolish the illegal structure and return the
building materials by 1 February 2017. She was also informed that she and members
of her family were required to vacate Cottage 5 and the illegal structure by 1
February 2017, failing which an application for their eviction would be brought.
14 Section 6(3) of ESTA provides:
‘An occupier may not-
. . .
(d) enable or assist unauthorised persons to establish new dwellings on the land in question.’
[38] The illegal structure was not demolished, neither were the building materials
returned. Consequently, on 1 February 2017 the sheriff served a notice on Mrs Malan
and the second to ninth respondents to vacate the farm by 28 February 2017. In that
notice it was recorded that the respondents’ residence had already been terminated
by a notice served by the sheriff on 20 January 2017 (on the basis of a breach of the
lease agreement). The notice stated that the unlawful removal of the building
materials constituted a serious breach of the relationship; that Mrs Malan had taken
no steps to prevent the removal; that she had made common cause with the members
of her family by stating that Cottage 1 was her house and that she could do with it
as she pleased; and that a complaint had been lodged with the police.
[39] The respondents did not vacate the farm and the appellant launched eviction
proceedings on 28 April 2017. In the founding papers it alleged that the termination
of Mrs Malan’s rights of residence was just and equitable on three alternative
grounds: (i) she had failed to pay the rental under the lease agreement; (ii) if she was
an occupier in terms of s 8(5) of ESTA, termination was justified under s 10(1); and
(iii) if she was an occupier contemplated in s 8(4), termination was warranted in
terms s 10(1)(a), (b) or (c) of ESTA.
[40] Mrs Malan opposed the application and was legally represented in the
magistrate’s court. None of the other respondents opposed the application or asserted
any independent right to reside on the farm. In the answering affidavit Mrs Malan
denied that she had concluded the lease agreement and said that the appellant had
never approached her for payment of rent, despite having made arrangements
through her attorneys to pay-off arrear rental. She opposed the application for
eviction on the basis that she was an occupier as envisaged in s 8(4) of ESTA: she
had resided on the farm for ten years and had reached the age of 60. Mrs Malan also
raised a special plea that in terms of s 8(5), her right of residence could be terminated
only on 12 calendar months’ written notice to leave the farm.15
[41] The magistrate found that the lease agreement was the source of Mrs Malan’s
right to reside on the farm. She was legally represented at the time and the lease
agreement had been concluded, presumably ‘to regulate and formalise her rights as
opposed to not being able to occupy the property further due to her husband’s
demise’. None of the other respondents had acquired any independent right to reside
on the farm. Further, Mrs Malan had conceded that her right of residence had been
lawfully terminated in accordance with s 8(1) of ESTA.
[42] The magistrate considered the factors set out in ss 11(3) and 9(2) of ESTA
and held that an order of eviction was just and equitable for the following reasons.
The eviction emanated from the widening of the R310 road. Mrs Malan conceded
that her right of residence had been lawfully terminated. The respondents had
committed a fundamental breach of the relationship contemplated in s 10(1)(c) of
ESTA. The unavailability of alternative accommodation came about as a result of
the respondents’ own conduct. The appellant had offered them the sum of R100 000
plus building materials, but the respondents wanted a minimum amount of
R400 000. Four of the five adult respondents were employed elsewhere, but never
paid any rent. The appellant had paid substantial amounts for water, sewerage and
waste removal on behalf of the respondents and could not be expected to continue
to do so. The respondents were guilty of misconduct which could not be condoned
15 Section 8(5) of ESTA reads:
‘On the death of an occupier contemplated in subsection (4), the right of residence of an occupier or his or her spouse
or dependant may be terminated only on 12 calendar months' written notice to leave the land, unless such a spouse or
dependant has committed a breach contemplated in section 10(1).’
in the circumstances. The appellant had given timeous notice of the eviction
proceedings to the relevant authorities.
[43] The LCC, as stated, set aside the eviction order. It concluded that Mrs Malan
was an occupier in terms of s 8(4) of ESTA. As such, her right of residence could
not be terminated unless she had committed a breach contemplated in s 10(1)(a), (b)
or (c). The LCC found that s 10(1)(a) was inapplicable and s 10(1)(b) was no basis
for termination of the right of residence. It held that there was no breach as envisaged
in s 10(1)(c) of ESTA because the appellant had ‘the option of claiming
compensation’ for its building materials if it wished to do so. The LCC held that the
eviction order could also not be confirmed because Mrs Malan had not been
informed that she could make representations in terms of s 8(1)(e) of ESTA.
Was there a breach of the relationship as envisaged in s 10(1)(c) of ESTA?
[44] On the case made out in the founding affidavit, it may be accepted that Mrs
Malan is an occupier as envisaged in s 8(4) of ESTA. She has lived on the farm for
at least ten years and has reached the age of 60 years. Consequently, her right of
residence could not be terminated unless she committed a breach contemplated in
s 10(1)(c) of ESTA.16
[45] Section 10(1)(c) of ESTA provides:
‘An order for the eviction of a person who was an occupier on 4 February 1997 may be granted
if–
16 Section 8(4) of ESTA, in relevant part, reads:
‘The right of the residence of an occupier who has a resided on the land in question or any other land belonging to
the owner for 10 years and–
(a)
has reached the age of 60 years; . . .
may not be terminated unless that occupier has committed a breach contemplated in section 10(1)(a), (b) or (c). . . .’
‘(c)
the occupier has committed such a fundamental breach of the relationship between him or
her and the owner or person in charge, that it is not practically possible to remedy it, either at all
or in a manner which could reasonably restore the relationship.’
[46] The plain wording of this provision makes it clear that what is contemplated
is an act of breaking the relationship on the part of the occupier that is essentially
impossible to restore. The LCC has held that a fundamental breach of the
relationship between an owner and an occupier contemplated in s 10(1)(c) ‘relates
to a social rather than a legal relationship’ and that this requirement would be met if
‘it is practically impossible for the relationship to continue due to a lack of mutual
trust’.17
[47] In determining whether an occupier has committed a fundamental breach of
the relationship envisaged in s 10(1)(c) of ESTA, it seems to me that the following
factors must be considered. The history of the relationship between the parties prior
to the conduct giving rise to the breach. The seriousness of the occupier’s conduct
and its effect on the relationship. The present attitude of the parties to the relationship
as shown by the evidence.
[48] Klaase18 is a case in point. There, the Constitutional Court held that
absconding from work and absenteeism; a history of inappropriate conduct; failure
to attend a disciplinary hearing; failure to vacate premises as agreed; and continuing
to live on the premises rent-free while being gainfully employed elsewhere, was
misconduct for purposes of s 10(1)(c) of ESTA.19
17 Ovenstone Farms (Pty) Ltd v Persent and Another [2002] ZALCC 31.
18 Klaase and Another v Van Der Merwe and Others [2016] ZACC 17; 2016 (6) SA 131 (CC).
19 Klaase fn 6 para 43.
[49] Applying these principles to the present case, it was common ground that prior
to the incident on 28 November 2016, the relationship between Mrs Malan and Mr
Van der Merwe was one of mutual respect, trust and co-operation. Mr Van der
Merwe described their relationship prior to its breakdown, as follows:
‘I just also want to point out at this stage, when all this moving over and this process took place,
there was not a breakdown in trust between Tadvest, myself and Ms Malan. We were on good
speaking terms. So there were no malicious actions or reasons for us not to work together and
facilitate this process. You may recall that I said to you, Monday morning at what time (indistinct)
they should've been out by [then] but I said: let's give them a couple more hours so that they can
move (indistinct) go to the house again they started breaking it down. So the breakdown of the
trust relationship only happened after this whole moving over and the process where they started
breaking down the house it ended.’
[50] On 28 November 2016 the appellant’s employees who had been given the
rafters and roof sheeting went to remove these materials from of Cottage 1. They
returned and told Mr Van der Merwe that the materials were already being removed.
Mr Van der Merwe went to the site where he found that the appellant’s building
materials were being removed and stacked. He asked Mrs Malan’s son to stop but
was ignored. He then called the police who came to the scene. Their presence did
not deter the persons from continuing with the removal of the building materials. As
Mr Van der Merwe was speaking to the police, Mrs Malan came out of Cottage 5.
She was ‘very upset and emotional’. She shouted at Mr Van der Merwe that Cottage
1 was her house and she could do with the building materials whatever she wanted
and, using an expletive, told him to get off the property.
[51] On hearing this, which Mr Van der Merwe described as ‘really upsetting’, he
left the scene. The police remained there and did nothing to stop the wrongdoers.
Despite the appellant laying criminal charges of theft against them, a few days later
Mrs Malan caused the building materials to be used to erect the illegal structure
annexed to Cottage 5, without the appellant’s permission and contrary to building
regulations. She then allowed persons who had not lived on the farm before to
occupy the illegal structure. As stated in the founding affidavit, this conduct was a
breach of s 6(3)(d) of ESTA.
[52] The erection of the illegal structure continued, despite the fact that the
appellant’s attorneys had written to Mrs Malan and demanded that it be removed and
the building materials returned. She ignored this letter. When the matter was heard
in the magistrates’ court – more than two years later – the illegal structure had still
not been demolished. Mr Van der Merwe described Mrs Malan’s response, which
was unchallenged, as follows:
‘As far as I know she didn’t react at all. There was no reaction from their side, they just carried on
for the next two months, adding on to the structures around house number 1 and no building
material was returned and there was no communication from their side to Abland, Tadvest or
myself.’
[53] The unchallenged evidence was that it was not practically possible to restore
the relationship between Mrs Malan and the appellant. When asked about the effect
of her conduct on the relationship, Mr Van der Merwe said:
‘. . . as I said before we had a mutual respectful relationship . . . But after this incident, I mean
there are some things that you say to another person that can’t be undone and that can’t change.
So the relationship of mutual trust and goodwill was can I say, demolished, destroyed in this case.
So all direct communication came to a halt.’
[54] Indeed, it was common ground that the relationship of trust between Mrs
Malan and Mr Van der Merwe had been broken: they had no contact nor any
relationship after the incident on 28 November 2016. It was also common ground
that Mr Van der Merwe had objected to the removal of the building materials; that
he had called the police; that Mrs Malan had shouted; that she had been rude to him
(she admitted this and apologised during her evidence); and that she had erected the
illegal structure without permission.
[55] In the light of this evidence, Mrs Malan’s explanation for the fundamental
breach of trust – she had shouted at Mr Van der Merwe that he was a liar, because
he had given her permission to take what she needed for Cottage 5, but subsequently
withdrew it – may safely be rejected. This served only to exacerbate an already
broken-down relationship. Mrs Malan did not need any building materials for
Cottage 5. The appellant had already done the necessary repairs and improvements
to it – which she had approved and signed for after an inspection with Mr Van der
Merwe.
[56] Further, on Mrs Malan’s version, there was no reason for Mr Van der Merwe
to go to Cottage 1 where the building materials were being removed, call the police
or lay charges of theft. It is thus not surprising that at no stage did Mrs Malan inform
the police that she had been given permission to remove the building materials. What
is more, she continued with the removal of the building materials even after Mr Van
der Merwe had told her that he viewed her conduct as theft. She did this precisely
because she considered that she could do with the building materials as she pleased
and knew that they were going to be used to erect the illegal structure.
[57] In addition, Mr Van der Merwe testified that it was illegal to erect any
structure around Cottage 5 without approved building plans. It is thus inconceivable
that he would have allowed Mrs Malan to remove the building materials, or to erect
any illegal structure on the farm contrary to building regulations. Mrs Malan’s
attitude that she could do with Cottage 1 as she pleased, also explains why she
ignored the appellant’s demand to demolish the structure and return the building
materials.
[58] In her evidence, Mrs Malan sought to justify the illegal structure as being
necessary to store her furniture because Cottage 5 was too small. This too, was false.
The undisputed evidence was that Cottage 5 was bigger than Cottage 1. So, there
would have been enough space for her furniture. Further, the illegal structure was
not erected immediately to protect Mrs Malan’s furniture. This merely underscores
the reason for the illegal structure – to house persons not previously resident on the
farm.
[59] For these reasons, the submission by counsel for Mrs Malan that it seemed
inevitable that the respondents were being evicted for business purposes, is
unsustainable on the evidence. So too, the contention that a fundamental breach of
the relationship was not established ‘over the use of building materials’. The reason
for the eviction initially was the non-payment of rent. However, it was ultimately
the events of 28 November 2016, Mrs Malan’s conduct in enabling unauthorised
persons to occupy the farm by erecting an illegal structure on it and her ongoing
refusal to demolish the structure and return the building materials, which culminated
in the breakdown of trust to the extent that the relationship could not be restored.
The misconduct was ongoing and deliberate and took place in the context of an
already deteriorating relationship due to the failure to pay rental and utilities, and the
refusal to relocate.
[60] The LCC thus erred in concluding that there was no fundamental breach of
the relationship between Mrs Malan and the appellant, and that the appellant could
simply claim compensation for its building materials. The LCC disregarded the
nature and seriousness of the respondents’ conduct and its effect on the relationship
between the parties. Apart from this, the LCC misconstrued the appellant’s case: its
conclusion was based solely on the respondents’ conduct in removing the building
materials from Cottage 1. On the evidence however, the lack of respect and mutual
trust in the relationship between the occupier and the owner or person in charge,
because of the occupier’s conduct, was beyond dispute.
Was the eviction order just and equitable?
[61] The requirements which an owner must meet to prove that termination of an
occupier’s right of residence was just and equitable depends on the facts of the
particular case.20 In this case the conduct of Mrs Malan and the respondents who
removed the building materials and subsequently erected the illegal structure, which
gave rise to the application for her eviction, is particularly relevant. So too, the
comparative hardship to the appellant and the respondents. In this regard, the dictum
by Nkabinde J in Molusi,21 bears repetition:
‘ESTA requires that the two opposing interests of the landowner and the occupier need to be taken
into account before an order for eviction is granted. On the one hand there is the traditional real
right inherent in ownership reserving exclusive use and protection of property by the landowner.
On the other there is the genuine despair of our people who are in dire need of accommodation.
Courts are obliged to balance these interests. A court making an order for eviction must ensure
that justice and equity prevail in relation to all concerned. It does so by having regard to the
considerations specified in s 8 read with s 9, as well as ss 10 and 11, which make it clear that
fairness plays an important role.’22
20 Land & Landbouontwikkelingsbank van SA v Conradie [2005] 4 All SA 509 (SCA) para 9.
21 Molusi and Others v Voges N O and Others [2016] ZACC 6; 2016 (3) SA 370 (CC) para 39.
22 The conclusion by C P Smith Eviction and Rental Claims: A Practical Guide (2021) para 5.7, that it seems that a
court does not have to take all relevant factors into account when considering an eviction order, but rather the specific
factors in ss 10 of 11, whichever applicable; and that eviction in terms of s 10(1)(a) to (d) does not have to be just and
equitable in addition to the specific requirements in each instance, is thus incorrect.
[62] Section 8(1) of ESTA provides that an occupier’s right of residence may be
terminated on any lawful ground, provided that such termination is just and equitable
having regard to all relevant factors, and in particular those listed in s 8(1)(a) to (e).23
These factors include the conduct of the parties giving rise to the termination; the
interests of the parties, including the comparative hardship to the owner and the
occupier; and the fairness of the procedure followed by the owner, including whether
the occupier had or should have been given an opportunity to make representations
before termination of the right of residence.
[63] While any eviction creates hardship for the persons evicted, the legislature has
expressly provided for eviction on the grounds of a fundamental breach of the
relationship between the occupier and the owner or person in charge. As stated, the
appellant reasonably required the land when the R310 road was widened, in order to
secure its anchor tenant under a long-term lease. It then sought to obtain Mrs Malan’s
consent to leave the farm through a series of negotiations, but to no avail. On
numerous occasions the appellant offered R100 000 and building materials as a
contribution to the respondents’ relocation and if that amount was insufficient, it was
willing to consider reasonable suggestions by them for additional assistance. The
appellant moreover offered to assist the respondents financially in purchasing
serviced plots in Klapmuts (of which Mrs Malan would have become a co-owner)
23 Section 8(1) of ESTA provides:
‘8 Termination of right of residence
(1) Subject to the provisions of this section, an occupier's right of residence may be terminated on any lawful ground,
provided that such termination is just and equitable, having regard to all relevant factors and in particular to-
(a) the fairness of any agreement, provision in an agreement, or provision of law on which the owner or person in
charge relies;
(b) the conduct of the parties giving rise to the termination;
(c) the interests of the parties, including the comparative hardship to the owner or person in charge, the occupier
concerned, and any other occupier if the right of residence is or is not terminated;
(d) the existence of a reasonable expectation of the renewal of the agreement from which the right of residence arises,
after the effluxion of its time; and
(e) the fairness of the procedure followed by the owner or person in charge, including whether or not the occupier
had or should have been granted an effective opportunity to make representations before the decision was made to
terminate the right of residence.’
on which emergency housing structures could be erected by the tenth respondent,
Stellenbosch Municipality (the Municipality). This assistance too, the respondents
refused.
[64] As stated, the changes and upgrades to Cottage 5 were done with Mrs Malan’s
approval. Despite this, she refused to move and the appellant was forced to apply for
the relocation order. The events leading to the breakdown of the relationship
between Mrs Malan and Mr Van der Merwe have been described above. The eviction
came about solely as a result of her conduct. She told Mr Van der Merwe in crude
and insulting terms to get off the property when she misappropriated the building
materials. She erected an illegal structure with those materials and enabled
unauthorised persons to occupy it. She has no intention of returning the materials or
demolishing the structure. Since her refusal to voluntarily relocate to Cottage 5, her
conduct (and that of the respondents) has been audacious and defiant. In these
circumstances, the belated apology by Mrs Malan during her evidence for treating
Mr Van der Merwe rudely, rings hollow.
[65] As to the interests of the parties envisaged in s 8(1)(b), it must be emphasised
that it is only Mrs Malan who is an occupier in terms of s 8(4) of ESTA. The
remaining respondents hold title under her. Mrs Malan had been living on the farm
for some 45 years when the case was heard, of which she resided for 14 years after
her husband’s passing in 2005. In my opinion however, given that it is practically
impossible for the relationship between Mrs Malan and Mr Van der Merwe to be
restored due to a lack of mutual trust, her continued residence on the farm is
untenable. This is an inevitable consequence of an eviction under s 10(1)(c) of
ESTA. According to the papers, Mrs Malan receives a state pension and was
employed as a domestic worker for many years. She has family who own residential
property in Stellenbosch and Wesbank in the Western Cape. Her brother owns a
house in Stellenbosch in which Mrs Malan’s mother was living at the time of the
hearing. There seems to be no reason why the responsibility of accommodating Mrs
Malan or assisting her in finding accommodation, should not be borne by her
family.24
[66] The remaining respondents have been living on the farm, rent-free for many
years. This, despite the fact that five of the six adult respondents work elsewhere and
receive an income, and that the remaining adult respondent is of an employable age.
This in itself is a lawful ground for the termination of the right of residency under
ESTA, if the termination is just and equitable.25 What is more, for as long as they
have been living on the farm, the respondents have never paid for services such as
water, refuse removal or sewerage, the monthly costs of which are borne by the
appellant.
[67] The LCC failed to consider this evidence or the appellant’s interests in not
permitting unlawful conduct, the erection of an illegal structure on the farm, or its
continued occupation by unauthorised persons. Instead, it had regard only to the
fairness of the lease agreement, to a limited extent the conduct of Mrs Malan, and
the apparent lack of notice regarding representations under s 8(1)(e) of ESTA.
[68] This brings me to s 8(1)(e) of ESTA. It states that an occupier’s right of
residence may be terminated on any lawful ground, provided that such termination
is just and equitable, having regard to, inter alia:
24 Rashavha v Van Rensburg 2004 (2) SA 421 (SCA) para 19.
25 Molusi fn 9 para 43.
‘the fairness of the procedure followed by the owner or person in charge, including whether or not
the occupier had or should have been granted an effective opportunity to make representations
before the decision was made to terminate the right of residence.’26
[69] It is a settled principle that when interpreting a statutory provision, what must
be considered is the language, context and purpose of the statute and the material
known to those responsible for its drafting.27 Two points must be made about this
provision. First, it is clear from the language and syntax of s 8(1)(e) that Parliament
did not require an occupier to be given an opportunity to make representations in
every case.28 The language is clear and explicit and, in my view, must be given effect
to whatever the consequences. Second, on the plain language of s 8(1)(e), the
opportunity to make representations applies only in relation to a decision to
terminate the right of residence, and constitutes the procedural fairness requirement
of that provision.29
[70] In my opinion, this interpretation is consistent with the immediate context and
is illustrated by the facts of this very case. Thus, s 9(2) of ESTA draws a distinction
between the eviction of an occupier on the basis of termination of the right of
residence in terms of s 8,30 and the conditions for an order for eviction in terms of
s 10.31 Section 10(1)(c) authorises the eviction of an occupier on the grounds of a
fundamental breach of the relationship between him or her and the owner or person
in charge. It says nothing about representations on the part of the occupier. This is
hardly surprising as a relationship of mutual trust and respect is fundamental to co-
26 Emphasis added.
27 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) affirmed
in Airports Company South Africa SOC Ltd v Imperial Group Ltd and Others [2020] ZASCA 2; [2020] 2 All SA 1
(SCA); 2020 (4) SA 17 (SCA) para 22.
28 Le Roux NO and Another v Louw and Another [2017] ZALCC 10 para 91.
29 Snyders and Others v De Jager and Others [2016] ZACC 55; 2017 (3) SA 545 (CC) para 75.
30 Section 9(2)(a) of ESTA.
31 Section 9(2)(c) of ESTA.
residence. A construction that an owner is required to grant an occupier an
opportunity to make representations once it is found that the occupier has committed
a fundamental breach of their relationship which is practically impossible to
continue, is both insensible and intolerable. It would also render the provisions of
s 10(1)(c) nugatory: what is contemplated is whether objectively, the relationship is
at an end.
[71] Thus, in Klaase32 there was no suggestion of the occupier being granted an
opportunity to make representations. This was also the case in Wichmann,33 in which
it was held that there was a fundamental, irremediable breach of the relationship
between the landowner and an occupier in terms of s 10(1)(c) of ESTA, where the
occupier had erected a structure on a farm without permission and disregarded the
landowner’s instruction to stop building. The conduct of the other occupiers in
intimidating and assaulting farmworkers was held to be a breach of their duty under
s 6(3), which rendered them liable to eviction in terms of s 10(1)(a) and (c).34 In
terms of s 10(1)(a), an order of eviction may be granted if an occupier has committed
a material breach of s 6(3) which has not been remedied. Again, the language and
context exclude an opportunity to make representations.
[72] Applying the principles in Molusi referred to in paragraph 36 above, I do not
think it can be said that an order for the eviction of the respondents would be unjust,
inequitable or unfair. The appellant did not elect to use the portion of the farm on
which Cottage 1 was located. It was compelled to do so because of the widening of
a road, and in order to secure a long-term tenant necessary for its business. To force
the appellant to continue to provide Mrs Malan with housing in the face of
32 Klaase fn 6.
33 Wichmann N O and Another v Langa and Others 2006 (1) SA 102 (LCC).
34 Wichmann fn 21 para 43.
overwhelming evidence of a fundamental breakdown of their relationship as
contemplated in s 10(1)(c) of ESTA, would place it in an untenable position. The
appellant cannot be expected to continue to tolerate the respondents’ occupation of
an illegal dwelling on its land – proscribed by ESTA itself. Neither can it be expected
to continue to support them financially by providing free housing and utilities. As
was said in Labuschagne:35
‘The Act was not intended to promote the security of opportunistic occupiers at the expense and
exploitation of the rights and legitimate interests of the landowners.’
[73] The facts show that the appellant has repeatedly tried to assist the respondents
in securing alternative accommodation, which has unreasonably been refused. The
inference is inescapable that the appellant’s offers were refused because the
respondents have no intention of giving up the benefits of free accommodation and
utilities which the appellant currently provides. The appellant has indicated on oath
that it remains willing to negotiate with the respondents if they consider that the
relocation contribution of R100 000 is insufficient, and that it remains willing to
consider all reasonable suggestions from the respondents as to how it could assist
them. There is no apparent reason why the appellant would renege on this offer.
[74] The amicus curiae, for whose assistance we are grateful, submitted that Mrs
Malan had committed a fundamental breach of trust as envisaged in s 10(1)(c) of
ESTA. The amicus suggested that the matter be remitted to the magistrate because
the report by the Municipality concerning alternative accommodation was dated 7
March 2018 and the report in terms of s 9(3) of ESTA, 25 May 2018, and that
circumstances may have changed.
35 Labuschagne and Another v Ntshwane 2007 (5) SA 129 (LCC) para 23.
[75] In my view, no purpose would be served by remitting the matter to the
magistrate. First, the appellant remains willing to assist the respondents in finding
alternative accomodation. Second, the report by the Municipality makes it clear that
it has adopted an emergency housing assistance policy to accommodate homeless
persons. It is accordingly obliged to provide the respondents with alternative
accommodation should they be rendered homeless, despite its claim that it was
unable to provide accommodation when the case was heard, because of its policy to
provide accommodation close to their former homes. The Constitutional Court has
held that a municipality is obliged not only in terms of ESTA, but also s 26 of the
Constitution to provide suitable alternative accomodation.36 Third, according to the
s 9(2) report, the Municipality had negotiated with the appellant to contribute the
sum of R50 000 towards the relocation of Mrs Malan, provided that she agreed to
leave the farm. Finally, any further delay is not justified. The respondents will be
given an adequate opportunity to find alternative accommodation. The matter has
dragged on for nearly five years now and the intolerable position in which the
appellant finds itself, cannot be allowed to continue.
[76] In the result the following order is issued:
The appeal succeeds.
The order of the Land Claims Court is set aside and replaced with the
following order:
‘(a) An eviction order is granted against the first to eighth respondents and all
those occupying the farm known as Topshell Park in Stellenbosch, Western Cape
(the farm) under them.
36 Baron and Others v Claytile (Pty) Ltd and Another [2017] ZACC 24; 2017 (10) BCLR 1225 (CC); 2017 (5) SA
329 (CC) para 46.
(b) The first to eighth respondents and all those occupying the farm under them
must vacate the farm on or before 31 March 2022.
(c) Should the respondents and all those occupying the farm under them fail to
vacate it on or before 31 March 2022, the sheriff of the court is authorised to evict
them from the farm by 14 April 2022.
(d) The tenth respondent is ordered to provide emergency housing of a dignified
nature with access to services (which may be communal) to the first to eighth
respondents and all those occupying the farm under them, on or before 31 March
2022.
(e) There is no order as to costs.’
___________________
A SCHIPPERS
JUDGE OF APPEAL
APPEARANCES:
For appellant:
J L Williams
Instructed by:
Cluver Markotter Inc., Stellenbosch
c/o McIntyre van der Post, Bloemfontein
For first to ninth respondents:
L Mfazi (with him L Tshigomana)
Instructed by:
S Morgan & Associates, Mitchell’s Plain
c/o Bekker Attorneys, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 September 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
Nimble Investments (Pty) Ltd v Johanna Malan and Others (556/2020) [2021] ZASCA 129 (30
September 2021)
___________________________________________________________________________
Today a majority of the SCA upheld the appellant’s appeal against an order of the Land Claims
Court, Randburg, which set aside an order by the Stellenbosch Magistrate’s Court (the
magistrate’s court) that the respondents be evicted from a farm known as Topshell Park in
Stellenbosch, Western Cape (the farm), in terms of the Extension of Security of Tenure Act 62
of 1997 (ESTA). The ground for their eviction was essentially that the first respondent had
committed a fundamental breach of the relationship between her and the manager or owner of
the farm, that was practically impossible to restore as envisaged in s 10(1)(c) of ESTA.
The first respondent had been living on the farm since 2005 after her husband had passed away.
Part of the farm was expropriated for purposes of a road and the appellant needed the portion
of land on which the house of the first respondent (Cottage 1) and those occupied by other
farmworkers were located. The land was needed by the owner’s tenant under a long-term lease.
The owner obtained an order in the magistrate’s court to relocate the respondents from Cottage
1 to Cottage 5 on the farm. The first respondent breached the relationship when, without
permission, she removed the building materials from Cottage 1 and used them to erect an illegal
structure next to Cottage 5. When confronted about this, she told the manager that Cottage 1
was her house and she could do with the materials as she pleased. Using an expletive, she
shouted at him to go away. The appellant’s building materials were used to erect an illegal
structure to accommodate persons who had not previously lived on the farm. The first
respondent refused to demolish the structure or return the materials. The SCA held that this
conduct constituted a fundamental breach of the relationship between the occupier and the
landowner, justifying the eviction of the respondents.
The SCA held that the eviction was just and equitable as it was untenable to force a landowner
to continue with a relationship which, according to the evidence was practically impossible to
restore. For this reason and on a proper construction of s 10(1)(c) of ESTA it was unnecessary
to grant the respondents an opportunity to make representations as envisaged in s 8(1)(e). A
number of the respondents were employed elsewhere but paid no rent and made no contribution
to utilities. The SCA concluded that the landowner could not be expected to provide free
housing and utilities to the respondents as it had done for a number of years. ESTA was not
intended to promote the security of opportunistic occupiers at the expense and exploitation of
the rights of landowners. Moreover, the appellant was, and remained willing to assist the
respondents financially in finding alternative accommodation. This assistance was
unreasonably refused.
In a minority judgment it was held that the order of eviction was not just and equitable. The
respondents had not been given an opportunity to make representations as envisaged in
s 8(1)(e) of ESTA, why their rights of residence should not be terminated.
|
1515
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 344/07
In the matter between:
MOHAMED JOONAID MIA FIRST APPELLANT
RAYMOND HOWELL SECOND APPELLANT
v
THE STATE RESPONDENT
Neutral citation: Mia v The State (344/2007) [2008] ZASCA 117
(26 September 2008).
Coram:
Heher, Mlambo, Maya JJA
Heard:
19 August 2008
Delivered:
26 September 2008
Summary:
Criminal law – theft – competent verdict on robbery charge – theft
generic offence encompassing theft by false pretences.
Evidence – discredited evidence of accused – irrelevant regarding
guilt or innocence of another accused – where state had
produced no inculpating evidence against that accused.
_______________________________________________________________
ORDER
_______________________________________________________________
On appeal from: High Court, Witwatersrand (Joffe J and Kekana AJ sitting as
Full Court).
1.
The first appellant’s appeal against his conviction for theft succeeds
and the order of the Johannesburg High Court is set aside.
2.
In its place the following order is substituted:
‘The first appellant’s appeal against his conviction is upheld and a
finding of ‘not guilty and discharged’ is substituted therefor.’
3.
The second appellant’s appeal against his conviction for theft is
dismissed.
______________________________________________________________
JUDGMENT
______________________________________________________________
MLAMBO JA (HEHER, MAYA JJA concurring):
[1] The appellants were convicted on one count of theft and sentenced to
six years’ imprisonment by the Johannesburg Regional Court. Their appeal to
the Johannesburg High Court (Joffe J and Kekana AJ) failed but they were
granted leave by that court to appeal to this court against their convictions.
[2] The facts are that on 31 October 1990 the first appellant (Mia) had
facilitated a meeting between the second appellant (Howell) and a certain
Mr Ebrahim to conclude a foreign exchange transaction involving an amount
of R1,1m. At that time Mia was an estate agent conducting his business with
attorneys Lachporia and Osman with whom he shared premises in Fordsburg.
The meeting was at Mia’s office and the transaction was in contravention of
foreign exchange regulations. That meeting was preceded by one on the
same day at which Howell had to check the money tendered by Ebrahim to
satisfy himself that it was genuine and all there. Even though Ebrahim was
involved in the transaction, the money he was using was not his but belonged
to the Carrim family represented by Enver Carrim. At the meeting in Mia’s
office Howell masqueraded as Peter Lehman, a German investor, whose
interest was to conclude a foreign exchange transaction involving the South
African and British currencies. This was Ebrahim’s understanding of what was
happening when he put the money, in containers, on Mia’s desk in the
expectation that Howell would then call his contacts in London to effect the
transfer of an amount of £200 000 into an agreed bank account which would
result in a profit in the region of 30 per cent.
[3] After Ebrahim had put the money on Mia’s table, Howell suddenly
produced a business card, stating at the same time that he was a policeman
from the Commercial Branch of John Vorster Square police station. Ebrahim,
thinking he had become entangled in a police sting operation, bolted out of
Mia’s office and retreated to his warehouse from where he advised Enver
Carrim of what had transpired. After Ebrahim’s departure Howell spoke into a
two way radio, and another man walked into Mia’s office and assisted Howell
to remove the containers with the money. As Howell was leaving the premises
he told the office staff that a police officer from John Vorster Square Police
Station would call to take charge of the case.
[4] Later that afternoon after a meeting involving Mia, Ebrahim, the Carrim
brothers, Lachporia and certain lawyers who had been consulted, Mia and
Ebrahim went to John Vorster Square Police Station to lay a charge of
robbery, stating that Howell had robbed Ebrahim of emeralds valued at R1,1m
at gunpoint. Mia provided a statement to the police and cooperated with them
as a witness in the ensuing investigation and efforts to trace Howell who had
vanished without trace. Just over a year later and on a routine visit to a police
station Mia saw Howell. This chance encounter prompted Mia to change his
version to the police about what had happened on 31 October 1990. He
stated that what was robbed was actually an amount of R1,1m and not
emeralds as he had initially reported.
[5] The police charged Howell with robbery but the charge was withdrawn.
After representations from the Carrim family to the Commissioner of Police a
decision was taken to charge both appellants with that offence. The charge
sheet alleged that ‘on 31 October 1990 both assaulted Ebrahim, whilst
pointing a firearm at him, and removed from his possession, with violence an
amount of R1,1m being his property and/or the property of Enver Carrim and
thereby took the money’. The ensuing trial spanning some seven years
culminated in the appellants being convicted of theft of the amount of R1,1m.
[6] The version presented by Mia during the trial was almost identical to
that of Ebrahim especially with regard to the incident in Mia’s office on 31
October 1990. This version was that he had facilitated the meeting on that day
at Howell’s instance, whom he had met for the first time a few days before
and who had been referred to him by certain persons he knew from Kwazulu-
Natal. He stated that his contacts had assured him of Howell’s bona fides. As
a result he had believed that Howell was Peter Lehman, a German investor,
and had in good faith facilitated the meeting with Ebrahim for purposes of the
foreign exchange transaction just like others he had facilitated in the past. He
stated that he was taken aback when, at the meeting in his office, Howell
suddenly announced that he was a policeman and produced a card. Because
he had believed Howell’s utterance, he had not tried to prevent him and his
accomplice leaving with the money.
[7] On the other hand, Howell’s version was that, from inception, the whole
incident was a plan hatched by Mia, who was owed commission from past
deals by Ebrahim and/or the Carrim family. He testified that Mia knew his true
identity and that he simply played along because he had been promised a
share of the spoils. After he removed the money from Mia’s office following
Ebrahim’s precipitate departure he met Mia at the Carlton Centre in
Johannesburg during the afternoon of the same day. There Mia paid him an
amount of R55 000 and took the rest of the money away with him.
[8] The trial court concluded that on the evidence before it the illegal
transaction involved a foreign exchange deal and not emeralds. In so doing it
rejected the evidence of Ebrahim, who had testified that the subject of the
transaction was emeralds. The trial court also disbelieved Ebrahim regarding
the production of a firearm by Howell at the meeting in the office. The court’s
conclusion that theft and not robbery was committed was informed by this
finding. The trial court further found that ‘the three versions [of the state and
the two accused] are mutually destructive and cannot all be the truth. The true
version is probably to be found in a combination of the three versions or
possibly in a fourth version which no one deposed to’. The court, however,
was specific in labelling Howell as evasive, not credible and unreliable but
made no similar finding regarding Mia save that there were improbabilities in
his version and that in certain respects his witnesses contradicted his version.
[9] The trial court concluded that the offence of robbery had not been
proved but that instead the appellants were guilty of theft1 in that they had
conspired to steal the money from Ebrahim through false pretences. The trial
court stated:
‘I find that the only reasonable inference which I can come to on the objectively
proven facts, is that the two accused have formed the common purpose to trick the
witness Ebrahim into believing that the money was genuinely going to be transferred
into a foreign account.’
[10] The issue therefore is whether the trial court was correct in concluding
that the two appellants had acted in cahoots to hoodwink Ebrahim. This, it will
be remembered, was Howell’s version, that he took part in the deal simply to
assist Mia who was recovering unpaid commission from the Carrims arising
1 Section 260 of the Criminal Procedure Act 51 of 1977 provides: ‘If the evidence on a charge
of robbery or attempted robbery does not prove the offence of robbery or, as the case may
be, attempted robbery, but- . . . (d) the offence of theft; . . . the accused may be found guilty of
the offence so proved, or, where the offence of assault with intent to do grievous bodily harm
or the offence of common assault and the offence of theft are proved, of both such offences.’
from past deals. The court’s conclusion that Mia was as guilty as Howell was
based on its finding that Mia, who was no small man, did nothing to come to
Ebrahim’s aid when Howell performed his theatrics in his office and that he
could have prevented the unarmed Howell from leaving with the money. The
trial court was further of the view that Mia had ample opportunity during the
afternoon to leave his office and meet Howell at the Carlton Centre to take his
share of the spoils – and return to his office.
[11] Before us, counsel for Mia submitted that the trial court had erred in
convicting Mia as no evidence had been adduced by the state incriminating
him. Counsel for Howell was content to argue that the trial court had erred in
convicting his client of theft as, at most, the evidence disclosed the
commission of the offence of fraud. Counsel submitted that as fraud is not a
competent verdict of robbery the court should have acquitted Howell. Counsel
for Howell further submitted, in the alternative that Howell could not be
convicted of theft by false pretences unless the charge sheet had specifically
mentioned this which was not the case here.
[12] The proper approach in a criminal case, is that evidence must be
considered in its totality.2 It is only in doing so that a court can determine if the
guilt of an accused person has been proved beyond reasonable doubt.
Should the trial court, in the course of assessing the evidence before it, find
that a particular witness is unreliable and reject his version for that reason,
that evidence plays no further part in the determination of the guilt or
innocence of the accused in the absence of satisfactory corroboration. Even
more so does this apply to evidence tendered by a co-accused incriminating
another, especially where the state has not adduced any evidence proving the
guilt of that other accused.
[13] The trial court, in convicting Mia, relied on Howell’s evidence that they
met at the Carlton Centre to share the spoils. That evidence was entirely
uncorroborated. Significantly, a reading of all the evidence renders it
2 S v M 2006 (1) SACR 135 (SCA) at 183h-i and S v Gentle 2005 (1) SACR 420 (SCA) at
433h-i.
improbable that Mia left his office that afternoon before going to the police
station. The evidence of the state established that Mia co-operated with
Ebrahim and the Carrim family in trying to locate Howell. He also
accompanied Ebrahim when they went to lay charges against Howell on the
same day. If anything, this evidence did not incriminate Mia but tended to
support his version that he was as flummoxed by Howell’s trick as was
Ebrahim. The state’s evidence fell short of establishing even a prima facie
case of robbery or theft by Mia. Reliance on Howell’s suspect testimony,
uncorroborated as it was, carried the case no further.
[14] Furthermore the trial court ignored Mia’s denial of a subsequent
meeting with Howell without good reason. It must also be pointed out that the
evidence of Howell’s massive spending spree involving a residential property
and a motor vehicle, for example, a few days after 31 October 1990 (which
Howell dishonestly attempted to explain away) without similar evidence
against Mia should at least have raised serious question about the credibility
of any evidence by him which inculpated Mia particularly the paltry amount he
alleged was his share of the spoils.
[15] The conviction of Mia cannot stand in the light of all the aforegoing
considerations. It is correct as submitted by Howell’s counsel that fraud is not
a competent verdict on a charge of robbery. Fraud is described as ‘the
unlawful and intentional making of a misrepresentation which causes actual or
potential prejudice . . .’.3 It is correct that in Ebrahim’s mind he was to part with
R1,1m and to receive £200 000 by way of a deposit into an account in
London. In his mind he expected Howell to finalise the transaction by calling
his contacts in London to do the transfer. Had Howell pretended to do that
and had Ebrahim walked out thereafter believing that the deposit had been
effected, fraud would have indeed been committed.
[16] That is not what happened here. No sooner had Ebrahim voluntarily
put the money on the table than the unexpected happened. The
3 C R Snyman Criminal Law 5 ed (2008) p 531.
transformation of Peter Lehman, the German investor, into a policeman was
not what Ebrahim had bargained for and he immediately made good his
escape. He was not induced to hand over the money by the representation;
rather he abandoned control of it when the representation was made and thus
enabled Howell to take it at his leisure, knowing that he had not yet received
the consent of Ebrahim to do so. That the trap was not a genuine police trap
did not turn Howell’s conduct into fraud. It is also incorrect to suggest, as
Howell’s counsel attempted to do, that there can be no conviction for theft by
false pretences where the charge sheet does not specifically mention this
offence. Counsel referred in this regard to an unreported judgment of
Stafford J (in which Strydom J concurred)4 in which it was found that ‘fraud in
the form of theft by false pretences was not the type of theft contemplated by
the legislator as a competent verdict in s 260(d)’ [on a robbery charge]. I
disagree. No such distinction is implicit in the section. Clearly it is competent
for a court to convict on the competent verdict of theft where the charge is one
of robbery. Theft is a generic offence that encompasses theft by false
pretences. See Ex parte Minister of Justice: In Re R v Gesa; R v De Jongh
1959 (1) SA 234 (A) at 239F-H where it was stated:
‘If there was deception so fundamental that the will of the victim did not go with the
act, there could be a taking and therefore larceny, called larceny by a trick. But if the
deception was not so fundamental as wholly to nullify the voluntariness of the act,
there was no room for larceny. Yet the deceiver's conduct had to be punished and so
the crime of obtaining goods by false pretences was devised. As was pointed out by
Ramsbottom J, in Dalrymple, Frank and Feinstein v Friedman and Another, 1954 (4)
SA 649 (W) at p 664, it is not correct to say that our law's treatment of both types of
fraudulent acquisition of another's goods – the larceny by a trick type and the
obtaining by false pretences type – as theft by false pretences owes its origin to
English practice. On the contrary in 1895 in R v Swart 12 SC 421, De Villiers CJ
stated that our law differs from the English law and has always treated facts covered
by the English crime of obtaining by false pretences as theft. Ten years later in Rex v
Collins 19 EDC 163, Kotze JP, said that theft in our law has a much wider scope than
the corresponding term in English law and that our crime of theft is wide enough to
4 William Boeck v The State Case No A273/91 (Transvaal Provincial Division) delivered on
13 May 1991.
include the obtaining of goods by false pretences. The belief that our law of theft
incorporated theft by false pretences under the influence of English law, a belief
expressed, for instance, in Rex v Mofoking 1939 OPD 117, may have been
encouraged by the mistaken notion that there is in English law a crime of theft by
false pretences (cf Rex v Hyland 1924 TPD 336). It is true that the name of the
English crime of obtaining by false pretences may well have suggested the use of the
expression “theft by false pretences” (cf Transkeian Penal Code ss 191 to 193), but
our law successfully resisted any tendency that there may have been to confine theft
within the narrow limits of larceny.’
Howell was in my view correctly convicted of theft and his appeal must fail.
[17] I should express my disquiet at the delay implicit in this matter. The
offence was committed in October 1990 and it took nearly three years for the
trial to start, against both appellants in May 1993. That trial was concluded in
January 1999 nearly seven years later. The subsequent appeal to the
Johannesburg High Court was concluded on 22 June 2007, eight years later.
The matter has to date taken some 18 years to finalise. This is an indictment
on the criminal justice system and the two appellants must take a lions’ share
of the blame for this state of affairs. They have, as would be expected, not
been prejudiced by the delay as they have been on bail since the inception of
the trial which was extended when they were convicted in 1999. One hopes
that the dilatory manner in which this matter has been handled will not be
repeated in other matters.
[18] In the circumstances the following order is granted:
1.
The first appellant’s appeal against his conviction for theft succeeds
and the order of the Johannesburg High Court is set aside.
2.
In its place the following order is substituted:
‘The first appellant’s appeal against his conviction is upheld and a
finding of ‘not guilty and discharged’ is substituted therefor.’
3.
The second appellant’s appeal against his conviction for theft is
dismissed.
__________________
D MLAMBO
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
1st APPELLANT – B ROUX SC;
2nd APPELLANT – M R HELLENS SC
INSTRUCTED BY:
MAHMOOD MIA ATTORNEYS; FORDSBURG
ROSSOUWS; BLOEMFONTEIN
FOR RESPONDENT:
M T NTLAKAZA
INSTRUCTED BY:
THE DIRECTOR OF PUBLIC PROSECUTIONS;
JOHANNESBURG
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
26 September 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.
Mia and Another v the State
The Supreme Court of Appeal (SCA) today upheld an appeal by Mohamed
Joonaid Mia and dismissed that of Raymond Howell. They had been convicted
of theft of R1,1m by the Johannesburg Regional Court which was confirmed by
the Johannesburg High Court.
Howell had approached Mia to facilitate an illegal foreign exchange transaction.
The complainant, Ebrahim, believing Howell’s representation that he would
receive £200 000 in exchange for R1,1m delivered the money but midway
through the meeting Howell pretended to be a policeman. On this turn of events
Ebrahim ran away leaving the money behind which Howell appropriated and
vanished without trace.
Some years later Mia and Howell were charged with robbery of R1,1m but were
convicted of theft instead it being the regional court’s conclusion that they had
committed that offence (a competent verdict on a robbery charge) and not
robbery as no violence was used. Their appeals to the Johannesburg High
Court failed but they were granted leave to appeal to the SCA.
The SCA found that the lower courts had misdirected themselves in convicting
Mia. In this regard the SCA found that the state had led no evidence inculpating
Mia and that his conviction was based on Howell’s evidence, who the regional
court had branded as evasive, unreliable and not credible. On this basis Mia’s
conviction was set aside.
The SCA further found that what Howell had committed was theft and not fraud
and that the regional court was correct in convicting him of theft. The SCA
accordingly dismissed Howell’s appeal.
|
3596
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 425/2020
In the matter between:
SASOL SOUTH AFRICA (PTY) LTD
Appellant
and
MURRAY & ROBERTS LIMITED
Respondent
Neutral citation:
Sasol South Africa (Pty) Ltd v Murray & Roberts Limited (Case no
425/2020) [2021] ZASCA 94 (28 June 2021)
Coram:
SALDULKER and ZONDI JJA and LEDWABA, GORVEN and
POTTERILL AJJA
Heard:
18 May 2021
Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email. It has been published on the
Supreme Court of Appeal website and released to SAFLII. The date and
time for hand-down is deemed to be 10h00 on 28 June 2021.
Summary: Construction contract – contract providing for dispute resolution process –
arbitration award final and binding on the parties until and unless set aside on review
– Project Manager refusing to implement some of the findings of arbitrator – dispute
relating to Project Manager’s refusal to implement arbitrator’s findings referred to
adjudicator for adjudication - adjudicator applying the principles established in
arbitration award – a party to the contract not entitled to ignore the adjudicator’s
decision simply on the ground that it considers it to be invalid – appeal dismissed.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg (Weiner J) sitting
as court of first instance:
1.
Save to the extent reflected in paragraph 2 hereof, the appeal is dismissed with
costs including the reserved costs for the application for leave to appeal and the costs
of two counsel where so employed.
2.
The order of the court a quo is varied to read as follows:
‘(a) The respondent (Sasol) is ordered to make immediate payment to the applicant
(Murray & Roberts) as follows:
R130 959.39 plus VAT;
R2 340 290.55 plus VAT;
R10 888 833.76 plus VAT;
R2 420 242.59 plus VAT;
R173 938.58 plus VAT;
R1 469 609.12 plus VAT;
R335 400.27 plus VAT;
R991 562.24 plus VAT;
R934 931.85 plus VAT; and
R102 842.50 plus VAT.
(b) The respondent is ordered to pay interest on the amounts set out in paragraphs
1 to 10 above plus VAT from 10 June 2019 (being the date from which the respondent
was in mora by having failed to make payment to the applicant in accordance with the
decision) to date of payment to be calculated on a daily basis at the interest rate equal
to the prime lending rate of ABSA Bank and compounded annually.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Zondi JA (Saldulker JA and Ledwaba, Gorven and Potterill AJJA concurring)
Introduction
[1] On 15 March 2015 the appellant, Sasol South Africa (Pty) Ltd (Sasol) as an
employer and the respondent, Murray & Roberts Limited (Murray & Roberts) as a
contractor, concluded a construction contract in terms of which Murray & Roberts
would render certain engineering and construction services to Sasol at its Secunda
plant. The contract provided for the appointment of a project manager to perform
certain functions under the contract and the mechanism to resolve the disputes that
might arise between the parties. The dispute had to be notified and referred first to the
adjudicator, appointed in terms of the adjudicator’s contract, for adjudication, whose
decision was enforceable as a contractual obligation and had to be complied with,
pending the referral to arbitration. A dissatisfied party could thereafter refer the dispute
to arbitration.
[2] During the execution of the contract various disputes arose between the parties.
These mainly related to the correctness of the assessments made by a project
manager in respect of payments claimed by Murray & Roberts in terms of the contract.
Murray & Roberts referred the disputed payments to the adjudicator. Ten disputes
related to the application of what was termed PMC200. Murray and Roberts presented
for payment timesheets signed off by Sasol daily which, it contended, bound Sasol
contractually to make those payments. Sasol, in turn, took the view that PMC200
should be applied. This would mean that the hours worked were not dispositive of the
entitlement to payment. They were only a record and the project manager was entitled
to deduct costs arising from a failure to remove resources upon the request of the
project manager pursuant to PMC200. The adjudicator rejected Murray & Roberts’
claims and confirmed the project manager’s assessments.
[3] Dissatisfied with the outcome, Murray & Roberts referred the disputed
payments (Disputes 1 and 2) to the arbitrator. No decision was made by the arbitrator
on the other 8 disputes arising from the same issues because they had not yet arisen
when Disputes 1 and 2 were referred to him. The arbitrator found in favour of Murray
& Roberts. He held that the timesheets were contractually binding and that the project
manager’s instruction (PMC200), pursuant to which the payments were disallowed,
was not valid. Murray & Roberts requested the project manager to implement the
terms of the award by adjusting payments in relation to all 10 disputes. He
implemented the terms of the award for some of the disputes and refused to implement
them for the rest, apparently on Sasol’s instruction.
[4] In consequence Murray & Roberts notified Dispute 16 requiring the project
manager to give effect to the ruling on Disputes 1 and 2 in relation to the balance of
the 10 disputes. This was not a referral of the balance of the 10 disputes to the
adjudicator, since he had previously decided Disputes 1 to 3, 5 to 6 and 8 to 12 against
Murray and Roberts prior to the award of the arbitrator. The adjudicator reviewed the
project manager’s refusal to pay on the basis of the decision of the arbitrator that costs
pursuant to PMC200 should not be deducted and ordered Sasol to pay the disallowed
payments. Murray & Roberts demanded of Sasol to comply with the adjudicator’s
award. Sasol refused. It contended that the decision of the adjudicator was invalid.
More about this aspect later.
[5] Sasol’s refusal to comply with Murray & Roberts’ demand prompted Murray &
Roberts to approach the Gauteng Division of the High Court, Johannesburg (high
court), on 12 June 2019, seeking to enforce as a contractual obligation the decision
made by the adjudicator on 12 May 2019 on Dispute 16. Dispute 16 related to
assessment number 38 issued by the project manager on 16 November 2018 in terms
of which the project manager had disallowed certain payments claimed by Murray &
Roberts. Sasol opposed the application and sought to justify its refusal to comply with
the adjudicator’s decision by contending that it was invalid. In turn, Sasol launched a
counter-application in which it sought an order declaring that the decisions previously
made by the adjudicator in respect of disputes 3 to 6 and 8 to 12 were enforceable as
contractual obligations. The high court (Weiner J) upheld Murray & Roberts’ claim and
dismissed Sasol’s counter-application. It granted Sasol leave to appeal to this Court.
Factual background
[6] The facts which gave rise to the dispute are the following. On 15 March 2015
Sasol and Murray & Roberts concluded an NEC3 Engineering and Construction
Contract for structural, mechanical, electrical instrumentation and piping work related
to phase 1 of the volatile organic compound abatement project at Sasol, Secunda. It
was a time charge contract which meant that Sasol would bear the risk of overruns.
[7] The written agreement between the parties comprises various parts of the
NEC3 Engineering and Construction Contract of June 2005 (with amendments June
2006). As already stated the contract provided for the nomination of the project
manager to perform certain prescribed functions and duties. The contract also
provided for a dispute resolution process and the parties opted for Option W1, which
contained the agreed dispute resolution provisions.
[8] The agreed dispute resolution procedures comprise the following three steps:
(a)
The notification of a dispute (clause W1.3(1));
(b)
The referral of the dispute to adjudication (clause W1.3(1); and
(c)
The referral of the dispute to the tribunal (agreed to be arbitration) in the event
that a party is dissatisfied with the adjudicator’s decision (clause W1.4(2)) or if the
adjudicator does not notify his decision within the agreed time (clause W1.4(3)). In
terms of W1.3(10) the adjudicator’s decision is binding on the parties unless and until
revised by the tribunal and is enforceable as a matter of contractual obligation between
the parties. It is not an arbitral award. The adjudicator’s decision is final and binding if
neither party has notified the other within the times required by the contract that he or
she is dissatisfied with a decision of the adjudicator and intends to refer the matter to
the tribunal.
Project manager’s instruction
[9] Due to budget constraints and time overruns, during February 2017, Sasol
became concerned and decided to appoint a team to reassess the amounts due to
Murray & Roberts. On 1 March 2017 the project manager by way of a project
manager’s communication, termed PMC200, instructed Murray & Roberts to
demobilise with immediate effect failing which, he would disallow the costs of the
resources in terms of clause 11(25) of the contract. The demobilisation concerned
involved the removal from site of resources, namely manpower and equipment. The
reassessment of past payments and the disallowance of the resources referred to in
PMC200 were reflected in the project manager’s payment advices 27 and 28 for the
months of March and April 2017 and they related to payment applications number 35
and 36. The application of PMC200 resulted in an amount of about R42 million being
deducted for those months.
Murray & Roberts’ referral
[10] Aggrieved by the deductions, Murray & Roberts, after giving notices of both
disputes on 19 May 2017 and 5 June 2017 respectively, submitted the disputes to the
adjudicator on 7 July 2017 relating to payment applications 35 and 36 (Disputes 1 and
2). On 20 October 2017 the adjudicator issued a decision upholding the project
manager’s assessments. Murray & Roberts thereafter referred Disputes 1 and 2 to the
arbitrator.
[11] While the arbitrator’s award in respect of Disputes 1 and 2 was still pending the
project manager continued to assess the payment applications submitted by Murray
& Roberts in terms of PMC200, and this resulted in certain amounts being disallowed.
Murray & Roberts on each occasion disputed the disallowed payments and referred
them to the adjudicator as Disputes 3, 5, 6, and 8 to 12. As he had done for Disputes
1 and 2, the adjudicator upheld the project manager’s assessments and found in
favour of Sasol.
[12] On 9 October 2018 the arbitrator rendered an award in favour of Murray &
Roberts in relation to Disputes 1 and 2. He determined that the PMC200 was not
contractually binding and that the timesheets submitted by Murray & Roberts for
payment, were contractually binding. Sasol subsequently brought an application for
the review and the setting aside of the arbitration award but its application was
dismissed by the high court and Sasol’s petition for leave to appeal was also dismissed
by this Court.
Referral of dispute 16
[13] Armed with the arbitrator’s award, Murray & Roberts approached the project
manager and requested him to give effect to the legal and factual position between
the parties resulting from the award by revising his assessment of the amounts due in
respect of Disputes 1 and 2 and his assessments contained in a number of other
payment certificates. On 23 November 2018 the project manager issued the revised
assessment. In his assessment the project manager, on the instruction of Sasol,
disregarded certain portions of the award which Sasol contended were invalid and had
undertaken to take them on review. Those portions related to the arbitrator’s findings
that the timesheets were contractually binding and PMC200 was not valid. Murray &
Roberts was dissatisfied with the assessment and on 16 January 2019 it referred the
dispute as Dispute 16 to the adjudicator.
[14] Before the adjudicator, Sasol had contended that Murray & Roberts had sought
the adjudicator to revisit and reconsider his earlier decisions and that the dispute
relating to payment advice 38 was not a new dispute, but was an attempt by it to again
refer the disputes relating to payment advices 27 to 37 before the adjudicator. Sasol
submitted that the adjudicator did not have jurisdiction and was expressly precluded
from reconsidering those parts of the disputes in respect of which the arbitrator had
already issued an award.
[15] The adjudicator rejected Sasol’s jurisdictional challenges and proceeded to
consider the dispute. His reasoning is set out as follows in paras 32 and 33 of his
decision:
‘[. . .] I cannot see any reason why, if an arbitrator gives an award which overturns an
adjudicator’s decision, other decisions of the adjudicator which were made on the same
principle as the overturned decision, cannot be changed to conform with the arbitrator’s award,
but can only be overturned in a further arbitration. Apart from that fact that that will put the
Contractor to unnecessary expense, it also files in the face of the underlying practicalities and
principles of the contract.
I accordingly find that, to the extent that the arbitrator’s award establishes principles that are
applicable to the other disputes, I may revise any of my prior decisions based on new
information.’
[16] As already stated when Murray & Roberts on 16 May 2019 demanded that
Sasol comply with the terms of the adjudicator’s decision it refused to do so. Hence
Murray & Roberts brought the application in the high court seeking to enforce the
decision of the adjudicator on Dispute 16. Sasol opposed the application and justified
its refusal to comply with the adjudicator’s decision by contending that it was of no
force or effect in that, so it argued, in conducting the adjudication and in issuing his
decision, the adjudicator had acted outside of his powers.
[17] In substantiation of its defence Sasol asserted, first, that the adjudicator
decided a dispute which was the same or substantially the same as the ones that he
had previously decided which, it argued, was something that he was not permitted to
do under the adjudicator’s contract; second, that he had received information after the
time allowed for him to do so had expired; and third, that he had given his decision
outside the time period allowed for him to do so.
[18] In challenging the merits of the decision, Sasol contended that the adjudicator
had failed to consider the dispute before him, in particular the timesheets which formed
basis of Murray & Roberts’ claims and the effect of such failure, it argued, prevented
it from making submissions on those timesheets. In Carillion Construction v Devonport
Royal Dockyard Ltd [220] EWCA Civ 1358 the court at para 52 endorsed the
correctness of the principle that ‘where an adjudicator has acted in excess of his
jurisdiction or in serious breach of the rules of natural justice, the court will not enforce
his decision.’
[19] The first point taken by Sasol was that the adjudicator erred in holding that the
arbitration award applied to all other payment assessments or his previous decisions.
It argued that the arbitration award applied only to the disputes that were referred to
arbitration and it did not apply to all other payment assessments disputes. This was
because, so proceeded the argument, the hierarchy of dispute resolution processes
in the contract required that all steps should be followed before the dispute was
referred to the arbitrator. Sasol argued that to hold that the arbitrator’s award
established a principle to be applied to all other payment assessments would render
dispute resolution processes meaningless as this would mean that the arbitrator’s
award was to be applied to all previous assessments and decisions, even if no notice
of dispute had been given or if no referral to the adjudicator had been made in relation
to a particular project manager’s assessment. Relying on Graham v Park Mews Body
Corporate and Another [2011] ZAWCHC 370; 2012 (1) SA 355 (WCC); [2012] (1) All
SA 187 Sasol submitted that the fact that the arbitrator came to a particular finding in
relation to PMC200 in relation to Disputes 1 and 2 was inadmissible in another
arbitration about any other dispute.
[20] In Park Mews the court at para 61 referred to the judgment in Land Securities
plc v Westminster City Council [1993] 4 All ER 124, in which Hoffmann J held as
follows at 127:
‘In principle the judgment, verdict or award of another tribunal is not admissible evidence to
prove a fact in issue or a fact relevant to the issue in other proceedings between different
parties. The leading authority for that proposition is Hollington v F Hewthorn & Co Ltd [1943]
2 All ER 35, [1943] KB 587, in which a criminal conviction for careless driving was held
inadmissible as evidence of negligence in a subsequent civil action. There has been criticism
of this decision and important exceptions have since been created by statute, notably in the
Civil Evidence Act 1968, but none of them apply here.
In Hunter v Chief Constable of West Midlands [1981] 3 All ER 727 at 734, [1982] AC 529 at
542, Lord Diplock said that Hollington’s case was ‘generally considered to have been wrongly
decided’. He did not elaborate on this remark, which in any case was not necessary for the
decision. In Savings and Investment Bank Ltd v Gasco Investments (Netherlands) BV [1984]
1 All ER 296 at 303, [1984] 1 WLR 271 at 280 Peter Gibson J said that Hollington’s case still
represented the common law. Still more recently the principle has been applied by the Privy
Council to exclude evidence of the conviction of a principal offender at the trial of an accessory
(see Hui Chi-ming v R [1991] 3 All ER 897, [1991] 1 AC 34).
Mr Barnes QC for the plaintiff did not seek to challenge Hollington’s case as a statement of
the common law, but he said that it is based upon the rule which excludes opinion evidence.
Goddard LJ, who gave the judgment of the court said ([1943] 2 All ER 35 at 40, [1943] KB 587
at 595):
“It frequently happens that a bystander has a complete and full view of an accident; it is beyond
question that while he may inform the court of everything that he saw, he may not express any
opinion on whether either or both of the parties were negligent. The reason commonly
assigned is that this is the precise question the court has to decide; but in truth it is because
his opinion is not relevant. Any fact that he can prove is relevant; but his opinion is not. The
well-recognised exception in the case of scientific or expert witnesses depends on
considerations which, for present purposes, are immaterial. So, on the trial of the issue in the
civil court, the opinion of the criminal court is equally irrelevant.”.’
[21] I disagree with Sasol’s submissions. In the arbitration award, the tribunal
determined certain principles which the project manager was contractually obliged to
apply in terms of clauses 50 and 51.3 when assessing payment advice 38 (PA 38),
but instead the project manager decided to do so selectively. As correctly submitted
by Murray & Roberts, in Dispute 16 the adjudicator merely ‘stepped into the shoes’ of
the project manager and reviewed and revised the project manager’s failure by finding
that he should have applied the principles determined by the tribunal and that, if he
had done so, he would have assessed PA 38 in the amounts set out in the
adjudicator’s decision.
[22] The second point taken by Sasol was that in terms of clause 2.1 of the
adjudicator’s contract ‘the adjudicator does not decide any dispute that is the same or
substantially the same as one that he or his predecessor has previously decided.’ It
argued that the disputes in respect of the previous assessments of the project
manager had been decided by the adjudicator. Those assessments had, so proceeded
the argument, become adjudicator’s decisions and were contractually binding on the
parties. The project manager was no longer entitled to change them.
[23] The interpretation of clause 2.1 contended for by Sasol is incorrect. In the first
place, Dispute 16 related to whether the project manager was correct to withhold
payment in the face of the arbitrator’s finding that he had been incorrect to do so as a
result of PMC200. In terms of the contract, the project manager was obliged to
consider and to take into account contractual entitlements determined in favour of
Murray & Roberts in the arbitrator’s award. This obligation was imposed on him by
clause 50.5 and 51.3 of the construction contract. Clause 50.5 provides the following:
‘The Project Manager corrects any wrongly assessed amount due in a later payment
certificate.’
Clause 51.3 states:
‘If an amount due is corrected in a later certificate either
by the Project Manager in relation to a mistake or a compensation event or
following a decision of the Adjudicator or the tribunal,
interest on the correcting amount is paid. Interest is assessed from the date when the incorrect
amount was certified until the date when the correcting amount is certified and is included in
the assessment which includes the correcting amount.’
[24] In this matter the project manager was requested to make an assessment in
compliance with the terms of the award. In the process of making an assessment and
on the instruction of Sasol he refused to comply with certain portions of the award.
Upon a referral to him of the project manager’s refusal to comply with the terms of the
arbitrator’s award, the adjudicator had the power in terms of clause W1.3(5) of the
contract to ‘review and revise any action or inaction of the Project Manager . . . related
to the dispute . . .’. When the adjudicator acts under this clause, he does not reconsider
a prior decision which he himself had made, but he simply does what the projector
manager was supposed to have done in terms of the contract in accordance with the
principles established in the arbitration award. The adjudicator was entitled to act in
circumstances where the project manager had, on Sasol’s version ‘declined to apply
the part of the arbitration award that is subject of the review application’. It was thus
never in dispute that the project manager was obliged to apply the award and Dispute
16 was only about the manner in which the project manager applied it. For these
reasons Sasol’s contention must fail.
[25] A third ground of Sasol’s attack on the validity of the adjudicator’s decision, was
that the adjudicator failed to notify the dispute timeously, that is to say when he issued
his decision, his jurisdiction had ceased. Sasol asserted that the adjudicator should
have issued his decision on 12 March 2019, and not on 12 May 2019. Sasol contended
that when the adjudicator issued his decision he no longer had jurisdiction to do so,
his jurisdiction having, so Sasol argued, ceased on 12 March 2019. In elaborating on
its defence Sasol stated that Murray & Roberts referred Dispute 16 to adjudication on
16 January 2019 and that in terms of the contract the four-week period provided for in
clause W1.3(8) for receiving information terminated on 12 February 2019 and the
further four-week period for the adjudicator’s decision on 12 March 2019 as the parties
had not agreed to extend it.
[26] Sasol relied heavily on the judgment of Twala J in Group Five Construction
(Pty) Ltd v Transnet SOC Limited [2019] ZAGPJHC 11, para 21 in which it was held
that, without the consent of the parties, the adjudicator cannot extend the time period
beyond the four-week prescribed period.
[27] Explaining the processes that occurred between the date of receiving the
referral, up to the time of giving his decision, the adjudicator stated that
from 16 January to 21 February 2019, the parties submitted e-mails and written
submissions. On 27 February 2019, within the four-week period from the date of
submission of Sasol’s submissions, he informed Sasol and Murray & Roberts that he
would allow Murray & Roberts to submit further information, as requested by Mr Fourie
of Sasol in his e-mails, dated 19 February 2019 and 21 February 2019 to ensure that
any decision he arrived at, was based on correct facts. He allowed Sasol to reply to
anything new in those submissions. In addition to what was contained in the e-mails,
the adjudicator requested further information from both parties.
[28] The adjudicator also invited the parties to motivate if they wanted to submit oral
argument. On 5 March 2019, Murray & Roberts submitted its further information. Sasol
responded to Murray & Roberts’ further information and supplied the information
requested by the adjudicator on 14 March 2019. An oral hearing was held on 16 April
2019 and Murray & Roberts and Sasol submitted written heads.
[29] In view of the considerable reliance placed on the Group Five decision by Sasol,
it would be appropriate to analyse that decision in a little detail. The facts are
adequately set out in the headnote as follows:
‘In January 2011, the applicant and respondent entered into a written engineering and
construction contract (“the ECC”). A dispute arose pertaining to the respondent’s issuance of
a final payment certificate. After the applicant notified the respondent of the dispute, in April
2018, the matter was referred for arbitration and in September 2018 the arbitrator rendered
his award. The present application was for an order directing the respondent to give effect to
the decision of the arbitrator’s award.
On 19 July 2018, the arbitrator requested further information from the applicant. He then
requested that the parties allow him an additional seven days to finalise his request for further
information, after which he would be in a position to finalise his award within 4 weeks. The
respondent refused to grant the arbitrator the extension requested. The arbitrator continued
to communicate and received certain information from the applicant without any further
contribution and participation from the respondent and published his decision on 18
September 2018.’
[30] When Group Five sought to enforce the adjudicator’s decision, Transnet
opposed it and contended that the decision was invalid. It submitted that the
adjudicator failed to publish his decision within four weeks which period was from 29
June 2018 to 29 July 2018. It contended that the adjudicator should not have
proceeded with the adjudication of the matter without the consent of both parties since
it refused to give consent on 31 July 2018. It submitted that since it had, by filing a
notice to refer the dispute to arbitration on 31 July 2018, brought the adjudication
process to a stop and disempowered the adjudicator from continuing with the
adjudication. The court upheld Transnet’s submissions and held at para 21 that:
‘In terms of clauses W1.3.3 and W1.3.8 of the agreement between the parties the time period
for the publication of the adjudicator’s decision is four weeks from the date when he receives
the last submissions from the parties, unless the parties agree to grant him an extension of
time. These clauses do not state what should happen when a party does not grant the consent
to extend the period. I am of the respectful view that the intention of the parties to make the
requirement of consent from the parties to afford the adjudicator more time is meant to give
the parties control over the process of the adjudication. It is meant to give the parties some
power to deal, should they find themselves in that situation, with a recalcitrant adjudicator. The
ineluctable conclusion is therefore that, absent such consent to the extension of time, the
adjudicator should publish his report on due date failing which his mandate is terminated. I am
therefore unable to disagree with Counsel for the respondent that, from the plain wording of
these clauses, the adjudicator is not competent to proceed and act beyond the time period set
by the agreement if he is unable to secure the necessary consent from both parties. No other
meaning can be ascribed to these provisions for they are not at all ambiguous.’
[31] Returning to the facts of the present matter, in my view, when the adjudicator
considered the dispute, he was obliged to gather sufficient facts to enable him to make
a decision and to do so within the framework provided for in the construction contract
and the adjudicator’s contract.
[32] Clause W1.3(3) of the construction contract states the following:
‘The Party referring the dispute to the Adjudicator includes with his referral information to be
considered by the Adjudicator. Any more information from a Party to be considered by the
Adjudicator is provided within four weeks of the referral. The period may be extended if the
Adjudicator and the Parties agree’.
[33] It was submitted by Murray & Roberts that this clause allows both parties to
provide further information or to reply to further information until the last day of the
four-week period. Only after that day, would the adjudicator be in a final position to
consider whether, based on the information already received, additional information
would ‘. . . enable him to carry out his work . . .’. I agree with this submission.
[34] CIause W1.3(5), third and fourth bullet points of the conditions of contract
states:
‘The Adjudicator may…
instruct a Party to provide further information related to the dispute within a stated time
and
instruct a Party to take any other action which he considers necessary to reach his
decision and to do so within a stated time.
The provision of ‘further information’ necessarily applies to information after the four-
week period in clause W1.3(3) and places no limitation on the extent of the ‘stated
time’.
[35] CIause W1.3(8) provides as follows:
‘The Adjudicator decides the dispute and notifies the Parties and the Project Manager of his
decision and his reasons within four weeks of the end of the period for receiving information.
The four-week period may be extended if the Parties agree.’
In the context of the subsequent agreement in the adjudicator’s contract, ‘. . . the end
of the period for receiving information . . .’ clearly adds an additional two weeks after
the request for additional information. It undermines Sasol’s argument that the four-
week period in clause W1.3(3) had not been extended by agreement. The parties
expressly extended the period by agreeing with the adjudicator that he could ask for
additional information to be provided to him within two weeks.
[36] Additional clause 2.5 of the adjudicator’s contract provides:
‘The Adjudicator may ask for any additional information from the Parties to enable him to carry
out his work. The Parties provide the additional information within two weeks of the
Adjudicator’s request.’
[37] It was submitted by Murray & Roberts that the phrase ‘. . . any additional
information . . .’ logically refers to information over and above that which the
adjudicator received in the four-week period provided for in clause W1.3(3) and which
the adjudicator started to consider after that period, resulting in his decision that
additional information would ‘enable him to carry out his work’. I agree with Murray &
Roberts’ submission.
[38] CIause 1.7 of the adjudicator’s contract regulates the position where there is a
conflict between the provision of the adjudicator’s contract and the construction
contract. It provides:
‘If a conflict arises between this [adjudicator’s] contract and the contract between the Parties
then this [adjudicator’s] contract prevails.’
[39] The adjudicator’s contract allows an entitlement to more information and more
time than that provided for in the ‘contract between the parties’ and to the extent that
there is a conflict between the adjudicator’s contract and the construction contract, the
adjudicator’s contract must prevail.
[40] From these events, it must be accepted that the date of hearing constituted ‘the
end of the period for receiving information’. The adjudicator was therefore obliged in
terms of clause W1.3(8) to deliver his decision and his reasons within four weeks of
the end of the period for receiving information (being 16 April 2019), which he did on
12 May 2019. The Group Five case upon which Sasol relied, is distinguishable on the
facts from the present case in that in that case the court did not consider the implication
of additional clause 2.5 of the adjudicator’s contract which gives the adjudicator the
right to request and to receive additional information, after which the four-week period
for his decision commences. The contention that the decision is invalid because of the
adjudicator’s failure to deliver his decision within four weeks of the end of the period
for receiving information, must therefore be rejected.
[41] In the alternative, Sasol argued that the adjudicator’s jurisdiction ceased when
Sasol issued a notice of dissatisfaction in terms of clause W1.4(3) of the construction
contract. In terms of this clause ‘if the adjudicator does not notify his decision within
the time provided by this contract, a party may notify the other party that he intends to
refer the dispute to the tribunal. A party may not refer a dispute to the tribunal unless
this notification is given within four weeks of the date by which the Adjudicator should
have notified his decision’.
[42] On 26 March 2019 Sasol gave its first notice of dissatisfaction in terms of
W1.4(3). This notice was given on the basis that the adjudicator had failed to give his
decision within four weeks from the end of the period for receiving information. In para
2 of the notice Sasol stated:
‘7. The Employer accordingly notifies the Contractor, which this notification constitutes, that
the Employer intends to refer the matter (Dispute 16) to the tribunal due to the fact that the
Adjudicator has not issued his decision in respect of Dispute 16 within the period stated in the
contract.’
[43] Sasol’s notification was premature because at the time that it was issued the
period within which the adjudicator was required to deliver his decision, had not
expired. He was entitled to receive from the parties, and to request the parties to
provide, additional information either in terms of clause W1.3 (8) of the construction
contract or of the additional clause 2.5 of the adjudicator’s contract.
[44] In any event the adjudication proceeded until it reached its finality despite Sasol
having given notification of referral. On 16 April 2019 both parties made oral
submissions after which the adjudicator undertook to deliver his decision within two
weeks of 16 April 2019. This period was not the period stipulated in the contract but
was the period determined by the adjudicator himself and within which he had
expected to make the decision available to the parties. This did not happen.
[45] When the adjudicator failed to deliver his decision within the period stipulated
by him, that is, within two weeks of 16 April 2019, Sasol, on 7 May 2019, gave its
second notice of dissatisfaction. Sasol contended that the adjudicator was not entitled
to extend this period for him to provide his decision. It gave notice of its intention to
refer the dispute to the tribunal. In para 6 of the notice Sasol stated:
‘6. Accordingly and insofar as it may be argued that the Employer’s notification in terms of
Clause W 1.4(3) as issued on the 26th of March 2019 was invalid and the Adjudicator was
entitled to disregard it, which is denied by the Employer, the Employer hereby gives notice in
terms of Clause W1.4(3) of its intention to refer the dispute to the tribunal as a result of the
Adjudicator not having provided his decision within 2 weeks of the 16th of April 2019, the period
as extended by him.’
Again Sasol’s notification was premature for the simple reason that in terms of W1.3(8)
the adjudicator had to make his decision within four weeks of the end of the period for
receiving information. The parties made submissions on 16 April 2019, which meant
that the adjudicator had to make his decision within four weeks of 16 April 2019.
[46] On 12 May 2019 the adjudicator issued his decision. Thereafter on 28 May
2019 Sasol served a third notice on the adjudicator of its intention to refer the dispute
to the tribunal. Sasol did not refer the dispute to the tribunal and neither did it take the
decision to the tribunal for it to be set aside. It therefore remained binding and was
enforceable as a matter of contractual obligation between the parties.
[47] Lastly, Sasol contended that Murray & Roberts’ failure to place before the
adjudicator timesheets on which its claims were based, deprived it of the opportunity
to consider them in addressing the adjudicator. The adjudicator, argued Sasol, failed
to afford it a right to be heard before he took a decision on timesheets. And that in
doing so, he breached the audi alteram partem principle. This contention must fail.
Sasol did not squarely raise this point before the adjudicator. Sasol’s refusal to pay
Murray & Roberts was not based on the ground that the timesheets were incorrect,
but rather based on the project manager’s reliance on clause 11.2(25) in disallowing
the costs of resources. The calculation and quantum of the amounts reflected in the
timesheets were never in dispute between the parties.
[48] In the result the appeal must fail. But the order of the high court must be
amended in the light of the fact that some of the amounts Sasol was ordered to pay
had since been paid and the parties provided this Court with the draft order reflecting
what the true position should be in relation to the amounts still to be paid by Sasol.
[49] In the result an order in the following terms is made:
1.
Save to the extent reflected in paragraph 2 hereof, the appeal is dismissed with
costs including the reserved costs for the application for leave to appeal and the costs
of two counsel where so employed.
2.
The order of the court a quo is varied to read as follows:
‘(a) The respondent (Sasol) is ordered to make immediate payment to the applicant
(Murray & Roberts) as follows:
R130 959.39 plus VAT;
R2 340 290.55 plus VAT;
R10 888 833.76 plus VAT;
R2 420 242.59 plus VAT;
R173 938.58 plus VAT;
R1 469 609.12 plus VAT;
R335 400.27 plus VAT;
R991 562.24 plus VAT;
R934 931.85 plus VAT; and
R102 842.50 plus VAT.
(b) The respondent is ordered to pay interest on the amounts set out in paragraphs
1 to 10 above plus VAT from 10 June 2019 (being the date from which the respondent
was in mora by having failed to make payment to the applicant in accordance with the
decision) to date of payment to be calculated on a daily basis at the interest rate equal
to the prime lending rate of ABSA Bank and compounded annually.’
______________
D H ZONDI
JUDGE OF APPEAL
APPEARANCES:
For appellant:
P H J van Vuuren SC (with him H M Viljoen)
Instructed by:
Cliffe Dekker Hofmeyr, Sandton
Phatshoane Henney Attorneys, Bloemfontein
For respondent:
L J van Tonder SC
Instructed by:
Tiefenthaler Attorneys Inc, Sandton
Honey Attorneys Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
28 June 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Sasol South Africa (Pty) Ltd v Murray & Roberts Limited (Case no 425/2020) [2021] ZASCA
94 (28 June 2021)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal from the
Gauteng Division of the High Court, Johannesburg (high court). Subject to minor variation of the
amounts still to be paid by the appellant the SCA confirmed the high court order.
On 15 March 2015 the appellant, Sasol South Africa (Pty) Ltd (Sasol) as an employer and the
respondent, Murray & Roberts Limited (Murray & Roberts) as a contractor, concluded a construction
contract in terms of which Murray & Roberts would render certain engineering and construction services
to Sasol at its Secunda plant. The contract provided for the appointment of a project manager to perform
certain functions under the contract and the mechanism to resolve the disputes that might arise between
the parties. During the execution of the contract various disputes arose between the parties which
mainly related to the correctness of the assessments made by the project manager in respect of
payments claimed by Murray & Roberts.
When the project manager applying what was termed PMC200 disallowed some of the payment
applications submitted by Murray & Roberts, the latter notified a dispute and referred it to the adjudicator
appointed in terms of the adjudicator’s contract. The adjudicator rejected Murray & Roberts’ claims and
confirmed the project manager’s assessments. Dissatisfied with the outcome, Murray & Roberts
referred the disputed payments on Disputes 1 and 2 to the arbitrator who found in favour of Murray &
Roberts, holding that the timesheets were contractually binding and that the project manager’s
instruction (PMC200), pursuant to which the payments were disallowed, was not valid. Murray &
Roberts requested the project manager to implement the terms of the award by adjusting payments in
relation to all 10 disputes. The project manager implemented the terms of the award for some of the
disputes and refused to implement for the rest. Murray & Roberts took the project manager’s refusal to the
adjudicator. The adjudicator reviewed the project manager’s refusal to pay and ordered Sasol to pay the
disallowed payments. Murray & Roberts demanded Sasol to comply with the adjudicator’s award but
Sasol refused.
Murray & Roberts approached the high court to enforce the adjudicator’s decision. Sasol opposed the
application. It contended that it was justified to ignore the adjudicator’s decision on the ground that it
was invalid. It in turn launched a counter-application in which it sought an order declaring that the
decisions previously made by the adjudicator were enforceable as contractual obligations. The high
court upheld Murray & Roberts’ claims and dismissed Sasol’s counter-application. It granted Sasol
leave to appeal to this Court.
The issue before the SCA was whether the adjudicator’s decision was invalid as contended by Sasol.
Sasol had contended that the adjudicator’s decision was invalid on the grounds that: (a) the adjudicator
decided a dispute which was the same or substantially the same as the ones that he had previously
decided which is something that he was not entitled to do under the adjudicator’s contract; (b) he had
no authority to receive information after the time allowed for him to do so had expired; and (c) he had
no jurisdiction to issue a decision after the time allowed for him to do so had expired.
The SCA dismissed Sasol’s contentions. It held that in terms of clause W1.3(5) read with clause 50.5
and 51.3 of the contract, the adjudicator was entitled to review and revise any action or inaction of the
project manager and when acting under these clauses the adjudicator was not reconsidering his prior
decisions, but was simply doing what the projector manager was supposed to have done in terms of
the contract in accordance with the principles established in the arbitration award. Furthermore, the
Court held that the adjudicator had complied with the time periods stipulated in the contract and the
adjudicator’s contract and that the notices of dissatisfaction purportedly issued by Sasol were
premature. The appeal was dismissed.
~~~~ends~~~~
|
2842
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 648/2011
In the matter between:
SOUTH AFRICAN PROPERTY OWNERS
ASSOCIATION
APPELLANT
and
THE COUNCIL OF THE CITY OF
JOHANNESBURG METROPOLITAN
MUNICIPALITY
FIRST RESPONDENT
EXECUTIVE MAYOR OF THE CITY OF
JOHANNESBURG METROPOLITAN
MUNICIPALITY
SECOND RESPONDENT
THE CITY OF JOHANNESBURG
METROPOLITAN MUNICIPALITY
THIRD RESPONDENT
THE MEMBER OF THE EXECUTIVE
COUNCIL FOR LOCAL GOVERNMENT
FOR THE PROVINCE OF GAUTENG
FOURTH RESPONDENT
THE MEMBER OF THE EXECUTIVE
COUNCIL FOR FINANCE FOR THE PROVINCE
OF GAUTENG
FIFTH RESPONDENT
Neutral citation: South African Property Owners Association v The
Council of the City of Johannesburg (648/2011) [2012] ZASCA 157(8 No-
vember 2012)
Coram:
NAVSA, LEWIS, SHONGWE, PETSE JJA AND SOUTH-
WOOD AJA
Heard:
30 AUGUST 2012
Delivered:
8 NOVEMBER 2012
Summary:
Constitutional law – municipal budget and imposition of
rates – imposition of rates part of budget process - constitutional review
based on principle of legality – failure to consult with community - ap-
plication of Local Government: Municipal Systems Act 32 of 2000, Local
Government: Municipal Finance Management Act 56 of 2003 and Local
Government: Municipal Property Rates Act 6 of 2004 - interpretation of
section 19(1)(b) of Local Government: Municipal Property Rates Act 6 of
2004 – section 172 of the Constitution.
_____________________________________________________________
ORDER
_____________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Moshidi J sitting
as court of first instance):
1 The appeal is upheld with costs, such costs to include the costs of two
counsel.
2 The order of the court below is set aside and substituted as follows:
‘1 It is declared that the first, second and third respondents failed to comply
with the prescribed statutory requirements and procedures in arriving at the
decision on 21 May 2009 to impose a rate of R 0.0154 in the rand on the
value of business, industrial and commercial properties.
2 It is declared that in the future the first respondent is obliged to comply with
the provisions of the Local Government: Municipal Systems Act 32 of 2000,
the Local Government: Municipal Finance Management Act 56 of 2003 and
the Local Government: Municipal Property Rates Act 6 of 2004 when it mate-
rially amends a proposed budget after it has been tabled and advertised for
public comment.
3 The first, second and third respondents are ordered to pay the costs of the
application, such costs to include the costs of two counsel.’
JUDGMENT
SOUTHWOOD AJA (dissenting as to the order only)
[1] This appeal is concerned with the levying of property rates of 1,54
cents in the rand in terms of the Local Government: Municipal Property Rates
Act 6 of 2004 (the Rates Act) on business, commercial and industrial proper-
ties (collectively referred to as business properties) by the Council of the City
of Johannesburg Metropolitan Municipality (the Council) for the 2009/2010 fi-
nancial year. At the heart of the dispute is the Council’s decision, on 21 May
2009, to increase the property rates on business properties by an additional
18% (after it had resolved, on 26 March 2009, to increase the rates generally
by 10% and advertised these rates with the proposed budget for public com-
ment) so that, instead of increasing from 1,2 cents in the rand to 1,32 cents in
the rand, the rates increased from 1,2 to 1,54 cents in the rand.
[2] The appellant, the South African Property Owners Association
(SAPOA), applied to the South Gauteng High Court, to review and set aside,
alternatively, declare null and void, the City of Johannesburg Metropolitan
Municipality’s (the City) budget for 2009/2010, alternatively, the rate of 1,54
cents in the rand on business properties. SAPOA sought this relief on these
grounds: firstly, that the levying of the rate contravened section 19(1)(b) of the
Rates Act because the ratio of the rate levied on business properties (1,54
cents in the rand) to the rate levied on residential properties (0,44 cents in the
rand) exceeded the ratio which is permissible under section 19(1)(b) of the
Rates Act read with the regulations; secondly, that the levying of property
rates is an integral part of the budget process in terms of the Rates Act, the
Local Government: Municipal Finance Management Act 56 of 2003 (the Fi-
nance Act) and the Local Government: Municipal Systems Act 32 of 2000 (the
Systems Act) and the decision to increase the rates on business properties by
an additional 18% required community participation which did not occur; and,
thirdly, the rates imposed on business properties contravened the Rates Act
because they unfairly discriminated against the owners of such properties.
[3] The court a quo found that the Council had not contravened section
19(1)(b) of the Rates Act; that the levying of property rates is not an integral
part of the budget process; that there was no failure of community participa-
tion and that the rates imposed on business properties were not discrimina-
tory. The court a quo also found that the grant of the relief sought by SAPOA
was not in the public interest because it would probably bankrupt the City and,
as a result, the City would not be able to perform its constitutional duties. Ac-
cordingly, the court a quo dismissed the application with costs.1 SAPOA ap-
1The judgment is reported as South African Property Owners Association v Johannesburg Metropolitan
Municipality & others 2012 (3) SA 335 (GSJ).
peals against that order with the leave of that court. At the hearing of the ap-
peal, presumably because of the Department of Finance’s view that no ratio
between the rates on residential and business property had been prescribed,
SAPOA’s counsel abandoned reliance on the ground based on section
19(1)(b) of the Rates Act and the appeal proceeded on the other grounds.
Nevertheless, as the interpretation of section 19(1)(b) is of fundamental im-
portance in the levying of property rates it will be considered again in this
judgment.
[4] Since there are no material disputes of fact it is clear that final relief
may be granted.2 The relevant events took place during a relatively short pe-
riod from March to May 2009, the facts are well-documented and for the most
part SAPOA’s case is based on the City’s documents. The facts will be con-
sidered later in this judgment.
[5] As the imposition of rates is not administrative action,3 SAPOA did not
seek to review and set aside the Council’s budget or the decision to levy an
additional 18% rate on business properties in terms of the Promotion of Ad-
ministrative Justice Act 3 of 2000. Its case is based on the principle of legality
in terms of which the Council’s decision had to be taken in accordance with
the law, failing which it was invalid to the extent that it was inconsistent with
the law. In Affordable Medicines Trust & others v Minister of Health & others4
the Constitutional Court summarised the legal position as follows:
‘Our constitutional democracy is founded on, among other values, the “(s)upremacy
of the Constitution and the rule of law.” The very next provision of the Constitution
dictates that the “Constitution is the supreme law of the Republic; law or conduct in-
consistent with it is invalid”. And to give effect to the supremacy of the Constitution,
courts “must declare that any law or conduct that is inconsistent with the Constitution
is invalid to the extent of its inconsistency”. This commitment to the supremacy of
the Constitution and the rule of law means that the exercise of all public power is now
subject to constitutional control.
2Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634D-635C; Na-
tional Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) para 26; Thint (Pty) Ltd v National
Director of Public Prosecutions & others; Zuma v National Director of Public Prosecutions & others
2009 (1) SA 1 (CC) paras 8-10.
3Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council &
others 1999 (1) SA 374 (CC) para 45.
42006 (3) SA 247 (CC) paras 48 and 49.
The exercise of public power must therefore comply with the Constitution, which is
the supreme law, and the doctrine of legality, which is part of that law. The doctrine
of legality, which is an incident of the rule of law, is one of the constitutional controls
through which the exercise of public power is regulated by the Constitution. It entails
that both the Legislature and the Executive “are constrained by the principle that they
may exercise no power and perform no function beyond that conferred upon them by
law”. In this sense the Constitution entrenches the principle of legality and provides
the foundation for the control of public power.’5
[6] With regard to the first issue, the appellant contends that the levying of
rates constitutes an integral part of the budget process which required that
there be community participation in the decision to increase the rates, which
did not happen. This is disputed by the respondents. There are therefore two
issues to be determined: first, whether the levying of rates constitutes an in-
tegral part of the budget process – which is primarily a legal issue - and sec-
ond, if so, whether the respondents made allowance for community participa-
tion in terms of the relevant statutory provisions.
[7] Municipalities such as the City are part of the local sphere of govern-
ment6 and must provide services to communities in a sustainable manner and
encourage the involvement of communities and community organisations in
matters of local government.7 The City is a category A Municipality: it has, in
its area, exclusive municipal executive and legislative authority.8 With regard
to rates on property and surcharges on fees for services rendered, the rele-
vant provisions of s 229 of the Constitution provide:
‘(1)
Subject to subsections (2) … a municipality may impose –
(a)
rates on property and surcharges on fees for services provided by or
on behalf of the municipality; and
5See also Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council paras
56 and 58; Pharmaceutical Manufacturers Association: In re Ex parte President of the Republic of South
Africa & others 2000 (2) SA 674 (CC) para 17 at 687D-E; Pretoria City Council v Walker 1998 (2) SA
363 (CC) para 85; Gerber & others v MEC for Development Planning and Local Government, Gauteng
& another 2003 (2) SA 344 (SCA) para 35.
6 Section 151(1) of the Constitution.
7 Section 152(1)(b) and (2) of the Constitution.
8 Section 155(1)(a) of the Constitution.
(b)
if authorised by national legislation, other taxes, levies and duties ap-
propriate to local government or to the category of local government
into which that municipality falls, but no municipality may impose in-
come tax, value-added tax, general sales tax or customs duty.
(2)
The power of a municipality to impose rates on property, surcharges on fees
for services provided by or on behalf of the municipality, or other taxes, levies or du-
ties –
…
(b)
may be regulated by national legislation.’
[8] The relevant national legislation is the Systems Act, the Finance Act
and the Rates Act. The three Acts must be read together as they form part of
the suite of legislation that gives effect to the new system of local govern-
ment.9 It must also be noted that a fundamental aspect of the new local gov-
ernment system is the active engagement of communities in the affairs of mu-
nicipalities in which they are an integral part, and, in particular, in planning,
service delivery and performance management.10 How this is achieved with
regard to the preparation of the budget and levying of rates is dealt with in the
following paragraphs.
[9] While the Systems Act provides that a municipality is an organ of state
with a separate legal personality,11 and that the Council has the right to gov-
ern the local government affairs of the local community12 and the right to ex-
ercise the municipality’s executive and legislative authority, and to do so with-
out improper interference, it also provides that members of the local commu-
nity have the right ‘through mechanisms and in accordance with processes
and procedures provided for in terms of this Act or other applicable legislation
to contribute to the decision-making processes of the municipality’.13 Chapter
4 of the Systems Act provides in detail for community participation and em-
9 See preamble to the Systems Act.
10 See preamble to the Systems Act.
11 Section 2 of the Systems Act.
12 Section 4 of the Systems Act.
13 Section 5(1)(a)(i) of the Systems Act.
phasises the necessity for the community to be apprised effectively of all mat-
ters requiring its participation. It is significant that the Act pertinently makes
provision for the local community to participate in the preparation of the
budget. The relevant provisions read as follows:
‘16(1) A municipality must develop a culture of municipal governance that comple-
ments formal representative government with a system of participatory governance,
and must for this purpose –
(a)
encourage, and create conditions for, the local community to partici-
pate in the affairs of the municipality, including in –
.…
(iv) the preparation of its budget;
….
(b) contribute to building the capacity of –
(i) the local community to enable it to participate in the affairs of the
municipality; and
.…
(2)
Subsection (1) must not be interpreted as permitting interference with a
municipal council’s right to govern and to exercise the executive and legislative au-
thority of the municipality.
17(1) Participation by the local community in the affairs of the municipality must
take place through –
(a)
political structures for participation in terms of the Municipal Structures
Act;
(b)
the mechanisms, processes and procedures for participation in mu-
nicipal government established in terms of this Act;
(c)
other appropriate mechanisms, processes and procedures established
by the municipality;
(d)
councillors; and
(e)
generally applying the provisions for participation as provided for in
this Act.
(2)
A municipality must establish appropriate mechanisms, processes and proce-
dures to enable the local community to participate in the affairs of the municipality,
and must for this purpose provide for –
. . .
(b)
notification and public comment procedures, when appropriate;
(c)
public meetings and hearings by the municipal council and other
political structures and political office bearers of the municipality, when
appropriate
. . .
18(1) A municipality must communicate to its community information con-
cerning –
(a)
the available mechanisms, processes and procedures to encourage
and facilitate community participation;
(b)
the matters with regard to which community participation is encour-
aged;
(c)
the rights and duties of members of the local community;
. . . .
The municipal manager of a municipality must give notice to the public, in a
manner determined by the municipal council of the time, date and venue of every –
(a)
ordinary meeting of the council; and
(b)
special or urgent meeting of the council, except when time constraints
make this impossible.
20(1) Meetings of a municipal council and those of its committees are open to the
public, including the media, and the council or such committee may not exclude the
public, including the media, from a meeting, except when –
(a)
it is reasonable to do so having regard to the nature of the business
being transacted; and
(b)
a by-law or a resolution of the council specifying the circumstances in
which the council or such committee may close a meeting and which
complies with paragraph (a), authorises the council or such committee
to close the meeting to the public.
(2) A municipal council, or a committee of the council, may not exclude the public,
including the media, when considering or voting on any of the following matters:
. . . .
(b)
a budget tabled in the council;
. . . .
21(1) When anything must be notified by a municipality through the media to the
local community in terms of this Act or any other applicable legislation, it must be
done –
(a) in the local newspaper or newspapers of its area;
(b) in a newspaper or newspapers circulating in its area and determined by
the council as a newspaper of record, or
(c) by means of radio broadcasts covering the area of the municipality.
. . . .
(3)
A copy of every notice that must be published in the Provincial Gazette or the
media in terms of this Act or any other applicable legislation, must be displayed at the
municipal offices.
. . .
21A(1) All documents that must be made public by a municipality in terms of a re-
quirement of this Act, the Municipal Finance Management Act or other applicable leg-
islation, must be conveyed to the local community –
(a)
by displaying the documents at the municipality’s head and satellite of-
fices and libraries;
(b)
by displaying the documents on the municipality’s official website, if
the municipality has a website as envisaged by section 21B; and
(c)
by notifying the local community in accordance with section 21, of the
place including the website address, where detailed particulars con-
cerning the documents can be obtained.
. . . .
21B(1) Each municipality must –
(a)
establish its own official website if the municipality decides that it is af-
fordable; and
(b)
place on that official website information required to be made public in
terms of this Act and the Municipal Finance Management Act.
. . . .
(3)
The municipal manager must maintain and regularly update the municipality’s
official website, if in existence, or provide the relevant information as required by
subsection (2).
22(1) The Minister may in terms of section 120 make regulations or issue guidelines
concerning –
(a)
minimum standards for municipalities, including minimum standards
relating to funding, when implementing the provisions of this Chapter;
and
(b)
any matter that may facilitate –
(i)
the participation of the local community in the affairs of the
municipality; or
(ii)
the application of this Chapter.’
[10] In terms of the Finance Act the financial (or budget) year of municipali-
ties commences on 1 July of each year and ends on 30 June the following
year. The Finance Act provides that –
(1)
A municipality may incur expenditure only in terms of an approved
budget and within the limits of the amounts approved for the different votes in
an approved budget;14
(2)
The council of a municipality must for each financial year approve an
annual budget for the municipality before the start of the financial year (1
July);15
(3)
The mayor of the municipality must table the annual budget at a council
meeting at least 90 days before the start of the budget year (on or before the
first day of April);16
(4)
The annual budget must be a schedule in the prescribed format –
(a)
setting out realistically anticipated revenue for the budget year
from each revenue source;
(b)
appropriating expenditure for the budget year under the different
votes of the municipality;
(c)
setting out indicative revenue per revenue source and projected
expenditure by vote for the two financial years following the
budget year;
(d)
setting out –
(i)
estimated revenue and expenditure by vote for the cur-
rent year; and
(ii)
actual revenue and expenditure by vote for the financial
year preceding the current year, and
(e)
a statement containing any other information required by section
215(3) of the Constitution or as may be prescribed.17
(5)
When an annual budget is tabled in terms of s 16(2), it must be ac-
companied by the following documents:
(a)
draft resolutions –
(i)
approving the budget of the municipality;
14 Section 15 of the Finance Act.
15 Section 16(1) of the Finance Act.
16 Section 16(2) of the Finance Act.
17 Section 17(1) of the Finance Act.
(ii)
imposing any municipal tax and setting any municipal tar-
iffs as may be required for the budget year; and
(b)
measurable performance objectives for revenue from each source and
for each vote in the budget, taking into account the municipality’s integrated
development plan;
(c)
a projection of cash flow for the budget year by revenue source, broken
down per month;18
(6)
An annual budget may only be funded from –
(a)
realistically anticipated revenues to be collected;
(b)
cash-backed accumulated funds from previous years’ surpluses
not committed for other purposes;
and revenue projections in the budget must be realistic, taking into ac-
count –
(a)
projected revenue for the current year based on collection levels
to date; and
(b)
actual revenue collected in previous financial years.19
(7)
The mayor of a municipality must –
(a)
co-ordinate the processes for preparing the annual budget and
for reviewing the municipality’s integrated development plan and
budget-related policies to ensure that the tabled budget and any revi-
sions of the integrated development plan and budget-related policies
are mutually consistent and credible;
(b)
at least 10 months before the start of the budget year (not later
than 31 August), table in the municipal council a time schedule outlin-
ing key deadlines for –
(i)
the preparation, tabling and approval of the annual
budget; and
(iv)
any consultative processes forming part of the processes
referred to in subparagraphs (i), (ii) and (iii).20
(8)
Immediately after the annual budget is tabled in the municipal council,
the accounting officer of the municipality must –
(a)
in accordance with Chapter 4 of the Systems Act –
18 Section 17(3)(a),(b) and (c) of the Finance Act.
19 Section 18 of the Finance Act.
20 Section 21(1) of the Finance Act.
(i)
make public the annual budget and the documents re-
ferred to in section 17(3); and
(ii)
invite the local community to submit representations in
connection with the budget;21 and
(9)
When the annual budget has been tabled the Council must consider
any views of –
(a)
the local community; and
(b)
the National Treasury, the relevant provincial treasury and any
provincial or national organs of state or municipalities which
made submissions on the budget.22
(10) After considering all budget submissions, the council must give the
mayor an opportunity –
(a)
to respond to the submissions; and
(b) if necessary, to revise the budget and table amendments for con-
sideration by the council.23
(11)
An annual budget –
(a)
must be considered for approval by the municipal council at
least 30 days before the start of the budget year (not later than 31
May);
(a)
must be approved before the start of the budget year (not later
than 30 June);
(b)
is approved by the adoption of the council of a resolution re-
ferred to in section 17(3)(a)(i); and
(c)
must be approved together with the adoption of resolutions as
may be necessary –
(i)
imposing any municipal tax for the budget year;
(ii)
setting any municipal tariffs for the budget year;
(iii)
approving measurable performance objectives for reve-
nue from each source and for each vote in the budget.24
21 Section 22(a) of the Finance Act.
22 Section 23(1) of the Finance Act.
23 Section 23(2) of the Finance Act.
24 Section 24(1) and (2)(a),(b) and (c) of the Finance Act.
[11] The Rates Act states clearly that its object is to regulate the power of a
municipality to impose rates on property. The preamble confirms: (1) that
there is a need to provide local government with access to a ‘sufficient and
buoyant source of revenue necessary to fulfil its developmental responsibili-
ties’; (2) that income from property rates is a critical source of revenue for
municipalities to achieve their constitutional objectives; and (3) that it is es-
sential that municipalities exercise their power to impose rates within a statu-
tory framework that not only enhances certainty, uniformity and simplicity
across the nation but also takes into account historical imbalances and the
rates burden on the poor.
[12] The relevant provisions of the Rates Act, which commenced on 2 July
2005, stipulate that –
(1)
a metropolitan or local municipality may levy a rate on property in its
area and must do this subject to –
(a)
s 229 and any other applicable provisions of the Constitution;
(b)
the provisions of the Rates Act; and
(c)
the rates policy it must adopt in terms of s 3.25
(2)
the council of a municipality must adopt a rates policy consistent with
the Rates Act for the levying of rates on rateable property which must –
(a)
treat persons liable for rates equitably;
(b)
determine the criteria to be applied by the municipality if it –
(i)
levies different rates for different categories of properties;
(ii)
increases rates;
(c)
determine or provide criteria for the determination of –
(i)
categories of properties for the purpose of levying differ-
ent rates as contemplated in paragraph (b)(i);26
(3)
before a municipality adopts its rates policy it must follow, amongst
other things, a process of community participation in accordance with Chapter
4 of the Systems Act which accords with the notice and comment require-
ments prescribed in s 4(2) of the Rates Act;27
25 Section 2(1) and (3) of the Rates Act.
26 Section 3(1) and (3) of the Rates Act.
27 Section 4(1) and (2) of the Rates Act.
(4)
a municipality must adopt by-laws to give effect to the implementation
of its rates policy and these by-laws may differentiate between different cate-
gories of properties and different categories of owners of properties liable for
payment of rates;28
(5)
a municipality may, subject to s 19, in terms of the criteria set out in its
rates policy, levy different rates for different categories of rateable property
which may include categories determined according to the –
(a)
use of the property;
(b)
permitted use of the property;
(c)
geographical area in which the property is situated;29
(6)
a municipality may determine categories of rateable property which in-
clude –
(a)
residential properties;
(b)
industrial properties;
(c)
business and commercial properties.30
(7)
a municipality must levy, as a rate on property, an amount in the rand
applied to the market value of the property31 which value is determined in ac-
cordance with generally recognised valuation practices, methods and stan-
dards and the provisions of the Rates Act.32 Generally, the market value of
the property is the amount the property would have realised if sold on the date
of valuation in the open market by a willing seller to a willing buyer;33
(8)
a municipality must levy a rate for each financial year as the rate
lapses at the end of the financial year for which it was levied;34
(9)
the levying of rates must form part of the municipality’s annual budget
process as set out in Chapter 4 of the Finance Act and a municipality must,
annually, at the time of its budget process review the amount in the Rand of
its current rates in line with its annual budget for the next financial year;35
(10)
a rate becomes payable as from the start of the financial year or, if the
municipality’s annual budget is not approved by the start of the financial year,
as from such later date, when the municipality’s annual budget, including a
28 Section 6(1) and (2) of the Rates Act.
29 Section 8(1) of the Rates Act.
30 Section 8(2) of the Rates Act.
31 Section 11 of the Rates Act.
32 Section 45(1) of the Rates Act.
33 Section 46(1) of the Rates Act.
34 Section 12(1) of the Rates Act.
35 Section 12(2) of the Rates Act.
resolution levying rates, is approved by the provincial executive in terms of s
26 of the Finance Act;36
(11)
a rate is levied by a resolution passed by the municipal council with a
supporting vote of a majority of its members after which the resolution must
be promulgated in the Provincial Gazette and made known to the public in the
prescribed manner;37
(12)
a municipality may not levy –
(a)
different rates on residential properties, except as provided for in
ss 11(2), 21 and 89;
(b)
a rate on a category of non-residential properties that exceeds a
prescribed ratio to the rate on residential properties determined
in terms of s 11(1)(a): Provided that different ratios may be set
in respect of different categories of non-residential properties;
(c)
rates which unreasonably discriminate between categories of
non-residential properties; or
(d)
additional rates except as provided for in s 22
and the ratio referred to in paragraph (b) may only be prescribed
with the concurrence of the Minister of Finance.38 (Section
19(1)(b) provided the basis for the appellant’s principal conten-
tion regarding illegality);
(13)
a municipality intending to levy a rate on property must, in accordance
with the Rates Act, cause a general valuation to be made of all rateable prop-
erties and all properties valued must be included in a valuation roll;39
(14)
valuations of properties on the valuation roll are subject to objection,
review and appeal;40
36 Section 13 of the Rates Act. Section 26 (1) of the Finance Act provides:
‘(1) If by the start of the budget year a municipal council has not approved an annual budget or any
revenue-raising measures necessary to give effect to the budget, the provincial executive of the relevant
province must intervene in the municipality in terms of section 139(4) of the Constitution by taking any
appropriate steps to ensure that the budget or those revenue-raising measures are approved, including
dissolving the council and –
(a)
appointing an administrator until a newly appointed council has been declared
elected; and
(b)
approving a temporary budget or revenue-raising measures to provide for the contin-
ued functioning of the municipality.’
37 Section 14 of the Rates Act.
38 Section 19 of the Rates Act.
39 Section 30 of the Rates Act.
40 Sections 50, 51, 52 and 54 of the Rates Act.
(15)
adjustments made to the valuations must be reflected in the valuation
roll or the supplementary valuation roll;41
(16)
if an adjustment in the valuation of a property affects the amount due
for rates payable on that property, the municipal manager must calculate the
amount actually paid on the property since the effective date and the amount
which should have been paid since that date and recover from or repay to the
person liable for payment of the rate the difference determined together with
interest at the prescribed rate.42
[13] The Council adopted a property rates policy, which came into effect
with the first valuation roll on 1 July 2008. It states that it is designed to ensure
equitable treatment by the Council of property owners and records that the
income from rates must be used to finance in full, or in part, the annual oper-
ating expenditure of the Council in the annual operating budget. One of the
key objectives of the policy is to set out the criteria to be applied by the Coun-
cil if it increases rates and levies differentiating between categories of prop-
erty. Another key objective is to ensure that all persons liable for rates are
treated equitably as required by the Act.
[14] As provided in the Rates Act, the policy determines categories of prop-
erty for levying of differential rates. These include residential property,
business property, commercial property and industrial property. The policy
provides in Item 6 for the determination of rates during the budget process
and purports to set out the criteria to be applied by the municipality if it in-
creases rates and the criteria to be taken into account in determining whether
a differential rate should be applied. Item 6 reads as follows:
‘Annual operating budget
(6.1)
The Council must consider the levying of rates annually during the budget
process.
(2)
Rate increases must be used to finance the increase in operating costs of
municipal services and facilities.
41 Sections 55, 77, 78 and 79 of the Rates Act.
42 Section 55(2) of the Rates Act.
(3)
In determining the level of increases in the rates the criteria to be applied may
include the following:
(a)
The inflation rate as indicated by the consumer price index
excluding mortgage bonds;
(b)
the financing of increased operating expenditure in the budget of the
Council;
(c)
the financing of additional maintenance expenditure included in the
operating budget of the Council;
(d)
the financing of additional depreciation charges included in the operat-
ing budget of the Council;
(e)
the additional cost of servicing debt included in the operating budget
of the Council;
(f)
the augmentation of any revenue shortfall;
(g)
the financing from the annual operating budget of expenditure related
to anything the Council is lawfully empowered to do for which provi-
sion has to be made in the budget;
(h)
take into consideration the medium term budget growth factors as de-
termined by National Treasury.
(4)
(a)
In terms of section 8 of the Act differential rates may be levied accord-
ing to the permitted use or actual use where applicable, of the property con-
cerned.
(b)
The criteria to be taken into account in determining whether a
differential rate should be applied are the criteria specified in sub-item
(3) and –
(i)
the need to promote economic development;
(ii)
any administrative advantages in applying a differential rate;
and
(iii)
the need to alleviate the rates burden on the owners of any
particular category of property specified in item 7.
(5)
Rates are levied in accordance with the Act as an amount in the Rand based
on the market value of all rateable property as reflected in the valuation
roll and any supplementary valuation roll, as contemplated in Chapters 6 and
8, respectively, of the Act.’
(It may be observed that Items 6(3) and (4) confer on the Council the discre-
tion to include the matters listed in determining the level of increases.
This is contrary to section 3(3) of the Rates Act which provides that the rates
policy must determine the criteria to be applied by the municipality if it in-
creases rates.)
[15] To briefly summarise the statutory position with regard to the approval
of a municipal budget and the imposition of rates on property and the commu-
nity’s right to participate in these matters:
(1)
The council of a municipality has the right to govern the affairs of the
municipality and exercise the municipality’s executive and legislative
authority without improper interference. However, these rights are sub-
ject to the rights of members of the local community to contribute to the
decision-making process of the municipality through mechanisms and
procedures prescribed in the Systems Act and other applicable legisla-
tion;
(2)
A municipality must encourage and create conditions for the local
community to participate in the affairs of the municipality, including the
preparation of the budget. Accordingly, a municipality must for this pur-
pose provide for appropriate notification and public comment proce-
dures. Notification to the local community with regard to the budget and
the imposition of rates must be done as prescribed by sections 21, 21A
and 21B of the Systems Act;
(3)
The public is entitled to attend meetings of a council and its committees
when a budget is tabled and approved and a resolution for the imposi-
tion of rates is adopted;
(4)
Every municipality must have a budget and impose rates for each fi-
nancial year which starts on 1 July and ends on 30 June the following
year. A budget must be in the prescribed format setting out the pre-
scribed information including realistically anticipated revenue for the fi-
nancial year from each revenue source. When the budget is tabled it
must be accompanied by a number of prescribed documents including
draft resolutions approving the budget and imposing rates and munici-
pal tariffs;
(5)
The levying of rates must be considered together with the budget as
the levying of rates is part of the budget process. A council levies rates
by passing a resolution imposing the rates. The resolution must be
promulgated and made known to the public in the prescribed manner;
(6)
The approved budget and the rates imposed remain in force for one
financial year: from 1July to 30 June the following year;
(7)
Not later than 31 August in the year before the start of the financial
year, the mayor must table in the council a time schedule for the prepa-
ration, tabling and approval of the budget and any consultation proc-
esses;
(8)
The mayor must co-ordinate the processes for preparing the budget;
(9)
Not later than 31 March before the start of the financial year, the mayor
must table the budget in the council;
(10)
Immediately after the budget is tabled in the council, the municipal ac-
counting officer must, in accordance with chapter 4 of the Systems Act,
make public the budget and accompanying documents (including the
draft resolution to impose the rates) and invite the community to submit
representations in connection with the budget;
(11)
After the budget has been tabled the council must consider any views
of the local community and, after considering all submissions, must
give the mayor an opportunity to respond to the submissions and, if
necessary, revise the budget and table amendments for consideration
by the council;
(12)
Not later than 31 May before the start of the financial year, the council
must consider the budget for approval;
(13) Not later than 30 June before the start of the financial year, the council
must approve the budget;
(14)
If the budget is not approved before the start of the financial year, the
provincial executive of the relevant province must intervene in terms of
s 26 of the Finance Act (read with s 139(4) of the Constitution) to en-
sure that the budget is approved. The provincial executive may take
any appropriate steps, including dissolving the council and appointing
an administrator.
[16] The City’s budget for 2009/2010 was prepared and approved in
accordance with a timetable which provided for the following key events:
25 September 2008 - Issuing of budget and tariffs guidelines
7 November 2008 - Submission of draft tariffs, budgets and business
plan templates to budget office
24 November to 3 December 2008 - Budget panel meetings
16 March 2009 - Submission of final draft tariffs, budgets and business
plans to the Budget Office
16 March 2009 - Tabling of draft budget, tariffs and IDP reports to Spe-
cial Mayoral Committee
26 March 2009 - Tabling of draft budget, tariffs and IDP at Council
April 2009 - Public participation on the tabled budget, tariffs and IDP-
objection period 30 days
7 May 2009 - Approval of final IDP and Budget by Special Mayoral
Committee, including public participation report
20-21 May 2009 - Council approval of final Budget and IDP and Budget
day.
[17] No allowance was made for the mayor to table any amendment of the
budget or for any further public participation. The timetable assumes that
every step will be completed properly in accordance with the timetable.
[18] The preparation and approval of the budget (including the increases in
the rates referred to) took place against the background of 22 448 objections
to the valuations of the properties on the valuation roll. The new valuation roll
had come into effect on 1 July 2008 and the objection process, which com-
menced in May 2008, was completed in March 2009. The objections were
considered and decided between 28 May 2008 and 15 March 2009 and on 16
March 2009 the City’s Finance Department knew that as a result of the objec-
tions the total value of rateable properties had already been reduced by R34.4
billion and that this must result in a substantial reduction in the revenue from
rates, the City’s most important source of revenue. The City’s Finance De-
partment comprises the following Directorates: Budget Office, Rates and
Taxes, Treasury, Valuations, Expenditure and Financial Strategy and Devel-
opment. The Directorates of Rates and Taxes and Valuations were involved in
the processing of objections to the valuations of properties on the valuation
roll and the effect this would have on rates revenue. By 16 March 2009 the
Valuations Directorate had prepared a summary of the objections received,
objections upheld and consequent reduction in the value of the valuation roll.
Pursuant to each successful objection the Valuations Directorate prepares a
voucher, which it sends to the Rates and Taxes Directorate, which amends
the relevant records. By 2 March 2009, both Directorates knew that the Rates
and Taxes Directorate had processed only half of the vouchers.
[19] On 16 March 2009, the mayoral Finance and Economic Development
Committee considered and approved the property rates tariff and the rebates
for 2009/2010. The differential rating of different categories of property was
also considered and it was noted that residential rates would be used as the
base rate and the other rates determined in relation to the residential tariff.
The committee proposed an increase of 10% in the rates in respect of all
categories of property which meant that business property and residential
property would be rated in the ratio 3:1: that is, 1,32 cents in the rand on busi-
ness property and 0,44 cents in the rand on residential property. Despite the
effect of the valuation objections (which the Committee was clearly aware of
because it referred to 21 021 formal objections and the effect these had on
the value of the rateable properties) it was noted that an overall increase of
10% would yield the budgeted income. Accordingly, the Committee recom-
mended that if no objections were received, the amended assessment rates
should be published in the Provincial Gazette to be effective from 1 July 2009.
[20] On 26 March 2009 the mayor tabled the budget for 2009/2010 in which
a 10% increase in the rates and tariffs for all categories of property was pro-
posed. Once again, there was no suggestion of a revenue shortfall that might
result from the large number of successful objections to the property valua-
tions. The respondents have not attempted to explain this omission or the
failure to allow for the reduced rates revenue. The respondents’ deponent
merely says, somewhat disingenuously, that, at the committee meeting on 16
March 2009 and the Council meeting on 26 March 2009, the ‘full extent’ of the
successful objections was not yet known. (Clearly the effect of the successful
objections was). The Council approved the proposed budget (with the 10%
increase in rates) for public participation. The effect of the approval was that
rates for business properties would be increased from 1,20 cents in the rand
to 1,32 cents in the rand whilst residential property rates (the base rate) would
increase from 0,4 cents in the rand to 0,44 cents in the rand. The Council
also resolved that the accounting officer be directed to publish and make
available to the public the tabled budget and accompanying documents, with
an invitation to the public to submit objections or representations and, in the
event of no comments being received, the proposed property rates be pub-
lished in the Provincial Gazette to take effect from 1 July 2009.
[21] After the Council meeting, the tabled budget (together with the
proposed increases in the property rates) was published in the local media
accompanied by an invitation to the local community that it become involved
and submit comments on the proposed budget and the proposed increase in
property rates. The local community had an opportunity until 30 April 2009 to
make representations to the respondents regarding the proposed 10% in-
crease in property rates and tariffs.
[22] On 9 April 2009, during the public participation period, Ms Erika Naudé,
the Director of Rates and Taxes, analysed the effect on the rates revenue of
the successful objections to the property valuations and prepared a discus-
sion document setting out her conclusions. She pointed out that, although the
Council had intended to increase property rates in line with inflation, the fund-
ing requirements of the City required that a predetermined
revenue be raised to enable the City to perform its operational activities; that
the reduced revenue (as a result of the objections) would result in a shortfall
of R336,39 million in the rates revenue of the proposed 2009/2010 budget
and that an increase of 20% in all property rates would be required to make
up the shortfall. She considered possible solutions -
‘3.1
Adjusting the tariff
Although the proposed tariff increase is currently 10%, it is clear that such an in-
crease will be detrimental to the budget for 2009/2010. In order to accommodate the
shortfall a 20% increase is required. This can be argued as an input from the City
due to the change in the rates base.
The tariffs are currently open for public comment. If such a change is proposed at
Council, without public consultation, it could be considered in contravention of the
MFMA [the Finance Act] and Systems Act requirements. In addition, it is considered
that such a huge additional increase may not be politically acceptable. It should also
be considered that such an increase, in addition to the increases on services could
burden the rate-payer to the extent that it is not affordable, possibly leading to a rates
boycott, increased loss of property and thus degradation of the built environment.
3.2
Amending ratios between categories
From the impacts of the shift in the rates base, it is clear that the business categories
are those that benefit most from the resultant changes. It can thus be considered
that the business ratio be increased to 1:4. This must yield some relief although it
may not cancel out the full impact. In essence this will have the effect that the in-
crease for the business category is higher than the increases of other categories.
Again, the issue relates to the legal process as the ratios form part of the tariff pro-
posal that is currently subject to public participation. The same arguments apply as
for the tariff increases. The ratios and therefore the subsequent tariffs are contained
in the tariff report and if a legal means can be established to make amendments to
the tariffs at this stage, this could be implemented without amendments to the rates
policy.
However, this is a more organised sector that could be engaged in various platforms.
It should also be considered that this may be a politically more acceptable method as
these businesses also have means to claim these costs from company tax. It does
not affect the domestic income of residents, although certain businesses have
claimed that the current increases already caused small businesses to close down.
This would have a detrimental impact on the economic growth of the City, especially
in the small enterprise category.
The principle is also not acceptable in terms of the guidelines of National Treasury,
where the intention is to move towards a 1:1 ratio.
If the current ratio of 1:3 for business is to increase to 1:3,5, it would result in a 28%
increase on the business tariff as opposed to the 10% on other categories. . . . This
potential additional increase on the business category may have a result of an in-
creased rates revenue of R274 669 800.’
She concluded by stating that business should be consulted urgently so that
its views could be obtained before the budget was presented to the Council
(obviously, for approval).
[23] Despite these clear warnings about the impact of the objections on the
rates revenue and the necessity for consulting urgently with business
organisations, the respondents do not seem to have taken any steps to do so.
They have not attempted to explain this failure.
[24] Ms Naudé distributed her discussion document to, amongst others, Ms
Ntshabiseng Mokete, the Director of the Budget Office (the respondents do
not say when) and Ms Mokete prepared a further report which highlights the
revenue shortfall. (The report is not dated and the respondents do not say
when she did this). In her report Ms Mokete emphasised the importance of
revenue from property rates (‘the most rateable revenue source’); referred to
the projected revenue shortfall of R336 million and said this was expected to
increase by a further R419 million. She said that this shortfall could not be
established at the time of tabling the budget because ‘the valuation objections
period was still under way’. However, she contradicted herself by saying that
all valuation objections were concluded during the first week of March 2009
and the necessary adjustments made to the system. She also adopted Ms
Naudé’s suggestion of amending the ratios between categories of property
and increasing the ratio of rates on residential to business properties from 1:3
to 1:3,5 which would lead to an increase of 28% in the business property rates
(with a consequent increase in revenue from the rates on business properties
of R274,669 million). With regard to the process of changing the tariff further
she observed:
‘The tariffs are currently open for public comment. If such a change is proposed at
Council, without public consultation, it could be considered in contravention of the
MFMA and Systems Act requirements.
Normal legal process
A new report could be written to Mayoral Committee and Council explaining
the proposal of the amendments to the business tariff and its impact on the
budget. After the Rates report has been approved by Council, a notice will
have to be issued informing the public that the Rates report has to be
amended again and is now open for public comments and submission. The
residents and all other stakeholders would be given 30 days to comment.
Final report will be written to Mayoral and Council detailing the comments and
how the City has responded. The reports will also seek the approval of the
new proposed increase and the amendment of the budget to accommodate
the new increase.
Mayoral Committee members would need to be sensitized on this matter be-
fore the report can be signed and submitted to committees. (The process fol-
lowed here will be flawless it will be as per MFMA and Systems Act).’
She recommended that the property rates tariff be amended: that the current
ratio of residential rates to business rates of 1:3 be increased to 1:3,5 which
would result in a 28% increase in the business tariff as opposed to 10% on
other categories.
[25] On 29 April 2009 the City’s Finance Department sent emails to various
business organisations inviting them to attend a meeting on 4 May 2009 to
‘discuss the proposed property rates/tariff for the business category for the
2009/10 financial year.’ However, the emails did not spell out the precise rea-
son for the meeting (to discuss the imposition of an additional increase of 18%
in the rate on business properties). They merely said: ‘These proposals are
not necessarily the same as the draft tariffs published for public comment’.
They also did not attach copies of either Ms Naudé’s discussion document or
Ms Mokete’s report. There is no record to indicate that the meeting took place.
[26] On 5 May 2009, Ms L Sonqishe, the Acting Director, Finance, issued a
memorandum (prepared by Mr Irvine Florence) explaining the increase in the
business property rates entitled ‘Alignment of Commercial and Residential
Property Rating‘. This was to be circulated for comment. The memorandum
commenced by saying that it had become necessary to review the alignment
of the commercial and residential property rating structures ‘so as to remain in
line with the following key principle embodied in the implementation of the
Municipal Property Rates Act, namely the retention of the rates contribution
over the various sectors of the economy to the municipal tax base.’ This is
the first time that any official in the City’s finance department had referred to
this ‘key principle’ and it was used to justify the further increase in business
property rates. The memorandum pointed out that, as a result of the objec-
tions to the property valuations, the total value of rateable property had de-
creased by R88 billion which would result in a revenue loss of approximately
R603 million.
[27] On 5 and 6 May 2009 finance department officials held meetings with
representatives of the Johannesburg Business Forum and the Johannesburg
Inner-City Business Coalition – because the city regards the two organisations
as representative of the business community - and explained the City’s di-
lemma and the proposed additional rate on business properties. Because of
the misleading invitation to the meeting SAPOA’s representative did not think
it was necessary to attend the meeting. The representatives of the two or-
ganisations did not accept the proposed additional rate on business property
and asked for further particulars about the proposal. At the 6 May 2009 meet-
ing, Ms Sonqishe’s memorandum of 5 May 2009, ‘Alignment of Commercial
and Residential Property Rating’, was distributed to those present and on 6
May 2009 the City’s finance department emailed the memorandum to all Jo-
hannesburg Business Forum members. The finance department did not send
a copy of the memorandum to SAPOA, which fortuitously received a copy
from the Johannesburg Chamber of Commerce.
[28] On 6 May 2009 the Finance and Economic Development Committee,
apparently in ignorance of the proposed further 18% increase in rates on
business properties, confirmed the proposed 10% increase in the rates on all
categories of property.
[29] On 8 and 9 May 2009, the Sonqishe proposal to realign the rates on
business and residential properties was advertised for comment in a number
of Johannesburg newspapers. The deadline for the submission of comment
was 11 May 2009 but in SAPOA’s case it was 15 May 2009. SAPOA’s re-
quest for three more days to enable it to consult with its members was refused
(clearly because the respondents wanted to meet their own deadlines). The
Mayoral Finance and Economic Development Committee ‘Public Participation
Report’ for the Council meeting to be held on 21 May 2009 records that nei-
ther the Johannesburg Business Forum nor the Johannesburg Inner-City
Business Coalition accepted the realignment proposal. Both organisations
complained about the limited time allowed for responding to the proposal. The
Business Forum said: ‘The meeting was short notice and the issues dis-
cussed here require some analysis therefore proposed that they be given
more time to consult their stakeholders before providing final comment’. The
Inner-City Business Coalition said: ‘Consultation process. The time allowed to
interact with the City regarding the proposed tariffs was not sufficient. The
process was not inclusive of all parties. The disparity between the proposed
rate in the rand applied to residential properties (0,004) and business proper-
ties (0,012) could not be discussed or clarified’. Both organisations pointed
out that the process of proposing new rates and taxes before the actual 2009
Property Valuation Roll had been finalised was flawed and the Inner-City
Business Coalition contended that the rates increase on business properties
was unacceptably high when compared to the increase on residential proper-
ties. It also expressed concern about the figures used and the calculations
made by the respondents.
[30] The Finance and Economic Development Committee adopted the rea-
soning of the Sonqishe memorandum (that is, that ‘it was necessary to review
the alignment of the commercial and residential property rating structures so
as to remain in line with the ‘key principle’ embodied in the implementation of
the Municipal Property Rates Act, namely the retention of the rates contribu-
tion over the various sectors of the economy to the municipal tax base’) and
recommended to the Council that the rates on business properties be in-
creased from 1,2 cents in the rand to 1,54 cents in the rand.
[31] On 21 May 2009 the Council approved and adopted the annual operat-
ing budget together with the amended property rates for business properties,
thus incorporating the 28% increase (from 01,20 to 01,54 cents in the rand).
[32] Apart from the fact that the respondents clearly and unambiguously
admitted in their answering affidavit that the levying of rates is an integral part
of a municipality’s annual budget process,43 the relevant provisions of the Acts
and the rates policy referred to in this judgment clearly provide that this is so.
The Finance Act provides in Chapter 4 that a municipality must for each fi-
nancial year approve an annual budget (s 16(1)); that the annual budget must
set out realistically anticipated revenue from each revenue source (obviously
including rates) (s 17(1)(a)); and that when an annual budget is tabled it must
be accompanied, inter alia, by draft resolutions approving the budget and im-
posing any municipal tax (that is, rates) and setting any municipal tariffs (s
17(3)). The Rates Act provides that the levying of rates must form part of the
municipality’s annual budget process set out in Chapter 4 of the Finance Act
and that a municipality must at the time of its budget process review the
amount in the rand of its current rates in line with its budget for the next finan-
cial year (s 12(2)). A rate is levied by a municipality by resolution passed by
the Council with a supporting vote of a majority of its members (s 14(1)). The
rates policy provides that the Council must approve an annual operating
budget prior to the commencement of each financial year and that the income
from rates must be used to finance, in full or in part, the annual operating ex-
penditure of the Council as reflected in such budget (Item 3 (3)). The rates
policy further provides that the Council must consider the levying of rates an-
nually during the budget process (Item 6 (1)). Furthermore, logic dictates that
the approval of the budget must go hand in hand with the determination of the
rates, as the revenue from rates is essential to fund the budgeted expendi-
ture. The court a quo therefore wrongly concluded that the levying of rates is
not an integral part of the budget process.
[33] The next question is whether the respondents complied with their obli-
gations to allow for community participation in the approval of the budget. It is
clear that this question relates only to the further increase in the rates to be
levied on business properties as the respondents seem to have complied with
43 SAPOA alleged and the respondents pertinently admitted: ‘The determination and levying of rates
form an integral part of a municipality’s annual budget process and the amount in the rand payable must
be considered and if necessary be reviewed annually in order for same to be in line with the requirements and de-
mands of the annual budget for the next financial year.
their statutory obligations up to the time that they finally appreciated that the
large number of objections to the property valuations would have a profound
effect on the City’s revenue from rates. This seems to have been sometime
between 16 March and 9 April 2009.
[34] The respondents do not dispute SAPOA’s allegations that, after the
public participation process had been concluded, the respondents saw fit to
introduce fundamental, far-reaching and inappropriate changes to the pro-
posed budget without adequate public participation; that they did so without
following the prescribed process, and without properly advising, consulting
and considering the views of the local community; that the appellant, because
of its role and function as a community organisation, par excellence, was enti-
tled to be notified timeously and be provided with all relevant information re-
garding the budget and that the appellant was entitled to be provided with a
reasonable opportunity to respond to these far-reaching amendments to the
budget. The respondents simply accepted that it was correct that the City’s
budget was tabled on 26 March 2009 and alleged that this was for the pur-
pose of public participation and that the other allegations are a matter for ar-
gument.
[35] It is clear that the primary error made by the officials in the City’s
Finance Department was to base the budget and the anticipated rates reve-
nue on the value of the properties on the valuation roll when those values
were subject to a very large number of challenges. The Finance Act stipulates
that ‘an annual budget may only be funded from realistically anticipated reve-
nues to be collected’ (s 18(a)) and that the annual budget must set out ‘realis-
tically anticipated revenue for the budget year from each revenue source’ (s
17(1)(a)) as well as ‘estimated revenue and expenditure by vote for the cur-
rent year’(s 17(1)(d)). The Finance Act also stipulates that when an annual
budget is tabled ‘it must be accompanied by draft resolutions approving the
budget . . . and imposing any municipal tax and setting any municipal tariffs as
may be required for the budget year’ (s 17(3)(a)) as well as ‘a projection of
cash flow for the budget year by revenue source broken down per month’
(s17(3)(c).
[36] The second important error which the City’s officials made was to per-
sist in using the rates based on those property values even when it was obvi-
ous - it would have taken only a moment’s reflection - that the values were not
reliable because of the objection process which was underway. On 16 March
2009 the analysis of the statistics showed that the total value of rateable
property had already diminished by R34.4 billion and that this figure would
probably grow (only half of the objection valuation vouchers had been cap-
tured by Rates and Taxes). Despite that knowledge the mayoral committee
approved a 10% increase in rates in respect of all categories of property and
recommended that the rates be increased accordingly. Thereafter the mayor
tabled the budget relying on the anticipated revenue from rates on the proper-
ties whose values were subject to objection.
[37] The third important error which the officials in the Finance Department
made was not to comply with the respondents’ statutory community participa-
tion obligations to ensure the participation of the local community in the prepa-
ration and finalisation of the budget. This could have been done during the
consultation period in April 2009 if the officials had reacted with due expedi-
tion. In her discussion document of 9 April 2009 Ms Naudé had already identi-
fied the problem (a R336.39 million shortfall in the rates revenue for the
2009/10 budget) and the solution to the problem (increase the rates across all
categories of property by 20% or increase the rates on business properties by
an additional 18%). This document should have been given to the mayor for a
decision to be made and then, if the mayor decided that the rates should be
amended, the mayor should have provided a statement to explain the neces-
sity for the amendment to the rates and the effect it would have on the budget.
Thereafter the proposed amendments to the budget should have been set out
in the tabled budget to comply with the relevant sections of the Finance Act
and the documents as they were to be amended, together with the mayor’s
statement, published in the prescribed manner, and the local community in-
vited to submit, within a time, which in the circumstances was reasonable,
representations in connection with the amended rates and the amended
budget. The Council would then have been obliged to consider the views of
the local community and thereafter give the mayor an opportunity to respond
to the submissions of the local community and, if necessary, revise the budget
and table amendments for consideration by the Council. The Council would
then have approved the budget, with or without the proposed amendments,
after having received the views of the local community and properly consid-
ered them.
[38] The tabled budget which had been advertised for public participation
required substantial amendment. The total value of rateable property had
been reduced by some R88 billion with a consequent loss of rates revenue
amounting to R603 million and a rates revenue shortfall in the 2009/10 budget
year calculated to be R336.39 million. The preparation and finalisation of the
budget required the participation of the ratepayers, particularly the ratepayers
most likely to be required to make up the shortfall. Although the Finance Act
does not specifically provide for such a situation it must obviously be dealt
with in terms of the provisions of the Acts governing the preparation and ap-
proval of a budget and any other statutory provisions governing participation
by the local community. It is significant that both Ms Naudé and Ms Mokete
immediately recognised the necessity for the respondents to comply with the
public participation requirements of the Finance and Systems Acts and that
Ms Mokete considered that a period of 30 days should be allowed for the local
community to comment.
[39] To summarise: when the budgeted rates of a municipality must be
amended after the budget has been tabled and advertised for comment, the
steps to be taken by a mayor and council of a municipality to comply with the
statutory requirements for participation by the local community are as follows:
(1) The budget must be amended to set out the realistically anticipated
revenue from each revenue source and the indicative revenue per revenue
source for the two financial years following the budget year (s 17(1)(a) and (c)
of the Finance Act);
(2) The draft resolutions accompanying the budget approving the
budget and imposing the municipal tax and setting the municipal tariffs must
be amended to reflect the amended rates (s 17(3)(a)(i)and (ii) of the Finance
Act);
(3) The measurable performance objectives for revenue from each
source and the projection of cash flow for the budget year by revenue source,
broken down per month, accompanying the budget, must be amended to re-
flect the amended rates (s 17(3)(b) and (c) of the Finance Act);
(4) The mayor must provide a statement explaining the necessity for
amending the rates and demonstrating the effect the amendment of the rates
will have on the budget and indicating what aspects of the budget require
comment (s 21(1)(a) of the Finance Act);
(5) Immediately after the budget and accompanying documents have
been amended and the mayor’s statement provided, the accounting officer of
the municipality must, in accordance with ss 21, 21A and 21B of the Systems
Act, make public the amended budget with the amended documents referred
to in the previous paragraphs and invite the local community to submit, within
a time which, taking into account the relevant circumstances, must be rea-
sonable, representations in connection with the amended budget and accom-
panying documents and the amended rates proposed (s 22(a) of the Finance
Act) and provide these documents to the National Treasury and the relevant
provincial treasury (s 22(b) of the Finance Act);
(6) After the submissions have been received the council must con-
sider them and then give the mayor an opportunity to respond to the submis-
sions and, if necessary, to revise the budget and table the amendments for
consideration by the council (s 23(1) and (2)).
[40] It is clear that the respondents did not follow this procedure and
adopted their own truncated procedure which was not in accordance with the
relevant Acts and which, in any event, was quite inadequate to ensure that the
local community could participate in the preparation and approval of the
budget. The respondents did not give SAPOA and the rest of the business
community proper notice of the new rates proposed and the short period al-
lowed for business organisations to comment on the amended rate for busi-
ness properties was completely inadequate for any person or body to properly
consider the matter, do the necessary research and prepare a meaningful
representation. It is clear from the responses received from the business fo-
rums that they were not able to consider the matter properly and make sub-
stantial representations in the time allowed. The essence of the respondents’
case was set out in the answering affidavit as follows:
‘. . . at a very late stage, during the notice and comment phase of the annual
budget and rates procedure for 2009/10, an unforeseeable and unavoidableshortfall
in rates income on the 2008/09 budget from business properties wasdetected. The
shortfall would also occur in the 2009/10 financial year. (I referto “business proper-
ties” as shorthand for “business, commercial and industrial properties”.) The only
reasonable solution was to propose amending the rate on that particular category of
property by increasing the rate by a further 18% over and above the 10% increase
already proposed and advertised and to advertise the proposed amendment as
widely as possible under the circumstances. The proposal was implemented for the
2009/10 financial year. It is denied that any material breaches of procedure oc-
curred.’
The respondents also claimed that because of the urgency of the matter ‘a
less extensive public participation process was followed’.
[41] There is no merit in this explanation. On the respondents’ own
documents the problem regarding the reduced rates revenue as a result of the
objections to valuations was obvious. By 16 March 2009 the respondents’ of-
ficials knew what the impact of the objections was. Their analysis of the statis-
tics showed that there was a very large reduction in the value of the properties
(R34.4 billion) which would have an effect on rates revenue. The respondents
contradicted themselves as to whether, at that stage, all the records had been
updated, but even if they had not been, it was obvious that the problem would
only get bigger. By 9 April 2009 Ms Naudé had thought it necessary to do a
further analysis of the valuations statistics and this showed that, when com-
pared with the rates income in the proposed 2009/10 budget, there would be
a considerable shortfall of rates income. Thereafter, there was an unexplained
delay in addressing the problem and seeking the participation of the business
community in the decision to impose an additional 18% increase in the rates
on business properties. Three weeks were allowed to pass before any steps
were taken. The steps taken after that were clearly inadequate and the time
allowed for the business community to comment on the proposed increase
was unreasonably short. (It is noteworthy that Ms Mokete thought that 30
days should be allowed for comment.) The City officials obviously considered
that it was more important for them to meet their deadlines than to get the
business community’s comments. It is also noteworthy that the City did not
ensure that SAPOA was involved from the outset. It was the most important
organisation to consult as it represents 90% of all business property owners.
The respondents were forced to rely on the fact that a member of the SAPOA
executive was given notice of meetings in another capacity. This is not com-
pliance with their obligation to inform all interested parties. In my view any ur-
gency was of the respondents’ making and they cannot rely on their own fail-
ures to excuse their non-compliance with their obligations in terms of the Acts.
By imposing the additional 18% in the rate on business properties without
complying with the Finance and Systems Acts the respondents acted unlaw-
fully.
[42] During oral argument the question was raised whether there is a
rational connection between the facts and the decision to increase the rates
on business properties by a further 18% and the respondents’ counsel were
given leave to file further heads of argument to deal with this issue. In their
supplementary heads of argument filed after the hearing the respondents’
counsel contended that –
(1)
the shortfall that occurred in the rates income for the category ‘busi-
ness properties’ was approximately R274 million and the additional
18% increase in the rates on that category served only to recover the
lost amount from that category;
(2)
the total reduction in revenue as a result of successful objections to
property valuations and corrections of wrong categorisation was R603
million;
(3)
the total of lost revenue due to successful objections in all categories
was R336 million;
(4)
the (additional) 18% increase in the rates in business properties did not
burden the owners of business properties with any shortfall that oc-
curred in other categories;
(5)
the rate on business properties was increased because the percentage
contribution from the rates on business properties to the total rates in-
come had declined from what it was in 2007/8 and the purpose of the
increase was to restore the percentage contribution from business
properties on the total rates income. This ‘re-alignment’ would be re-
stored by increasing the rates on business properties from 1,2 cents in
the rand to 1,54 cents in the rand and was intended to be a ‘once-off
adjustment in order to restore the previous relative positions of busi-
ness and residential properties’.
For these contentions the respondents relied on the evidence of their principal
deponent, Mr Mankode Moitse, the Executive Director of the City’s Finance
Department, who relied on the contents of two documents prepared by City
officials. The first was the memorandum dated 5 May 2009 issued by L Son-
qishe, the Acting Executive Director, Finance and Acting Group Chief Finan-
cial Officer. The second, which is undated but was obviously prepared after
the first (it used the same figures and the same language) was to be signed
by Ms Mokete, the Director, Budget Office, Mr Moitse, as Executive Director
Finance Department, and Counsellor Parks Tau, as MMC Finance Strategy
and Economic Development.
[43] An analysis of these documents shows that they do not support the
first, third and fourth supplementary submissions but that they support the
second (that the total reduction in rates revenue as a result of successful ob-
jections to the property valuations was R603 million) and particularly the fifth
submission (the respondents simply used the fact that the business proper-
ties’ contribution to total property rates revenue had declined by about 10% to
justify the additional 18% increase).44 This justification is itself problematic.
(When dealing with the figures in the two documents I shall use round fig-
ures.)
[44] It will be remembered that the Sonqishe memorandum of 5 May 2009
provided the theoretical basis for the additional increase of 18% in business
property rates. The memorandum is entitled ‘Alignment of Commercial and
Residential Property Rating’ and commenced with the paragraph:
‘It has become necessary to review the alignment of the Commercial and Residential
Property Rating Structures so as to remain in line with the following key principle
embodied in the implementation of the Municipal Property Rates Act, namely the
retention of the Rates Contribution over the various sectors of the economy to the
44 In para 47.2 and 47.3 of their answering affidavit the respondents’ deponent said:
‘The rates income from business properties was re-aligned to the income produced by residential prop-
erties by increasing the rate on the former category. The rate on business property was increased be-
cause the percentage contribution from this category to the total rates income had reduced from what it
was in 2007/08. The purpose of the increase in the rate was to restore the percentage contribution from
this category to the total rates income.’
municipal tax base.’
It then dealt with the decline in total property valuations as a result of objec-
tions to the valuations of the properties on the valuation roll (R88 billion) and
the consequent total loss of revenue from rates (R603 million). According to
the figures used, the contributions of six categories of properties to the total
rates income declined: business (by 12%); mixed use (by 31%); business sec-
tional title (by 32%); vacant (by 35%); residential (by 3%) and residential sec-
tional title (by 2%). These figures do not show by how much (that is, the rand
value) rates revenue on business property had declined. The next sections of
the memorandum demonstrated how the estimated rates income, primarily
from business and residential, had declined, and how the percentage contri-
bution of the rates from business properties had declined from approximately
50% in 2006/07 and 2007/08 to approximately 40% in 2008/09 and how this
would continue in 2009/10 if the rates increase of 10% was implemented but
would ‘be restored’ to just under 50% if the additional increase of 18% was
imposed. The memorandum stated: ‘it was a hallmark of Municipal Property
Rates Act implementation process that the rates contribution per category of
rate paying sectors should not be unduly distorted’. It said that the purpose of
the proposal was to restore the parity that prevailed prior to 1 July 2008 on
property rates over the commercial and residential sectors of the tax base. If
the business property rates were increased by 28% this would be a ‘once-off
adjustment in order to restore parity over the affected contributory sectors to
the tax base’.
[45] The Sonqishe memorandum simply sought to justify the increase of
28% by reference to the reduced contribution of business property rates as a
percentage of the total. No figures were given for the loss of rates income
from business properties and how much more income would be received from
business property rates after the increase of 28%. However, if the estimated
income after the 10% increase is compared with the estimated income after
the 28% increase, the total increase in rates income would be R274 million.
[46] Ms Mokete’s report for signature by herself, Mr Moitse and Mr Tau
dealt with the anticipated shortfall in property rates revenue in the 2008/09 fi-
nancial year (R421.28 million) and in the 2009/10 financial year (R336.39 mil-
lion). It pointed out that in the 2008/09 financial year the rates income did not
grow but in the 2009/10 financial year it was expected to increase by R257.49
million, still leaving a shortfall of R336.39 million. The report made no attempt
to attribute the shortfall to any category of property rates. The report included
a table showing the changes in the rates base of the City. This reflected a de-
cline of R88 billion in the total market value of rateable properties and a con-
sequent loss of revenue of R603 million from property rates. One hundred and
ninety one million rand of this loss was attributed to the loss of revenue from
business property rates (31% of the total). The decline in business property
rates therefore contributed to 31% of the estimated rates shortfall of R336 mil-
lion (R104 million). The report then pointed out that if the rates on business
properties were increased by another 18% the rates from business properties
would increase by R274.669 million (81% of the estimated shortfall in rates
revenue of R336 million).
[47] The analysis shows that there is no merit in the contention that there
was a shortfall of R274 million in the rates income from the category ‘business
properties’. The reduced rates from ‘business properties’ amounted to only
R191 million (or 31%) of the total reduction of R603 million. Therefore, it is not
correct to say that the additional 18% ‘served only to recover the lost amount
from that category’. It is also not correct that the total of lost revenue due to
successful objections was R336 million. This was not identified as such in the
report. The R336 million was the shortfall on total estimated rates income
measured against the total rates income in the proposed budget for 2009/10.
Finally, it is not correct that the additional 18% increase on business proper-
ties did not place a disproportionate burden on the owners of business proper-
ties. It clearly did. If the decline in business rates revenue was only 31% of the
total decline in property rates then imposing an additional rate of 18% on
business properties, to make up 81% of the shortfall, placed a disproportion-
ate burden on the owners of business properties.
[48] The Sonqishe memorandum makes it abundantly clear that the
additional increase of 18% was imposed ‘in line with the . . . key principle em-
bodied in the implementation of the Municipal Property Rates Act, namely
the retention of the rates contribution over the various sectors of the economy
to the municipal tax base’. Apart from the fact that the statement is meaning-
less because a principle cannot be embodied in the implementation of an Act,
there is clearly no such principle in the Rates Act or the City’s Rates Policy.
Self evidently such a principle would be impossible to implement if the vari-
ables involved in the number and value of properties to be rated are taken into
account. It is also significant that this ‘key principle’ is not referred to in the
discussion document prepared by Ms Naudé, the Director of Rates and
Taxes, or the memorandum prepared by Ms Mokete. If there were such a
principle, they would have known about it and used it to justify the additional
18% increase. Significantly both documents refer to the fact that business has
benefited the most from the shift in the rates base. While this statement is cor-
rect the reduction in rates revenue due to the business sector was still only
31% of the total.
[49] The opening paragraph of the Sonqishe memorandum of 5 May 2009
was repeated in the Mayoral Committee report of 18 May 2009 for the council
meeting on 21 May 2009 and is used in support of a re-alignment of business
and residential property rates.
[50] The documents relied on by the respondents clearly demonstrate that
there is no rational connection between the facts and the decision to impose
the additional 18% rate on business properties and that there is no legal basis
for the justification of the additional increase. It should be recorded that the
respondents’ counsel objected strongly to this issue being raised at the hear-
ing on the grounds that it was not part of SAPOA’s case in the founding affi-
davit. In my view this is simply a matter of pleading. The relevant facts appear
clearly from the respondents’ own documents and SAPOA was entitled to
deal with them in argument. In my view, there is no merit in the objection and
the court is entitled to take these facts into account in determining whether the
respondents acted lawfully in imposing the additional 18% in the rate on busi-
ness properties.
[51] The court a quo therefore wrongly found that the respondents did not
fail to comply with the public participation requirements of the municipal legis-
lation when they imposed the additional 18% rate on the owners of business
properties and that they did not act unlawfully in doing so. In the absence of a
factual or legal basis to impose the additional rate on the owners of business
properties, the court a quo also wrongly found that the Council did not unfairly
discriminate against the owners of business properties when it imposed the
additional burden on them.
[52] As pointed out at the beginning of this judgment, it is no longer neces-
sary for this court to decide whether the increase of 28% in the rates on busi-
ness property was prohibited by s 19(1)(b) of the Rates Act because it re-
sulted in a ratio of the residential rate to the business rate of 1:3,5. The appel-
lant contended that the section, read with the regulations, prohibited the City
from imposing a rate on any category of non-residential property which would
result in the ratio between the rate on residential property and the rate on non-
residential property exceeding the prescribed maximum ratio of 1:1. The re-
spondents contended that in terms of s 8 of the Rates Act the Council was en-
titled to impose differential rates and that the purpose of the proposed
amendment of the rates was to restore the parity that prevailed prior to 1 July
2008 on property rates over the commercial and residential centres of the tax
base. According to the respondents, to restore this parity a ‘once-off’ adjust-
ment was required. Accordingly, the Council proposed increasing the ratio be-
tween rates for business to residential property from 3:1 to 3,5:1 (by increas-
ing the business rate from 1,2 to 1,54 cents in the rand or, expressed differ-
ently, increasing the business rate by 28%).
[53] This dispute about the interpretation of s 19(1)(b) and the regulations is
obviously of great importance as far as the imposition of rates is concerned.
Although both s 19(1)(b) and the regulations (which were promulgated to give
effect to the section) are inelegantly worded (they show no proper under-
standing of the meaning of the word ‘ratio’) they seem to be capable of being
understood in the way contended for by SAPOA. In view of the statements in
the respondents’ documents that it is Treasury’s intention that the ratio be-
tween the rate on residential property and non-residential property should be
1:1 the matter should obviously receive the urgent attention of the Treasury
and the Legislature.
[54] Section 8 of the Rates Act empowers a municipality to levy different
rates on different categories of rateable property but clearly provides that this
power is subject to s 19 and must be exercised ‘in terms of the criteria set out
in its rates policy’. Section 19 prohibits ‘impermissible differentiation’. The
relevant parts of the section read as follows:
‘(1)
A municipality may not levy –
. . .
(b)
a rate on a category of non-residential properties that exceeds a pre-
scribed ratio to the rate on residential properties determined in terms
of section 11(1)(a): Provided that different ratios may be set in re-
spect of different categories of non-residential properties;
. . .
(2)
The ratio referred to in subsection (1)(b) may only be prescribed with the con-
currence of the Minister of Finance.’
Section 19(1)(b) must be read with the regulations promulgated pursuant to
s 19(2). These regulations read as follows:
‘SCHEDULE
INTERPRETATION
Definitions
1. In these regulations, a word or expression to which a meaning has been as-
signed 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.
REGULATIONS ON THE 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 repre-
sents 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:
Categories
Ratio in relation to residential
property
Residential property
1:1
Agricultural property
1:0.25
Public Service Infrastructure
Property
1:0.25
Commencement
3.
The provisions of regulation 2 take effect on 1 July 2009.
Short title
4.
These regulations shall be called the Municipal Property Regulations
on the rate ration between residential and non-residential categories of property.’
[55] The rules of statutory interpretation require that the words to be con-
strued must be given their ordinary grammatical meaning in the light of their
context, where ‘context’ includes the language of the rest of the statute (which
may throw light of a dictionary kind on the words to be interpreted), the matter
of the statute, its apparent scope and purpose, and, within limits, its back-
ground. The court must, from the outset,45 consider the language to be inter-
preted together with the context. Even where the words to be interpreted are
(or appear to be) clear and unambiguous, regard must be had to the con-
text.46
45 Id para 89; Jaga v Dönges NO & another; Bhana v Dönges NO & another 1950 (4) SA 653 (A) at
662G-663A.
46Thoroughbred Breeders Association v Pricewaterhouse 2001 (4) SA 551 (SCA) para 12 of concurring
judgment of Marais and Farlam JJA and Brand AJA; Bato Star Fishing (Pty) Ltd v Minister of Environ-
mental Affairs para 90.
[56] Section 19(1)(b) prohibits a municipality from levying –
‘A rate on a category of non-residential properties that exceeds a prescribed ratio to
the rate on residential properties determined in terms of section 11(1)(a)’.
Section 11(1)(a) simply provides that a rate must be an amount in the rand
and the municipality must apply this rate to the market value of the property.
(This accords with the ordinary meaning of ‘rate’: ‘assessment levied by local
authorities for local purposes at so much per pound of assessed value of
buildings and land area owned’: see Gerber v MEC for Development Planning
and Local Government, Gauteng.47) Section19(1)(b) uses the word ‘ratio’,
which ordinarily indicates a relationship between two similar magnitudes in
respect of quantity, determined by the number of times one contains the
other.48 In s 19(1)(b) the magnitudes are the amounts in the rand determined
by the Council. Although inelegantly worded, s 19(1)(b) indicates that the ra-
tio of the rate on non-residential properties (which obviously includes busi-
ness, commercial and industrial properties) to the rate on residential proper-
ties may not exceed a prescribed ratio. The object of the section is clearly not
to limit the rates on either non-residential or residential properties per se. It is
to prohibit the relationship between the two rates from exceeding the pre-
scribed relationship. The problem which arises from the wording of the rele-
vant part of s 19(1)(b) is resolved if it is interpreted to read:49
‘A rate on a category of non-residential properties so that the prescribed ratio to the
rate on residential properties determined in terms of section 11(1) is exceeded.’
[57] The regulations promulgated in terms of s 19(2) are also inelegantly
worded. Their object is obviously to give effect to s 19(1)(b) by prescribing ra-
tios of rates on residential property to non-residential properties, which may
not be exceeded. They refer to the first figure (the rate) in the second column
as the figure for residential properties and the second figure (the rate) in the
second column as the figure for non-residential properties referred to in the
47 Gerber v MEC for Development Planning and Local Government, Gauteng 2003 (2) SA 344 (SCA)
paras 23-24.
48 C T Onions (ed) The Shorter Oxford Dictionary vol 2 at 1750.
49 See Durban City Council v Gray 1951 (3) SA 568 (A) at 580B where the court said: ‘…it is within the
powers of a court to modify the language of a statutory provision where this is necessary to give effect to
what was clearly the legislature’s intention’. See also Shenker v The Master & another 1936 AD 136
at142-143 and Santy’s Wine and Brandy Co (Natal) Ltd v The District Commandant, SA Police 1945
NPD 115 at 117-118.
first column. Confusion arises from the words ‘residential property’ in the first
column. 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 amounts 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. This is consistent with the interpreta-
tion of s 19(1)(b) above (and with the intention of Treasury according to Ms
Naude and Ms Mokete).
[58] If this is the proper interpretation, then the Council would have been
prohibited from levying a rate on business properties that was 3.5 times as
much as the rate on residential property as this would result in a ratio of 3,5:1.
The most the Council could have levied was the same amount in the rand as
it levied on residential property. The rates levied on business properties in the
2009/2010 budget year would therefore have been unlawful because they
were contrary to s 19(1)(b). It must be borne in mind that the value of busi-
ness property will almost always exceed that of residential property and, ac-
cordingly, the revenue from rates on business property, even if the rates for
business and residential property are the same, will always be greater than
the revenue from residential property.
[59] In the light of the finding that the Council did not follow the procedures
prescribed in the Acts in imposing the rates in respect of business properties,
the question arises as to what relief should be granted.
[60] SAPOA’s counsel does not seek the setting aside of the 2009/2010
budget (prayer 1 of the notice of motion) but persists in seeking relief pertinent
to the additional 18% in the rates imposed on business properties (essentially
prayers 2 and 3.1 of the notice of motion). If this relief is granted, this court
would declare, in effect, that the Council acted unlawfully in imposing the ad-
ditional 18% on the rates on business properties (because it failed to comply
with the prescribed legal requirements and procedures) and, pursuant to that
declaration, would set aside the rate imposed in excess of R0,0132 in the
rand. Counsel acknowledged that there may be claims for repayment of the
rates paid in excess of what should have been paid and suggested that the
court order that the City have three years to repay any such amount. He also
acknowledged that the respondents’ conduct has created a problem which is
too big to be solved by a court order. As he put it, the court cannot unscram-
ble the egg. This concession is clearly correct in so far as it relates to the
whole budget for 2009/10.
[61] When the Council imposed the additional 18% rate on business proper-
ties the Council intended to make up R274 million of the calculated revenue
shortfall of R336 million in the 2009/10 budget. On the strength of this addi-
tional revenue of R274 million the Council approved a budget involving ex-
penditure on a large number of essential matters, including the salaries of the
City’s employees. It must be accepted that the City has spent that revenue
and it is no longer available to the City to repay the owners of business prop-
erties who were required to pay the increased rate. There is no evidence as to
the City’s current financial position and the respondents did not say more in
their answering affidavit other than make the general statements, unsupported
by any substantial evidence, that the order setting aside the rate would put the
City in a precarious financial position; that it would not be able to raise the
money to repay the rates; that it would have to budget for the repayment in
the future and that there would be a problem in identifying the source of such
additional income. Alternatively, said the respondents, the City would have to
cut back on essential expenditure because of the amount to be repaid which
would affect its ability to comply with its constitutional obligations. A further
problem not dealt with in the respondent’s answering affidavit is the distorting
effect the 28% increase in the rates on business properties probably had in
the intervening years. The Council has approved budgets for the 2010/11,
2011/12 and 2012/13 budget years. When it approved each budget the Coun-
cil also imposed rates. If the Council decided to increase rates in each year by
a percentage, this would be based on the ‘once off’ increase in the rates on
business properties. The difference in the rates imposed on business proper-
ties as a result of this distorting effect could be considerable. Once again, the
expenditure in the budget would have been based on this revenue. The ques-
tion of the legal status of subsequent rates imposed and their possible repay-
ment is not before the court but it is not unreasonable to anticipate this prob-
lem arising in the not too distant future. That is the position as far as the City
is concerned. But that is not the end of the matter.
[62] The additional 18% in the rates on business properties was supposed
to increase the rates revenue for 2009/10 by R274 million. This additional rate
was unlawfully levied on the owners of business properties who should not
have been obliged to pay the additional rate to the City. Ordinarily, a person
who pays something which is not owed is entitled to repayment of the amount
wrongly paid. That is basic fairness and accords with the principle embodied
in s 55 of the Rates Act. What is due and owing must be paid and what is paid
in excess of what is due and owing must be repaid. It is also consistent with
s 3(3) of the Rates Act which stipulates that the rates policy must treat per-
sons liable for rates equitably and the City’s Rates Policy itself which states
unambiguously in Item 3(1) that the policy is designed to ensure equitable
treatment by the Council in the levying of rates on property owners and in
Item 4(h) that one of the key objectives of the policy is to ensure that all per-
sons liable for rates are treated equitably as required by the Act.
[63] Section 172 of the Constitution requires that the court must declare
conduct that is inconsistent with the Constitution invalid to the extent of its in-
consistency and make any 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 for any period and on any conditions,
to allow the competent authority to correct the defect.50 The prejudice suffered
by the business property owner ratepayers is manifest – they have been
obliged to pay amounts which they do not owe and have been out of pocket
for two to three years. As against that the prejudice which would be suffered
by the City is, at best on the evidence, theoretical. The court simply does not
know because the City did not place the relevant information before the court.
In my view there is no good reason not to grant the relief sought by SAPOA
and it would not be just and equitable to withhold such relief. One can only
speculate as to what will happen once the relief is granted and how the City
will deal with the problem but that is obviously a matter for the parties con-
50 Bengwenyama Minerals (Pty) Ltd & others v Genorah Resources (Pty) Ltd & others 2011 (4) SA 102
(CC) paras 84-85.
cerned to resolve. In view of the likelihood of claims being instituted to recover
the rates wrongly paid and SAPOA’s concession regarding a three year mora-
torium, it would be just and equitable to order that, in the event of claims be-
ing instituted, the City will not be obliged to effect repayment of any rates im-
posed on the owners of business (business, industrial and commercial) prop-
erties in the 2009/10 budget year in excess of R0,0132 in the rand for a period
of three years from when the City’s liability for repayment is finally determined.
It would also be appropriate to make a declaratory order which would remove
doubt about the Council’s obligation to comply with the Systems, Finance and
Rates Acts when the Council wishes to approve its annual budget with prop-
erty rates different from those in the tabled budget. The City is presently in the
process of preparing its annual budget for 2013/14 and this would, it was
submitted, be a timeous reminder for the City about its community participa-
tion obligations. I agree.
[64] Accordingly I would have made the following order (the prayers have
been suitably amended to set out the relief sought more accurately):
1 The appeal is upheld with costs, such costs to include the costs of two
counsel.
2 The order of the court a quo dismissing the application with costs, including
the costs of two counsel, is set aside and replaced by the following orders:
‘(1) It is declared that the first, second and third respondents failed to comply
with the prescribed legal requirements and procedures when arriving at their
decision on 21 May 2009 to increase the ratio between the rates applicable to
business, industrial and commercial properties, on the one hand, and the
rates applicable to residential properties, on the other, from 3:1 to 3,5:1;
(2) The promulgation of the assessment rate tariff of R0,0154 in the rand on
the value of business, industrial and commercial properties within the third re-
spondent’s area of jurisdiction for the 2009/10 budget year is set aside and
replaced with a rate of R0,0132 in the rand;
(3) It is ordered that the first and third respondents shall not be obliged to re-
pay to the owners of business, industrial and commercial properties any rates
paid by them in excess of R0,0132 in the rand in respect of the 2009/10
budget year, for a period of three years as from the date on which the first and
third respondents’ liability for repayment of such rates is finally determined;
(4) It is declared that the council of a municipality is obliged to comply with the
provisions of the Local Government: Municipal Systems Act 32 of 2000, the
Local Government: Municipal Finance Management Act 56 of 2003 and the
Local Government: Municipal Property Rates Act 6 of 2004 when it wishes to
approve an amended budget with rates which are different from the rates in
the budget which was tabled;
(5) The first, second and third respondents, jointly and severally, are ordered
to pay the costs of the application, such costs to include the costs of two
counsel.
________________________
B R SOUTHWOOD
ACTING JUDGE OF APPEAL
JUDGMENT
NAVSA JA (LEWIS, SHONGWE AND PETSE JJA concurring)
[65] I have read the judgment of my colleague, Southwood AJA, and agree
with his reasoning and conclusion that the Council failed, in determining rates
for the 2009/2010 financial year and amending its budget, to comply with its
statutory obligations in relation to community consultation and participation. I
agree that SAPOA is entitled to a declaratory order in that regard, particularly
to inform future conduct on the part of Council. I also agree with my colleague
concerning the rationality of the decision to impose the rate in question. I dis-
agree with the further orders proposed by my colleague, which in my view are
untenable in the circumstances in which the respondents find themselves. My
reasons are set out hereafter.
[66] The following was the relief sought by the appellant in its notice of mo-
tion:
‘1.
Reviewing and setting aside the annual budget for the year 2009/2010 as
adopted by the first respondent at its meeting held on 21 May 2009.
2.
That the promulgation of the assessment rate tariff amounting to R0.0154 in
the rand value of business, commercial and industrial properties in the third respon-
dent’s area of jurisdiction be declared null and void and be set aside.
3.
Alternatively to prayer 1 above:
3.1
Declaring that the first, second and third respondents failed to comply with
the prescribed legislative procedures and the principle of legality when taking their
decision on 21 May 2009 to increase the rate ratios applicable to business, industrial
and commercial property from 3:1 to 3.5:1
3.2
Reviewing and setting aside the decision of the first respondent to increase
the rates ration applicable to business, industrial and commercial property from 3:1 to
3.5:1
4.
That the first, second and third respondents be directed to pay the costs of
the application.’
[67] At the heart of the dispute between the parties was the question
whether, in materially amending the budget after the Council belatedly be-
came aware of a substantial revenue shortfall, it was required to follow all the
statutory procedures that it was obliged to when it proceeds to adopt a budget
in the ordinary course. The parties were in disagreement about the application
of the legislation and the extent and manner of public participation. My col-
league, with admirable attention to detail, resolved the dispute and rightly an-
swered that question in the affirmative.
[68] It is necessary at the outset to record what appears to be common
cause, namely, that at the time that the rate in question was imposed, the
valuation roll was in a chaotic state, not only because the objection process
was still underway, but also because in relation to some commercial proper-
ties there had been a significant degree of undervaluation which, obviously,
would not have been revealed by the objection processes. In para 83 of
SAPOA’s founding affidavit the following appears:
‘In essence what had transpired is that the municipal valuer had over-valued a num-
ber of properties whilst under-valuing an even greater number of properties.’
Whilst denying that a greater number of properties had been under-valued the follow-
ing was stated on behalf of the Council:
‘I agree that there has been under-valuation of properties. . . It is not known what the
extent of the under valuation is.’
In its replying affidavit, SAPOA stated, with reference to reports by valuers:
‘On the probabilities - and also having regard to the affidavit deposed to by Mr My-
burgh and to the appointment of and the valuations more recently carried out by
George Nel which is allegedly premised on a random selection of business properties
which proved to be 100% successful – the court, I submit, is entitled to accept that
there exist a significant number of business properties which have been under-
valued.’
This, of course, reduced the Council’s revenue base and contributed to an income
shortfall. The Council in more ways than one was the author of its own misfortune,
which then became the misfortune of ratepayers.’
[69] Importantly, because of the unknowns, the variables and the impon-
derables one is unable to say with exactitude, if at all, what the rate on any
category of property would have been had the valuation roll been rectified in
time and had the statutory public participation processes been followed. Put
differently, a rate to deal with the revenue shortfall had not been lawfully
adopted. Thus, in my view, the order proposed by my colleague in relation to
the repayment of amounts above the originally proposed rate of 0.0132 is ill-
advised. Put simply, the Council’s failure to adopt a rate in terms of the appli-
cable legislation to meet the anticipated revenue shortfall does not mean that
the prior suggested rate became the lawful rate by default. I will, in due
course, deal with the three-year moratorium on repayment proposed by coun-
sel for SAPOA and adopted by my colleague and attempt to show why that is
even more ill-advised.
[70] Notionally, an owner of commercial property, aggrieved at the rate im-
properly imposed, ought to have a claim for a refund. In the present circum-
stances such an owner might experience difficulty in the formulation of a
claim. It is, however, not an issue we are called upon to decide. It is signifi-
cant, though, that SAPOA did not, in its notice of motion, seek any relief in re-
lation to repayment, nor did the parties engage, on affidavit, on affordability or
terms of repayment or the possible future impact on all ratepayers. Even more
significantly, SAPOA, even though it represents 90 per cent of commercial
property owners, is not the representative of all such owners. The other own-
ers were not party to the present litigation. As stated earlier there is the ques-
tion of what the proper rate historically would have been. My colleague is, with
respect, correct when he states that it was recognized on behalf of SAPOA in
so far as the setting aside of the budget is concerned, that the egg could not
be unscrambled. And as he pointed out also, s 172 of the Constitution re-
quires that although the court must declare conduct that is inconsistent with
the Constitution invalid to the extent of its inconsistency, it may make any or-
der that is just and equitable. In my view it is fair and equitable now, for the
reasons I have set out and that follow, not to order the repayment of rates that
were not validly imposed.
[71] Although counsel on behalf of SAPOA persisted in having the rate im-
properly imposed set aside, he advisedly recognized the difficulties of a court
even attempting to set aside the 2009/2010 budget, two budgetary periods
thereafter. Successive budgets are based on surpluses or deficits from prior
periods. One is built on the outcome of the other. This, in modern language, is
called a knock-on effect. The legality of the budgets for the successive peri-
ods has not been challenged. Considering the knock-on effect it must be so
that any subsequent increase in rates would have owed its genesis to and
been premised on the rate presently sought to be impugned.
[72] Another factor militating against the setting aside of the 2009/2010
budget is that, given the historical over-recovery from the commercial sector,
the lapse of time - three years hence - will have a harsh impact on struggling
individual home-owners who would not in the intervening years have made
provision for dealing with the effects of the setting-aside of the budget.
[73] My colleague, in para 32, set out the following, which is impeccable:
‘Furthermore, logic dictates that the approval of the budget must go hand in hand
with the determination of the rates as the revenue from the rates is essential to fund
the budget expenditure. The court a quo therefore wrongly concluded that the levying
of the rates is not an integral part of the budget process.’
[74] In not persisting in its prayer to have the budget for the 2009/2010
year set aside, SAPOA must have recognized additional practical and per-
haps even jurisprudential difficulties. If the budget were set aside expenditure
on items such as libraries and parks, and even on capital expenditure to im-
prove infrastructure, would be called into question.
[75] If, as the parties and my colleague accept, the effluxion of time and the
practical realities referred to above dictate that the budget for the 2009/2010
year cannot be set aside, the corollary must be that, the rate in question,
which was its principal component, also cannot be set aside. A mathematical
equation which proposes that a principal value remains unaltered when its
most significant constituent part is deducted has to be flawed. If the present
dispute concerning the Council’s statutory obligations and the manner and ex-
tent of public participation did not have implications for the future conduct of
the Council, the application by SAPOA might well have proved academic and
liable to be dismissed in terms of s 21A of the Supreme Court Act 59 of
1959.51 Thus, in my view, the relief sought in paras 2 and 3 of the notice of
motion ought not to be granted. It is neither necessary, nor desirable, for us
to offer a view as to how a claim for a refund ought to be framed or indeed
whether it is in the present circumstances competent at all.
[76] That brings me to the three-year moratorium on the repayment of
amounts above the originally proposed rate suggested by my colleague. In
this regard reliance was placed on s 172 of the Constitution. The Constitu-
tional Court has, in appropriate circumstances, when declaring legislation un-
constitutional, suspended a declaration of invalidity and afforded the legisla-
ture an opportunity to remedy the defect.52 In those circumstances the past
and the legitimacy of actions in terms of the impugned legislation is pre-
served. Sometimes the legislation is declared unconstitutional immediately.53
On occasion the declaration of invalidity is suspended conditionally.54 Each
case and resultant order is, of course, dependent on that case’s facts and cir-
cumstances. It should not be forgotten that s 172 of the Constitution gives a
court deciding a constitutional matter a wide discretion to make such order as
is just and equitable, including but not necessarily obliging an order limiting
the retrospective effect of the declaration of invalidity or suspending the decla-
ration of invalidity.
[77] Returning to the present case, in the ordinary course, a creditor may
well have an unfettered right to reclaim amounts unlawfully obtained or re-
tained by a debtor. In the present case there was, as stated earlier, no claim
for repayment and no engagement on that issue on the affidavits filed on be-
half of the parties. In is not inapposite to ask the question: Whence do we ac-
quire the power to restrict parties, particularly non-parties to the litigation, who
have not been heard on the issue to reclaim amounts that may be legitimately
owing to them?
51 Radio Pretoria v Chairperson, Independent Communications Authority of South Africa 2005 (4) SA
319 (CC) para 22.
52 Glenister v President of the Republic of South Africa 2011 (3) SA 347 (CC) para 251.
53 Tongoane v Minister of Agriculture 2010 (6) SA 214 (CC) para 133.
54 Johannesburg Metropolitan Municipality v Gauteng Development Tribunal 2010 (6) SA 182 (CC) para
95.
[78] I am not persuaded that due consideration was given to the full import
of the suggestion that there be a payment moratorium and all of its ramifica-
tions. There is certainly nothing in the affidavits in that regard. On this aspect
one needs only to have regard to what was stated, during February 2010, in
the founding affidavit on behalf of the SAPOA regarding the global economic
crisis and the precarious position of businesses worldwide. The cavalier atti-
tude of the Council might well have caused many businesses to founder and
fail. To say to ailing businesses that may be entitled to recover moneys that
they have to wait a further three years would be to add insult to injury. Fur-
thermore, the moratorium does not take into account a debtor’s right to raise
prescription. Is it interrupted by the order proposed or not? From when will it
commence to run? The proposed moratorium would be compounding an al-
ready confused situation. Counsel did not deal with the questions raised in
this and the preceding paragraph, either in their heads or in oral argument.
[79] For all these reasons I would refrain from ordering the undoing of any
constituent part of the 2009/2010 budget and adding any additional orders
other than the limited ones I propose. Does this mean the Council can con-
tinue flagrantly flouting the law with impunity? The short answer based on the
principle of legality is no. If it becomes clear that the Council has not rectified
or is not willing to deal with the shortcomings in the valuation roll, an applica-
tion to court for a mandatory interdict would be warranted in advance of the
budgetary process. If it becomes clear that the Council intends to continue
denying its constituent ratepayers meaningful participation in the budgetary
process and that it is resorting to irrational means in the process of determin-
ing rates a timeous application to court might well result in a proposed budget
or even an adopted one being set aside. It is not inconceivable given the his-
tory that offending officials could be ordered to pay litigation costs personally.
[80] The following order is made:
1 The appeal is upheld with costs, such costs to include the costs of two
counsel.
2 The order of the court below is set aside and substituted as follows:
‘1 It is declared that the first, second and third respondents failed to comply
with the prescribed statutory requirements and procedures in arriving at the
decision on 21 May 2009 to impose a rate of R 0.0154 in the rand on the
value of business, industrial and commercial properties.
2 It is declared that in the future the first respondent is obliged to comply with
the provisions of the Local Government: Municipal Systems Act 32 of 2000,
the Local Government: Municipal Finance Management Act 56 of 2003 and
the Local Government: Municipal Property Rates Act 6 of 2004 when it mate-
rially amends a proposed budget after it has been tabled and advertised for
public comment.
3 The first, second and third respondents are ordered to pay the costs of the
application, such costs to include the costs of two counsel.’
_____________
M S Navsa
Judge of Appeal
APPEARANCES:
Counsel for appellant:
R Stockwell SC
C McKelvey
Instructed by:
Masilo-Freimond
Roodepoort
Bloemfontein
Counsel for respondent:
S J Du Plessis SC
I Currie
Instructed by:
Moodie & Robertson
Johannesburg
Claude Reid Inc
Bloemfontein
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
APPEAL
8 November 2012
STATUS: Immediate
SOUTH AFRICAN PROPERTY OWNERS ASSOCIATION V THE COUNCIL OF
THE CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY & OTHERS
(684/11)
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
On 8 November 2012 the Supreme Court of Appeal decided that the Council had
unlawfully increased the property rate levied on the owners of business, commercial
and industrial property within the jurisdiction of the Johannesburg Metropolitan
Municipality during the 2009/2010 budget year. The SCA found that the Council and
the Executive Mayor had not complied with the relevant provisions of the Local
Government: Municipal Systems Act 32 of 2000, the Local Government: Municipal
Finance Management Act 56 of 2003 and the Local Government: Municipal Property
Rates Act 6 of 2004, which make provision for community participation, when they
decided to increase the rate on business, commercial and industrial property by 28%
after the budget providing for an increase of 10% had been tabled and advertised for
public comment. The SCA also found that the decision to impose the additional 18%
in the rate on business, commercial and industrial property was irrational and
unfairly discriminated against the owners of such property. The SCA therefore
upheld SAPOA’s appeal against the order of the South Gauteng High Court
dismissing SAPOA’s application to set aside the budget, alternatively, the rate
imposed.
The majority of the court decided that the problem created by the rate unlawfully
levied could not be solved by a court order (the egg could not be unscrambled) and,
acting in terms of s 172 of the Constitution which requires that the court make an
order which is just and equitable, issued orders declaring that the Council had acted
unlawfully in imposing the contentious rate and declaring how such a problem must
be dealt with in future: that the relevant provisions of the Acts must be complied with
when the Council wishes to adopt a budget with rates which are materially different
from those in the tabled budget, after the budget has been tabled and advertised for
public comment.
-- ends --
|
3343
|
non-electoral
|
2020
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1136/2018
In the matter between:
VISHNU NOHOUR
FIRST APPELLANT
NEVILLE MICHAEL CHARLES
SECOND APPELLANT
and
MINISTER OF JUSTICE AND CONSTITUTIONAL
RESPONDENT
DEVELOPMENT
Neutral citation:
Nohour and Another v Minister of Justice and Constitutional
Development (1136/2018) [2020] ZASCA 27 (26 March 2020)
Coram:
PETSE DP, VAN DER MERWE and DLODLO JJA
Heard:
05 March 2020
Delivered:
26 March 2020
Summary: Delict – damages arising from alleged wrongful conviction – whether wrongful
conviction proved – whether evidence established on balance of probabilities that
acquittal would have followed if no irregularity had been committed – whether proved that
the conduct of the prosecution was the cause of conviction – ex turpi causa non oritur
actio maxim not applicable.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Pillay J
sitting as court of first instance):
‘The appeal is dismissed with costs including the costs of two counsel where so
employed.’
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Dlodlo JA (Petse DP and Van der Merwe JA concurring):
[1] The appellants, Mr Vishnu Nohour and Mr Neville Michael Charlos, together with
three others were tried on charges of kidnaping and rape of one RM in the Durban
Regional Court. They raised the defence that they had consensual sex with the
complainant whom they described as a prostitute. The complainant denied that she had
consented to the sexual intercourse or that she was a prostitute. The trial ended on 8
April 1994 when the appellants were convicted. They unsuccessfully appealed against
the conviction in the KwaZulu-Natal High Court. The high court, upon dismissing the
appeal proceeded to increase their sentences to an effective period of 7 years’
imprisonment.
[2] The appellants’ applied and were granted leave to appeal by the high court to this
Court. The appeal was against both conviction and sentence. On 13 May 2003, this Court
set aside the appellants’ conviction and sentence. By that time, consequent upon
conviction, the appellants had served a term of imprisonment from 19 March 1998 until
23 November 2001 and from 19 March 1998 until 28 September 2012 respectively.
[3] One Ms Monique Holzen was at all material times an employees of the Department
of Justice and Constitutional Development (Department). She was the State Prosecutrix
in the trial. It is common cause that at all material times, she acted within the course and
scope of her employment by the Department.
[4] In the particulars of claim in the court a quo, it is averred that in the course of the
criminal trial Ms Holzen omitted to disclose facts within her knowledge to the appellants
and the regional court. Those facts she withheld were:
(a) that the complainant (RM) had admitted to the investigating officer that she was a
prostitute;
(b) that the investigating officer had witnessed the complainant soliciting and plying her
trade as a prostitute; and
(c) that the complainant’s sworn statement which, in accordance with the practice at the
time was not in possession of the appellants or their legal representatives, materially
differed from her evidence in court.
[5] In acting as Ms Holzen did, the appellants alleged that she breached her common
law duty to disclose to the defence any material deviation between the evidence given by
the complainant and the contents, statements and information in the docket. The
appellants alleged that had the aforementioned information been disclosed by the
prosecutor, they would have been acquitted of charges against them. The contention by
the appellants is that the withheld information was critical in their defence of consensual
sex with the complainant
[6] According to the appellants as the prosecutor acted with the object to secure a
conviction against them she had the necessary animus uniuriandi, that is, the intention to
injure. In the alternative the appellants pleaded that the prosecutor acted negligently. The
appellants pleaded that as a consequence of wrongful conviction they were imprisoned
for various periods described above. They were thereafter subjected to stringent parole
conditions which restricted their rights and freedoms until their appeals succeeded. They
were unable to be employed in the time they were in prison and consequently they
suffered loss of earnings. They alleged to have suffered loss of amenities of life, loss of
freedom of movement and loss of opportunities to interact with family and friends. They
averred to have suffered depression from which they continue to suffer. They claimed
specified amounts of money representing general damages, past loss of earnings etc.
Save for the special plea of prescription, the respondent unhelpfully pleaded a bare denial
of each and every averment made by the appellants. The special plea is not before us. It
was dismissed by the high court.
[7] The trial proceeded only on the issue of liability. The appellants denied that they
raped the complainant. The high court found that all the essentials of the cause of action
had been established by the evidence advanced save for the issue of causation and
damages. The high court found that the appellants failed to discharge the onus of proving
causation. Put differently, the appellants failed to prove that they would not have been
convicted but for the irregularity committed by the prosecutor. Another finding made by
the high court was that the state was not obliged to compensate the appellants on the
basis of the ‘ex turpi’ principle.
[8] This Court is called to make a determination whether the appellants would have
been acquitted if the prosecutor had discharged her common-law obligations and
disclosed to the defence material deviations between the complainant’s evidence and the
contents of the docket. Additionally, perhaps, a finding is called for whether the high court
was correct in finding that the ex turpi causa maxim applied to the factual matrix of this
matter.
[9] The duty to disclose the apparent deviations by a witness from the statement
made, existed in this country even prior to the advent of the present constitutional
dispensation. Nowadays the constitutional values are also relevant in determining the
legal convictions of the community.1 In R v Steyn,2 this Court laid down a firm rule of
practice in terms of which a public prosecutor is obligated to inform the court if a state
witness has deviated in a material respect from the statement he made which is in the
police docket. This rule also required that the State shall furnish to the defence a copy of
1 Van Eeden v Minister of Safety and Security 2003 (1) SA 389 (SCA) at 396G-J.
2 R v Steyn 1954 (1) SA 324 (A).
such statement in order that it be used during the cross-examination of the relevant
witness. The prosecutor indeed had a legal duty to disclose material discrepancies as
aforementioned.
[10] The information that the prosecutor should have disclosed in terms of the aforesaid
duty was concisely set out by Heher JA in this Court’s judgment in the following terms.3
‘9. The statement made by the complainant to the police and the contents of the investigation
diary were only brought to the attention of the appellant and his legal advisers in 1998 after initial
appeal had been dismissed;
10. In the police statement apparently signed by the complainant, she is reported as follows:
“On 1993-02-12 at about 23:15 I was walking with my sister (Hlewye Mkhize) down Innes Road.
To visit a friend who lives in Innes Road but I am unable to give address at this stage…. I was
screaming and four black males came to my rescue. A fight broke between the unknown black
males and the Asian males. . . The black male who I informed that I was raped left the scene of
the Asian males whilst I stood by the roadside”. . .
‘11. The appellant testified that towards the latter part of the time which he and the other accused
spent with the complainant in the park they became aware of the noise in the vicinity including a
gunshot. When they were hurriedly settling accounts with the still naked complainant two black
men ran into the park and confronted him he panicked and fled. He heard what sounded like a
fight going on behind him. (Accused 2 testified that, indeed such fight took place involving him,
accused 3 and the black men.)
12. In the investigation diary the investigating officer, Murugan, made the following relevant
entries:
“93/05/14. . . The complainant was traced and served with J32 . . . According to the complainant,
the person mentioned in her statement H Mkhize is not in fact her sister but a fellow prostitute . .
. tried to get hold of this prostitute but she kept avoiding me . . .
13. In the affidavit which supported the application to re-open the case the investigating officer
confirmed that conversation which he had with the complainant on 14 May 1993 and added that
the source of his knowledge that she was a practising prostitute was not only that conversation
but his own observation of her while she was engaged in soliciting.’”
The conduct of the prosecutrix in withholding these material matters from the trial court
and the defence was most certainly gross.
3 Myendra Naidoo v The State Case no. 504/2002, unreported judgment of this Court.
[11] If the prosecutor concerned acted deliberately in omitting or failing to disclose the
aforementioned discrepancies to the court and to the defence, the requirement of animus
iniuriandi would be established. On the other hand, if the prosecutor acted negligently,
then liability can only arise where the circumstances give rise to a legal duty to avoid
negligently causing harm. The principles applicable to liability for negligent omission were
correctly formulated by Nugent JA in the following terms:4
‘A negligent omission is unlawful only if it occurs in circumstances that the law regards as sufficient
to give rise to a legal duty to avoid negligently causing harm. It is important to keep that concept
quite separate from the concept of fault. Where the law recognises the existence of a legal duty
it does not follow that an omission will necessarily attract liability – it will attract liability only if the
omission was also culpable as determined by the application of the separate test that has
consistently been applied by this Court in Kruger v Coetzee, namely whether a reasonable person
in the position of the defendant would not only have foreseen the harm but would also have acted
to avert it, “namely whether a reasonable person in the position of the defendant would not only
have foreseen the harm but would also have acted to avert it.’
[12] Negligence is a discrete element of delict by omission. It must, however, be considered in
the light of all the evidence and submissions regarding the issues of causation and wrongfulness.
The test for negligence in Kruger v Coetzee5 has been followed since its formulation by Holmes
JA. The Constitutional Court confirmed the test in Steenkamp NO v Provincial Tender Board,
Eastern Cape.6 The test is that negligence is established 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 his patrimonial loss; and
(ii) would take reasonable steps to guard against such occurrence; and
(b) the defendant failed to take such steps.’
The formulation of the test in Kruger v Coetzee has been extended under our Constitution. It now
includes reasonable precautions to be taken by public servants when discharging their
constitutional obligations.
4 Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) at 441E-442B.
5 Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-G.
6 Steenkamp NO v Provincial Tender Board of the Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC)
para 39. See also the judgment by Langa CJ in NM and Others v Smith and Others (Freedom of Expression
Institute as Amicus Curiae) [2007] ZACC 6; 2007 (5) SA 250 (CC) at 100.
[13] This Court, explaining the test which courts apply to determine the element of
wrongfulness for the purpose of establishing liability, stated the following in Van Eeden v
Minister of Safety and Security; 7
‘An omission is wrongful if the defendant is under a legal duty to act positively to prevent the harm
suffered by the plaintiff. The test is one of reasonableness. A defendant is under a legal duty to
act positively to prevent harm to the plaintiff if it is reasonable to expect of the defendant to have
taken positive measures to prevent harm. The Court determines whether it is reasonable to have
expected of the defendant to have done so by making a value judgment placed, inter alia, upon
its perceptions of the legal convictions of the community and on consideration of policy. The
question whether a legal duty exist in a particular case is thus a conclusion of law pending on a
consideration of all the circumstances of the case and in the interplay of the many factors which
have to be considered.’
The approach adopted by our courts whether the omission should be regarded as unlawful
is an open and flexible one. The court have played a policy making role.8
[14] Wrongfulness is an essential element in delict.9 The Constitutional Court held in
this regard that the element of wrongfulness acts ‘as a brake on liability’ and that conduct
is not to be regarded as wrongful if public or legal policy considerations determine that it
would be ‘undesirable and overly burdensome to impose liability’.10 In Le Roux and Others
v Dey,11 the Constitutional Court confirmed that the criterion of wrongfulness depends on
a judicial determination as to whether it would be reasonable to impose liability on the
defendants, which reasonableness has nothing to do with the reasonableness of the
defendant’s conduct or omissions. Therefore, even if it were to be found that there was
negligence herein, the mere fact of such negligence may not make the omission wrongful.
In order to prevent the ‘chilling effect’ that delictual liability in such cases may have on the
functioning of public servants, such proportionality exercise must be duly carried out and
7Van Eeden v Minister of Safety and Security 2003 (1) SA 389 (SCA) at 395H-396BE-G.
8 Id at 396E-F.
9 Stedall and Another v Aspeling and Another [2017] ZASCA 172; 2018 (2) SA 75 (SCA) para 11.
10 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng 2015 (1) SA 1
(CC).
11 Le Roux and Others v Dey [2011] ZACC 4; 2011 (3) SA 274 (CC) para 122.
the requirements of foreseeability and the proximity of harm to the action or omission
complained of, should be judicially evaluated.12
[15] As it had been said, the court a quo found that the elements of fault and
wrongfulness had been proved. What remained was proof of factual and legal causation.
As far as factual causation is concerned the sine qua non test applies.13 Legal causation
entails an enquiry into whether the alleged wrongful act (wrongful omission to disclose
deviations) is sufficiently closely linked to the harm for legal liability to ensue. Generally,
a wrongdoer is not liable for harm that is too remote from the conduct alleged or harm
that was not foreseeable.14 Remoteness of damage operates along with the requirement
of wrongfulness as a measure of judicial control in respect of the imposition of delictual
liability. It, therefore operates as a ‘long stop’ in cases where most right-minded people
will regard the imposition of liability in a particular case as untenable despite the presence
of all other elements of delictual liability.15
[16] Legal causation is resolved with reference to public policy. For that reason, the
elements of legal causation and wrongfulness will frequently overlap. They nevertheless,
remain conceptually distinct.16 The result is that even if conduct is found to have been
wrongful (or even negligent, for that matter), a court may still find, for other reasons of
public policy, the harm flowing therefrom to have been too remote for the imposition of
delictual liability. The traditional tests for determining legal causation (reasonable
foreseeability, adequate causation, proximity of the harm etc.) remain relevant as
subsidiary determinants. These traditional tests should be applied in a flexible manner.
They should be tested against considerations of public policy as infused with
constitutional values.17 Insofar as legal causation is concerned, every matter must be
determined on its own facts. The consideration of legal causation or wrongfulness, public
12 Carmichele v Minister of Safety and Security 2001 (4) SA 938 (CC) para 49.
13 See Lee v Minister of Correctional Services [2012] ZACC 30; 2013 (2) SA 144 (CC) paras 41 and 74.
14 De Klerk v Minister of Police [2019] ZACC 32; 2019 (12) BCLR 1425 (CC) para 24 and cases cited there
(majority judgment).
15 De Klerk supra para 27 and cases cited there (It is to be noted though that the Constitutional Court did
not pronounce on the relationship between wrongfulness and legal causation of the same delict).
16 De Klerk para 28 and cases cited there.
17 De Klerk paras 30, 31 and 47.
policy considerations, infused with the norms of our constitutional dispensation dictate
that even if the prosecutor suffered from negligent omission, legal liability may ensue if
the harm was foreseeable and is not too remote.
[17] Whether an act or omission is the proximate cause of harm depends on the
conclusion drawn from the available facts and the relevant probabilities. Similarly, the
conclusion as to whether a causal link exist between the wrongdoer’s conduct and the
harm alleged is drawn from the facts, the evidence before court and the relevant
probabilities in the circumstances. In Minister of Police v Skosana,18 this Court expressed
itself regarding the test for factual causation in the following terms:
‘Causation in the law of delict gives rise to two rather distinct problems. The first is a
factual one and relates to the question whether the negligent act or omission in question
caused or materially contributed to . . . the harm giving rise to the claim. If it did not, then
no legal liability can arise and cadit quaestio. If it did, then the second problem becomes
relevant, viz. whether the negligent act or omission is linked to the harm sufficiently closely
or directly for legal liability to ensue or whether, as it is said, the harm is too remote. This
is basically a juridical problem in which considerations of legal policy may play a part.’
The general principle of the law of delict is that loss is recoverable only if it was factually
caused by a defendant’s wrongful and culpable conduct. One purpose of the law of delict
is to encourage those who commit delict to admit their liability and to pay damages to
their victims without the need for lengthy, divisive and prohibitive expensive litigation.19
[18] Factual causation in delict is also determined by applying the but–for test. This test
asks whether, for defendant’s negligent conduct, the plaintiff’s harm would not have
occurred.20 The but-for test requires the court mentally to eliminate or think away as much
of the defendant’s conduct as was unreasonable, and to ask hypothetically whether the
plaintiff would still have suffered the harm had the defendant acted reasonably. If the
harm would have ‘not’ been suffered factual causation is established; if the harm ‘would’
18 Minister of Police v Skosana 1997 (1) SA 31 (A) at 34E-34H.
19 See Alistair Price ‘Factual causation after Lee’ (2014) 131 SALJ 491 at 491.v
20 See Minister of Police v Skosana 1997 (1) SA 31 (A); Simon & Co (Pty) Ltd v Barclays National Bank Ltd
1984 (2) SA 888 (A).
have occurred anyway, the required causal link is absent. Courts exercised common
sense when applying this test.21 Nugent JA, in Van Duivenboden, held that the first
enquiry is whether the wrongful conduct was a factual cause of the loss. The second is
whether in law it ought to be regarded as a cause. The same test was formulated slightly
differently by Corbett CJ in International Shipping22 as follows:
‘The first is a factual one and it relates to the question as to whether the defendant’s
wrongful act was a cause of the plaintiff’s loss. This has been referred to as “factual
causation”. The enquiry as to factual causation is generally conducted by applying the so-
called “but-for test”, which is designed to determine whether a postulated cause can be
identified as causa sine qua non of the loss in question. In order to apply this test one
must make hypothetical enquiry as to what probably would have happened but for the
wrongful conduct of the defendant. This enquiry may involve the mental elimination of the
wrongful conduct and the substitution of a hypothetical course of lawful conduct and the
posing of the question as to whether upon such an hypothesis plaintiff’s loss would have
ensued or not. If it would in any event have ensued, then the wrongful conduct was not a
cause of the plaintiff’s loss; aliter, if it would not so have ensued. If the wrongful act is
shown in this way not to be a causa sine qua non of the loss suffered, then no legal liability
can arise. On the other hand, demonstration that the wrongful act was a causa sine qua
non of the loss does not necessarily result in legal liability. The second enquiry then
arises, viz whether the wrongful act is linked sufficiently closely or directly to the loss for
legal liability to ensue or whether, as it is said, the loss is too remote. This is basically a
juridical problem in the solution of which considerations of policy may play a part. This is
sometimes called “legal causation”.’
In other words, the test of the factual causation is simply whether the relevant act of
omission was a necessary condition (conditio sine qua non) of the event in question.
[19] A brief summary of the evidence presented by the prosecution before the regional
court is necessary. This under normal circumstances would not have been necessary
21 See Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SAC) para 25; Minister of
Finance v Gore NO 2007 (1) SA 111 (SCA) para 33.
22 International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 9A0 700E-J.
because the appeal before us concerns a delictual claim. But the criminal proceedings
herein are foundational to this appeal. The complainant testified before the regional court
that she was walking down Innes Road with her sister when a motor vehicle occupied by
the appellants and their companions stopped. The occupants of the vehicle alighted and
one of them called out ‘hey, come here.’ the complainant and her sister ignored that call.
Then suddenly the appellants and their companions started chasing her. She told the trial
magistrate that she ran into a foyer of a block of flats situated not far from the intersection
with Umgeni Road. A locked inner door prevented any further escape for the complainant.
It was there that one of the attackers (accused 2) caught her, slapped her and he accused
her of robbing his brother. Accused 2 claimed that he was a policeman effecting an arrest
of the complainant. It is so that no police appointment certificate was exhibited to her. The
complainant was lifted off the ground and she was carried despite her muffled scream to
the waiting vehicle, which at that stage was occupied by accused 1. Her mouth was
gagged by someone’s hand, preventing her scream from having any effect. All the
occupants of the vehicle, who were initially in the vehicle (including the two appellants),
were then again in the vehicle. The complainant was forced into the back seat between
accused 3 and 5. She testified that en route she was assaulted by at least accused 3 and
5. Accused 5 undressed his jacket and it was then used to cover her head. The vehicle
stopped at the grounds described by the complainant as being dark and secluded. She
was pulled out from the vehicle. En route to the corner behind a precast wall, accused 2
threatened the complainant saying that he would shoot her if she makes noise.
[20] She testified, in the magistrate court, that she believed that she would indeed had
been shot because during the journey something resembling a gun had been pointed at
her temple. She added though that she never managed to identify what she perceived
was the firearm because she believed there was a firearm and that she would be shot,
she calculated in deciding whether to flee through the hole in the wall or not. She was, in
any event, further hampered by an injured knee sustained during a fall in the initial flight
into the foyer. She testified how she was forcibly undressed and instructed to lie down.
She exhibited some reluctance to comply but was forcefully ‘dropped’ to the ground. This
was followed by sexual intercourse by accused 2 in two positions after which he whistled
for accused 3, 4 and 5. At a point two accused persons would hold her whilst one of them
was vaginally penetrating her. At one stage one of the assailants placed his penis into
her mouth. There was a stage when there was a jostling for sexual intercourse with her
by all accused. In her evidence they all had sexual intercourse with her against her will.
She never consented. She testified that it was even possible that some of her assailants
had sexual intercourse with her more than once.
[21] When she heard voices of people conversing and laughing, emanating from the
direction of the road, she cried out and this led to the termination of the assault upon her.
She testified that this caused the accused persons to flee the scene. She thereupon fled
naked through the hole in the wall. She met up with a man, later on established to be
Msomi, to whom she reported, ‘Indians are raping me’. Msomi referred her to a woman
nearby for assistance. When this lady realised how naked the complainant was, she gave
her an oversized jersey to hide her nakedness and suggested that they go into a room.
The complainant who was still fearful, declined and they hid rather in the garden. They
remained there until satisfied that those calling her were in the company of the police.
The complainant was conveyed to the police station after pointing out the scene of rape
and her statement was taken. The complainant was subjected to grilling cross-
examination by the accused’s’ legal representative. Her evidence was unshaken by that
cross-examination. Importantly she denied the version of the accused that they had
sexual intercourse with her with her consent. She denied further that she was a prostitute.
Dr Vawda, on examining the complainant, concluded that sexual intercourse most
probably took place. He confirmed as well that the complainant’s left knee had suffered
abrasions. The complainant also told the magistrate that she suffered abdominal pain
particularly to the groin and also in the legs. Additionally, she stated that her vagina bled
during the attack.
[22] Mr Michael Msomi and Mr Sipho Hadebe testified for the State. Hadebe, was
together with Msomi when they heard a female crying at about 00h30. Both exited the
room to investigate. They stood about 20 meters from the boundary wall to the park in
order to discern the direction of the cry. A naked complainant appeared from the gap in
the wall. She was ‘crying excessively’. She reported that she had been raped by five men.
She was referred to a lady living nearby for some clothing to cover her nakedness. Msomi
was still trying to see what he could do there at the scene of rape when he came across
accused 1 putting on his trousers whilst his underwear was just above his knees. When
Msomi was grabbing accused 1, the other accused persons appeared from the trees and
prevented Msomi from grabbing accused 1. Msomi was hit by accused 3 in the face
despite the fact that he produced his appointment certificate in an endeavour to identify
himself. The evidence is that then all the accused persons fled towards the motor vehicle.
Msomi had already recorded the registration number of the motor vehicle before it drove
away with the accused persons.
[23] Whilst Msomi and Hadebe were conversing the vehicle returned. The occupants
disembarked. Msomi realised he was in danger as the group of accused advanced
towards him after disembarking from their motor vehicle. Msomi fled and accused 3 gave
chase. Msomi outran accused 3 and he telephoned the charge office from his residence.
He requested that they contact radio control and send reinforcements. The flying squad
responded promptly. That is how the accused were arrested. The occupants of the
accused vehicle had already attacked and injured Hadebe. He told the court that when
accused vehicle returned, its occupants alighted, struck and stabbed him on the head,
cheekbone and left kidney. Hadebe was rushed to hospital by the police. Msomi recalled
that when he was in the company of a female constable a search revealed the
complainant and her good Samaritan hiding amongst some shrubbery. On being
interviewed by the female constable, the complainant pointed out some of her property in
the accused vehicle. At the scene complainant’s shoe, brassier and a knife were
discovered.
[24] The claim by the appellants that if the information contained in the docket had been
made available to them they would have used it such that they would have been acquitted
goes too far. In the first instance it is unknown what explanation would have been given
by the complainant on why in her oral testimony she disputed the assertion that she was
a prostitute when it appears that in her police statement she had so stated. The appellants
are in no position to say that their cross-examination in this regard would have yielded
the result they contend for. The trial magistrate would still have a duty to evaluate her
evidence. It is of significance that the magistrate was made aware that the complainant
was alleged to be a prostitute. The prosecution in addressing the court did tell the court
so. Consequently, the magistrate remarked as follows:
‘There have been allegations that the complainant was a lady of ill-repute and of course
you would have the court believe, as you have throughout this trial that she had offered
herself to you for reward. Even if that be the case she is still entitled to the protection of
the law.’
It appears from this statement that, in evaluating the complainant’s evidence, the trial
magistrate took into account that she might have been a prostitute.
[25] The evidence of the complainant did not stand alone. When she screamed
excessively on being sexually assaulted this attracted the attention of Msomi and Hadebe
whose evidence forms part of the summary above. The defence of the appellants was
that the sexual intercourse was consensual and that the complainant was a prostitute.
The complainant suffered abrasions on her left knee. This militates against consensual
sexual intercourse. The appellants’ testified that the complainant was either lying on her
back or was seated when sexual intercourse took place. The injury she sustained is
unlikely to have occurred if sexual intercourse took place with her consent. Only one of
the complainant’s shoes was found in the appellants’ motor vehicle together with her
brassier as stated in the summary of evidence above. A police officer found her
‘hysterical – hiding in the shrubbery’ with a woman (the good Samaritan) who was
comforting her. The difficulty for the appellants is that all of the above is not reconcilable
with consensual sex, whether for reward or otherwise. The aforegoing is independent of
the prosecutor’s omission to disclose statements indicating the complainant as a
prostitute. How in these circumstances could the prosecutor’s omission be a factual cause
of the appellants’ conviction?
[26] Turning to the case presented by the appellants before the high court, no evidence
exists as to what the response of the complainant would have been, for instance, had she
been confronted by way of cross-examination as to why, having admitted this fact to the
investigating officer, she denied that she was a prostitute in her viva voce evidence before
the trial court. It might well be that there was a compelling and an understandable
explanation for this. Nobody knows. One could only speculate on this score. Having
responded in whatever manner she would have chosen, nobody knows for a fact how the
presiding magistrate would have found in the evaluation of the complainant’s evidence.
Again one can only speculate. However, courts work on the basis of evidence from which
facts are established and not conjecture. It remains speculation, as well, on the part of
the appellants to advance an argument that had the prosecutor disclosed to the defence
the content of the complainant’s statement contained in the docket, cross-examination on
that score of the complainant would have resulted in their acquittal. There is no factual
basis for such an argument. Nobody knows how the magistrate would have decided. It is
not uncommon for instance that the witnesses’ statements are different from the viva voce
evidence. Witnesses often explain such differences satisfactorily whenever confronted on
such differences. But, as already indicated, the trial magistrate had due regard to the fact
that the complainant might have been a prostitute when he evaluated the evidence
presented before him in its totality. The appellants bore the onus of proving all
requirements for delict including factual causation on a balance of probabilities.
[27] The magistrate made the following observations concerning the complainant:
‘The complainant subjected to a lengthy and repetitive questioning on three appearances held up
well, exhibiting natural and expected moments of tearfulness from time to time.’ The magistrate
expressed himself as follows regarding the evidence by other witnesses:
‘The court can find no suggestions of untruthfulness in the unified version of Msomi and Hadebe,
both independent witnesses, that their attention was drawn by the plaintiff cry for help which
sounded to have enacted from the complainant.’ The magistrate observed further:
‘Arguing for the conviction for all as charged on count one on the basis of common purpose, and
of accused 2 to 5 on count two, also as charged, the prosecutrix seemed to think that the
probabilities favoured the finding that the complainant was indeed the prostitute, a fact she (the
complainant) vehemently denied, but pointed out that even if this was so no significant damage
to the prosecution case would inevitably follow.’
Even though the prosecutrix omitted to disclose to the defence the fact that the
complainant admitted in her police statement that she was a prostitute, the same
prosecutrix did inform the trial magistrate about this. This may not have been at
appropriate stage of the criminal hearing, but the fact is, the magistrate was made aware
of this. He expressed his views about this. The submission that the appellants would
never have been convicted but for the prosecutor’s non-disclosure lacks substance.
There are no facts established by evidence advanced that support the assertion that they
would have been acquitted but for the omission by the prosecution. They failed the test
for factual causation which is the condition sine qua non. The appellants have thus failed
to produce evidence that the prosecutor’s conduct ‘caused or materially contributed to’
the harm suffered. The wrongful act on the part of the prosecution has not been proved
to be linked sufficiently closely or directly to the loss alleged to have been suffered by the
appellants. There is no causal link proved. The appeal must clearly fail. The ex turpi causa
non oritur actio maxim, accepting that it is part of our law, had no application on the facts
of this case. But having regard to the conclusion to which I have come, nothing more need
be said about it.
[28] In the result, the following order is made:
‘The appeal is dismissed with costs including the costs of two counsel where so
employed.’
_________________
DV Dlodlo
Judge of Appeal
APPEARANCES:
For Appellant:
T N Aboobaker SC and M Bahadur
Instructed by:
Justice Reichlin Ramsamy, Durban
Webbers Attorneys, Bloemfontein
For Respondent:
CAS Jennings and SH Ngcobo
Instructed by:
The State Attorney, Durban
The State Attorney, Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Nohour and Another v Minister of Justice and Constitutional Development
From:
The Registrar, Supreme Court of Appeal
Date:
26 March 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) dismissed the appeal by the appellants with costs.
The appellants in this case, Mr Vishnu Nohour and Mr Neville Michael, were tried on charges of
kidnaping and rape of one RM in the Durban Regional Court. They raised the defence that they had
consensual intercourse with the complainant whom they described as a prostitute. The complainant
denied that the intercourse was consensual or that she was a prostitute. The appellants were
convicted. They unsuccessfully appealed against the conviction in the KwaZulu-Natal High Court. The
high court, upon dismissing the appeal proceeded to increase their sentences to an effective period of
7 years’ imprisonment. The appellants applied and were granted leave to appeal by the high court to
this Court. The appeal was against both conviction and sentence. On 13 May 2003, this Court set
aside the appellants’ conviction and sentence.
In the court a quo, it is averred that Ms Holzen (the Prosecutor) omitted to disclose facts that were
within her knowledge to the appellants and the regional court. The facts she withheld were that the
complainant (RM) had admitted to the investigating officer that she was a prostitute; that the
investigating officer had witnessed the complainant soliciting and plying her trade as a prostitute and
that the complainant’s sworn statement which, in accordance with the practice at the time was not in
possession of the appellants or their legal representatives, materially differed from her evidence in
court. By doing this, the appellants alleged that Ms Holzen breached her common law duty to disclose
to the defence any material deviation between the evidence given by the complainant and the
contents, statements and information in the docket. Further, they allege that such information would
have led to their acquittal.
The appellants pleaded that as a consequence of wrongful conviction they were imprisoned for
various periods. They were thereafter subjected to stringent parole conditions until their appeals
succeeded. The high court found that the appellants failed to prove that they would not have been
convicted but for the irregularity committed by the prosecutor. Further, it held that the state was not
obliged to compensate the appellants on the basis of the ex turpi causa non oritur actio maxim
(referring to the fact that no action may be founded on illegal or immoral conduct).
This Court was called to determine whether the appellants would have been acquitted if the
prosecutor had discharged her common-law obligations and disclosed to the defence material
deviations between the complainant’s evidence and the contents of the docket. This court held that
the prosecutor had a legal duty to disclose material discrepancies. If the prosecutor concerned acted
deliberately in omitting or failing to disclose the discrepancies to the court and to the defence, the
requirement of animus iniuriandi (intention to injure) would be established. On the other hand, if the
prosecutor acted negligently, then liability could only arise where the circumstances gave rise to a
legal duty to avoid negligently causing harm. Therefore, even if it were to be found that there was
negligence herein, the mere fact of such negligence would not make the omission wrongful. The
consideration of legal causation or wrongfulness, public policy considerations, infused with the norms
of our constitutional dispensation dictated that even if the prosecutor suffered from negligent
omission, legal liability could ensue if the harm was foreseeable and was not too remote. The general
principle of the law of delict is that loss is recoverable only if it was factually caused by a defendant’s
wrongful and culpable conduct.
Factual causation in delict is also determined by applying the but–for test. This test asks whether, for
defendant’s negligent conduct, the plaintiff’s harm would not have occurred. If the harm would have
‘not’ been suffered factual causation is established; if the harm ‘would’ have occurred anyway, the
required causal link is absent. This Court held that the appellants bore the onus of proving all
requirements for delict including factual causation on a balance of probabilities. They failed the test for
factual causation which is the condition sine qua non (without which it could not be). Further, the
appellants failed to produce evidence that the prosecutor’s conduct ‘caused or materially contributed
to’ the harm suffered. The wrongful act on the part of the prosecution was not proved to be linked
sufficiently closely or directly to the loss alleged to have been suffered by the appellants. There was
no causal link proved. In the result, this court dismissed the appeal with costs and the ‘ex turpi’
principle, accepting that it is part of our law, had no application on the facts of this case. But having
regard to the conclusion to which the court came to, nothing more need be said about it.
|
166
|
non-electoral
|
2017
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 058/2017
In the matter between:
CHINAZ SEPTOO obo J M SEPTOO
& M SEPTOO APPELLANT
and
THE ROAD ACCIDENT FUND RESPONDENT
Neutral citation: C Septoo obo J M Septoo & another v The Road Accident Fund
(058/2017) [2017] ZASCA 164 (29 November 2017)
Coram:
Tshiqi, Majiedt and Mocumie JJA, Mbatha and Rogers AJJA
Heard:
09 November 2017
Delivered: 29 November 2017
Summary: Delict – action for damages – loss of support – dependant's action –
breadwinner died as a result of own negligence – single vehicle accident –
wrongfulness not established against the Road Accident Fund – appeal dismissed.
______________________________________________________________________
ORDER
On appeal from: Eastern Cape Local Division of the High Court, Port Elizabeth
(Schoeman J sitting as court of first instance):
The appeal is dismissed.
__________________________________________________________________
JUDGMENT
Mbatha AJA (Tshiqi, Majiedt and Mocumie JJA and Rogers AJA
concurring)
[1] The appeal before us is with the leave of the high court, Eastern Cape Local
Division, Port Elizabeth. The issues on appeal are; first, whether dependants, in the
position of the appellant Ms Chinaz Septoo, and her minor children, are entitled to
claim compensation for loss of support from the respondent, the Road Accident
Fund (the Fund) in terms of the Road Accident Fund Act 56 of 1996 (the Act) in
circumstances where the deceased breadwinner was the sole cause of the collision;
second, whether the common law should be developed to include such claims.
[2] The deceased, who was the driver of the motor vehicle at the time of the
collision, was married to the appellant and was the father to both her minor child
and unborn child. The appellant and her minor child were both passengers in the
said motor vehicle. The deceased negligence was the sole cause of the collision. In
a separate action the Road Accident Fund (the Fund) was declared liable for the
appellant and her minor child‟s general damages and future medical expenses. In
another action giving rise to the present appeal, she claimed damages for loss of
support.
[3] Section 3 of the Act stipulates that:
„The object of the Fund shall be the payment of compensation in accordance with this Act
for loss or damage wrongfully caused by the driving of motor vehicles.‟
The underlying basis for the Act is the common law principles of the law of delict.
A claimant must therefore prove all the elements of a delict before it can succeed
with its claim in terms of the Act.
[4] In Legal Insurance Company Ltd v Botes1 this Court described the nature of
the dependants‟ claim for loss of support in the following manner:
„At the outset it is necessary to deal with the nature and scope of the action, according to existing
South African Law, by dependants against a person who has unlawfully killed the bread-winner
who was legally liable to support them. The remedy was unknown to Roman Law, in which no
action arose out of the death of a freeman, and consequently the Aquilian action was not
available. It had its origin in Germanic custom, in which the reparation of “maaggeld” was
regarded as a conciliation to obviate revenge by the kinsmen of the deceased, and it was divided
among the latter‟s children or parents or other blood relatives. The Roman-Dutch Law modified
the custom by regarding the payment as compensation to the dependants for loss of maintenance.
The Roman-Dutch jurists felt that this could be accommodated within the extended framework
of the Roman Aquilian action by means of a utilis actio. The remedy has continued its evolution
in South Africa - particularly during the course of this century - through judicial
pronouncements, including judgments of this Court, and it has kept abreast of the times in regard
to such matters as benefits from insurance policies. The remedy relates to material loss “caused
to the dependants of the deceased man by his death”. It aims at placing them in as good a
position, as regards maintenance, as they would have been in if the deceased had not been killed.
1 Legal Insurance Company Ltd v Botes 1963 (1) SA 608; [1963] 1 All SA 593 (A).
To this end, material losses as well as benefits and prospects must be considered. The remedy
has been described as anomalous, peculiar, and sui generis - but it is effective.‟2
[5] In Evins v Shield Insurance Co Ltd3 this Court illustrated the distinction
between a dependant's claim, and a damages action for bodily injuries as follows:
„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 an 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 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.‟4
[6] In Aetna Insurance Co v Minister of Justice5 this Court said that the purpose
of motor vehicle insurance legislation was to remedy the evil „that members of the
public who are injured, and the dependants of those who are killed, through the
negligent driving of motor vehicles may find themselves without redress against
the wrongdoer. If the driver of the motor vehicle or his master is without means
and is uninsured, the person who has been injured or his dependants, if he has been
2 Ibid at 614B-E.
3 Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A); [1980] 2 ALL SA 40 (A).
4 Ibid at 838H-839C.
5 Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A).
killed, are in fact remediless and are compelled to bear the loss themselves. To
remedy that evil, the Act provides a system of compulsory insurance.‟6
[7] The provisions of the Act that are relevant to the present enquiry are ss
17, 19 and 21. Section 17 confers on a third party a right to claim against the Fund
for any loss or damage suffered by him or her as a result of personal injury to
himself or herself, or death of or any personal injury to any other person, if the
injury is due to the negligence or other wrongful act of the driver or owner of the
motor vehicle.
[8] Section 19(a) of the Act excludes liability for the Fund in certain cases. It
provides that:
„The Fund or an agent shall not be obliged to compensate any person in terms of section 17 for
any loss or damage –
(a) for which neither the driver nor the owner of the motor vehicle concerned would have been
liable but for section 21; or
(b) . . .‟
[9] Section 21(1) provides that:
„(1) No claim for compensation in respect of loss or damage resulting from bodily injury to or
the death of any person caused by or arising from the driving of a motor vehicle shall lie–
(a) against the owner or driver of a motor vehicle; or
(b) against the employer of the driver.
(2) Subsection (1) does not apply –
(a) if the Fund or an agent is unable to pay any compensation; or
(b) to an action for compensation in respect of loss or damage resulting from emotional shock
sustained by a person, other than a third party, when that person witnessed or observed or was
6 Ibid at 285A-B.
informed of the bodily injury or the death of another person as a result of the driving of a motor
vehicle.‟
[10] In Mlisane v South African Eagle Insurance Co Ltd7 the facts and the legal
question raised were similar to the ones raised in this case. The court in that matter
held that:
„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.‟8
It held further that the right of action was against a third party who unlawfully
caused the death of a breadwinner and not against the estate of a breadwinner who
caused his own death.9
[11] In Amod v Multilateral Motor Vehicle Accidents Fund10 this Court set out
the requirements for the action for dependants, being that:
„(a) The claimant for loss of support resulting from the unlawful killing of the deceased must
establish that the deceased had a duty to support the dependant;
(b) It had to be a legally enforceable duty;
(c) The right of the dependant to such support had to be worthy of protection by the law;
(d) The preceding element had to be determined by the criterion of boni mores.‟
[12] In Amod the requirement of the unlawful killing of the deceased was
reaffirmed as an essential requirement. This Court in Du Plessis v Road Accident
Fund11 stated as follows:
„In terms of s 17 of the Act the defendant or an agent is, subject to the provisions of the Act,
obliged to compensate any person for any loss or damage which that person has suffered as a
7 Mlisane v South African Eagle Insurance Co Ltd 1996 (3) SA 36 (C).
8 Ibid at 41G.
9 Ibid at 41E-F.
10Amod v Multilateral Motor Vehicle Accidents Fund (Commission for Gender Equality Intervening) 1999 (4) SA
1319 (SCA); 1999 4 All SA 421 (A) para 12.
11 Du Plessis v Road Accident Fund 2004 (1) SA 359 (SCA).
result of the death of any other person caused by or arising from the driving of a motor vehicle if
the death is due to the negligence of the driver or owner of the vehicle. Section 19(a) of the Act
exempts the defendant from liability for loss or damage for which neither the driver nor the
owner of the motor vehicle which caused the deceased‟s death, would have been liable at
common law.‟12
[13] In Brooks v Minister of Safety and Security13, where this Court had to deal
with whether a claim for maintenance against the Minister of Safety and Security
by the dependant of a convicted criminal was competent or not, the following was
said:
„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.‟14
[14] The reasoning adopted by this Court as illustrated above is consistent with
the common law position. In my view the Act codifies the common law position,
which recognises that compensation for loss of support can only arise from the
unlawful killing of the breadwinner by a another person. Section 19(a) expressly
states that liability is excluded in certain cases. Therefore the dependants in the
case of the deceased, who died as a result of his own negligence, do not have a
cause of action for damages for loss of support.
12 Ibid para 6
13 Brooks v Minister of Safety and Security [2008] ZASCA 141; 2009 (2) SA 94 (SCA); [2009] 2 All SA 17 (SCA).
14 Ibid para 16.14 See also Mnguni v Road Accident Fund (1090/2014) [2015] ZAGPPHC 1074 (26 November 2015).
[15] In order to bolster its contention that the dependants should be eligible to
claim even if the breadwinner was the sole cause of the accident, the appellants
contended that the common law should be developed. In Carmichele v Minister of
Safety and Security,15 the Constitutional Court warned judges to be mindful that
the major engine for law reform should be the Legislature and not the Judiciary. It
stated that „the Judiciary should confine itself to those incremental changes which
are necessary to keep the common law in step with the dynamic and evolving
fabric of our society‟.16
[16] In Cape Town City v South African National Roads Authority & others17 this
Court said:
„ . . . if the common law is to be developed, it must occur not only in a way that meets the s39(2)
objectives, but also in a way most appropriate for the development of the common law within its
paradigm. Faced with such a task, a court is obliged to undertake a two-stage enquiry: It should
ask itself whether, given the objectives of s 39(2), the existing common law should be developed
beyond the existing precedent – if the answer to that question is a negative one that should be the
end of the enquiry. If not, the next enquiry should be how the development should occur and
which court should embark on that exercise.‟18
[17] In this matter the appellant has failed to lay the basis for the proposed
development. The effect of such a development would amount to jettisoning an
essential element of the law of delict, ie wrongfulness. In any event Du Plessis and
Brooks, to the extent relevant to the issues in this matter, affirmed the common law
position in the existing current constitutional dispensation. The decision in Mlisane
15 Carmichele v Minister of Safety and Security & another (Centre for Applied Legal Studies Intervening) 2001 (4)
SA 938 (CC); 2001 (10) BCLR 995 (CC).
16 Ibid para 36.
17 Cape Town City v South African National Roads Authority & others [2015] ZASCA 58; 2015 (3) SA 386 (SCA);
[2015] 2 ALL SA 517 (SCA).
18 Ibid para 29.
was cited with approval in Amod.19 This is the correct approach that is still
applicable to cases of this nature and there is no uncertainty to the law.
[18] For its contention that the common law should be developed, the appellant
also seeks to place reliance on the Apportionment of Damages Act 34 of 1956.
According to the appellant the Apportionment of Damages Act 34 of 1956
discriminates against dependants‟ claims for loss of support where only a single
vehicle is involved in an accident as opposed to where there are joint wrongdoers.
This argument is based on s 2(1B) which provides as follows:
„Subject to the provisions of the second proviso to subsection (6)(a), if it is alleged that the
plaintiff has suffered damage as a result of any injury to all the death of any person and that such
injury or death was caused partly by the fault of such injured or deceased person and partly by
the fault of any other person, such injured person or the estate of such deceased person, as the
case may be, and such other person shall for the purposes of this section be regarded as joint
wrongdoers.‟
[19] The discrimination argument is misconceived. The purpose of s 2(1B) is not
to grant a remedy to the dependant against the deceased breadwinner. Its purpose is
to ensure that the other negligent party can reduce his own liability by bringing
into account the negligence of the deceased breadwinner. Boberg says this of the
amendment in terms of The Apportionment of Damages Amendment Act:20
„It appears, then, that the effect of this amendment on its literal wording is not merely to grant a
third party a right of contribution against a guilty spouse, but to abolish the common-law
prohibition of actions in delict between spouses married in community for the purposes of s 2 of
the Act, ie if the defendant spouse was a joint wrongdoer. But what if he was the sole
19 Amod fn 10 para 6.
„It constitutes the juristic basis for any claim which the appellant might have against Biyela and therefore against the
respondent which is only obliged to compensate the dependants of a deceased for losses suffered by them in
consequence of a motor accident caused by the negligent or other unlawful conduct of the driver of the relevant
motor vehicle, if such a driver would have been liable for such losses at common law.‟
20 The Apportionment of Damages Amendment Act 58 of 1971.See Boberg 1971 SALJ 452.
wrongdoer? The Act does not deal with that situation: the common-law prohibition therefore
remains.‟21
[20] The appellant argued that the deletion of s 19(b) of the Act in 2008 showed
that the liability which the appellant asserts in the present case was no longer
excluded. Section 19(b) previously excluded the Fund‟s liability for loss or damage
suffered as a result of bodily injury to or the death of any passenger who was a
member of the household of the negligent driver of the vehicle. The simple answer
is that on the previous restrictions applied to claims arising from the injury or loss
caused to the claimant directly or from the death of a breadwinner who was also a
passenger in the vehicle. The exclusion was not directed at the type of liability
asserted by the appellant in the present case – no such liability ever existed.
[21] In circumstances such as the present, the appellant and the minor children
have a right to claim for loss of support against the estate of the deceased. This is a
liability which exists regardless of the manner in which the deceased died. There is
thus no conceivable basis to extend the common law to create another action on
their behalf. That is not the role of the courts. It is thus not necessary to develop the
common law in this regard.
[22] The only question that remains for consideration is that of costs. The
respondent as the successful party in this litigation is entitled to costs as a general
rule. Though the general rule is that costs should follow the result, the issue of
costs is an exercise of a judicial discretion. In the case where a party has been
successful, there must be exceptional circumstances, to deprive the successful
21 P Q R Boberg, „The Apportionment of Damages Amendment Act 58 of 1971: Reform of the law regarding
delictual actions between spouses married in community and the dependants‟ action‟ (1971) 423 SALJ at 433.
party of its costs. A court „should take into consideration the circumstances of each
case, . . . the conduct of the parties and any other circumstance which may have a
bearing upon the question of costs, and then make such order as to costs as would
be fair and just between the parties.‟22
[23] I have considered whether it will be in the interests of justice to make an
order of costs against the appellant and it is my view that exceptional
circumstances exist that should persuade this Court not to mulct the appellant with
costs. Though the litigation was not undertaken to assert a constitutional right, the
issue raised by the appellant was of broad public concern and in the public interest.
We were told that there are a number of such claims in the pipeline and that the
present matter is in the nature of a test case. Private litigants should not be
discouraged to approach the courts on issues that affect the general public, for fear
of being mulcted with costs.
[24] In Hotz & others v University of Cape Town23 the Constitutional Court held
that the starting point when determining an award for costs is to have regard to the
„nature of the issues‟ between the parties. In considering whether the appellant
should be held liable for the costs of the appeal, I have taken into consideration the
nature of the claim. This claim was not a frivolous exercise. It addressed concerns
which had been brought through the various divisions of the high court. This
matter will hopefully clear the uncertainty brought about the Fund due to the fact
22 Fripp v Gibbon & Co 1913 AD 354 at 363.
23 Hotz & others v University of Cape Town [2017] ZACC 10‟ 2017 (7) BCLR 815 (CC) para 29.
that the Fund had settled similar claims in the past and rejected others.24 (See also
Ferreira v Levin NO & others; Vryenhoek & others v Powell NO & others).25
[25] In the light of the aforementioned I make an order that each party should pay
its own costs in the appeal. Accordingly the appeal fails.
[26] The following order is made:
The appeal is dismissed.
___________________
Y T Mbatha
Acting Judge of Appeal
24 Khonziwe Ntombizanele Mbambani v Road Accident Fund Case no 340/2015 Eastern Cape Local Division, Port
Elizabeth, 02 March 2016.
25 Ferreira v Levin NO & others; Vryenhoek & others v Powell NO & others 1996 (2) SA 621 (CC); 1996 (4) BCLR
441 (CC) para 3.
Appearances
For appellants:
A Frost (with him A White)
Instructed by:
Ingram & Louis Attorneys, Port Elizabeth
A P Pretorius & Vennote, Bloemfontein
For respondent:
P E Jooste (with him T Rossi)
Instructed by:
Friedman Scheckter, Port Elizabeth
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 November 2017
STATUS
Immediate
C Septoo obo J M Septoo & another v The Road Accident Fund
(058/2017)[2017] ZASCA 164 (29 November 2017)
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.
The Supreme Court of Appeal (SCA) handed down the judgment today in an
appeal from the Eastern Cape Local Division of the High Court, Port
Elizabeth. The matter concerned the question whether the appellant and her
minor children were entitled to claim compensation for loss of support from
the Road Accident Fund (the RAF) in circumstances where the deceased
breadwinner was the sole cause of the collision; second, whether the common
law should be developed to include such claims.
The appellant instituted a claim for loss of support against the RAF for herself
and on behalf of her minor children. The court a quo, dismissed their claims
on the basis that the RAF was not legally liable to compensate the appellant
and her minor children for loss of support, which they suffered as a result of
the death of her husband due to his own negligence.
The SCA recognised that the Road Accident Fund Act 56 of 1996 (the Act)
codifies the common law position, which recognises that compensation for
loss of support can only arise from the unlawful killing of a breadwinner by
another person. Section 19(a) of the Act expressly excludes liability in certain
cases. Therefore in the present case, the dependants of the deceased, who
died as a result of his own negligence and in a single vehicle, do not have a
cause of action for damages for loss of support.
On the question whether the common law should be developed, the SCA held
that the major engine for law reform should be the legislature and not the
judiciary.
The SCA held further, that the effect of such a development would amount to
jettisoning an essential element of the law of delict, i.e. wrongfulness. The
common law position is the correct approach and is still applicable to all cases
of this nature.
The SCA accordingly dismissed the appeal.
~~ ends~~
|
1531
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case No: 164/08
No precedential significance
In the matter between:
JONATHAN STREET
APPELLANT
v
THE STATE
RESPONDENT
Neutral citation: Street v The State (164/08) [2008] ZASCA 133 (26
November 2008).
CORAM:
LEWIS JA and LEACH and MHLANTLA AJJA
HEARD:
12 November 2008
DELIVERED: 26 November 2008
Summary:
Appeal against conviction of being an accessory after the fact to
murder. Court a quo making factual findings not justified on the
evidence. Conviction replaced with one of common assault and
sentence reduced to an appropriate punishment for assault.
_______________________________________________________________
ORDER
_______________________________________________________________
On appeal from:
High Court, Johannesburg (Jajbhay and Mabuse JJ
sitting as court of appeal).
(1)
The appeal succeeds to the extent set out below.
(2)
The appellant’s conviction as an accessory after the fact to murder and
the sentence of five years’ imprisonment are set aside. The order of the court
below is replaced with the following:
‘(a) The appeal succeeds.
(b) The accused’s conviction and sentence of 15 years’ imprisonment are set
aside and replaced with the following:
“The accused is convicted of common assault and is sentenced to a
fine of R6 000 or six months’ imprisonment, half of which is suspended for
three years on condition that he is not convicted of an offence involving an
assault committed during the period of suspension and for which he is
sentenced to imprisonment without the option of a fine.”’
______________________________________________________________
JUDGMENT
______________________________________________________________
LEACH AJA (LEWIS JA and MHLANTLA AJA concurring)
[1] On 29 December 2002, Patrick Perreira Caetano died after having
been stabbed during an incident which occurred in Kyalami. The appellant
was subsequently charged with the murder of the deceased and tried in the
regional court. It was common cause that the deceased died as a result of a
stab wound to the stomach. Although the appellant admitted having punched
the deceased on the night in question, he pleaded that he was not guilty of
murder and denied having inflicted the fatal wound. However, despite there
having been no credible evidence that he had stabbed the deceased, the
appellant was convicted as charged and sentenced to 15 years imprisonment.
[2] The appellant appealed to the high court which held that in the light of
the contradictory evidence which had been led, as more fully set out below,
the state had failed to prove beyond a reasonable doubt either that the
appellant had been the person who had inflicted the fatal wound or that he
had acted with a common purpose with the person who had done so. But
while the high court concluded that the appellant’s murder conviction could
therefore not stand, it found that he had been an accessory after the fact to
the deceased’s murder. It therefore altered the conviction to one of the latter
offence and imposed a sentence of five years’ imprisonment. With leave of
the high court, the appellant now appeals to this court against his conviction
as an accessory after the fact.
[3] The state’s main witness was one Guil Yahav, a man who admitted to
having severely assaulted the deceased with a knife on the night in question.
It appeared that the deceased had injured Yahav’s one eye several years
before and, although the deceased had undertaken to pay Yahav R75 000
towards his medical expenses incurred as a result, he had failed to do so.
[4] Yahav testified that on the evening in question he learned that the
deceased was at a restaurant known as the Blueberry Grill, and proceeded
there in order to confront him about not having paid him as he had promised.
He also decided he needed someone to call the deceased out of the
restaurant so that he could have a word with him in private and, with that in
mind, he telephoned the appellant and asked for his help. Although the
appellant was on his way to a casino in the company of two friends, Theuns
Kingma and Francois Moller, he agreed to assist.
[5] It is common cause that the appellant drove to the Blueberry Grill
together with Kingma and Moller. By the time they arrived, Yahav had already
confronted the deceased and was talking to him outside the restaurant. When
the appellant and his two companions approached, and the deceased
suddenly found himself facing up to four men rather than one, he panicked
and ran off. Kingma and Moller set off in pursuit while Yahav and the
appellant, after speaking to a security guard who had approached to inquire
what was happening, followed shortly afterwards.
[6] What next occurred is a matter of considerable dispute. According to
Yahav, they found that Kingma and Moller had assaulted the deceased and
knocked him to the ground. Yahav testified that he went up to where the
deceased was lying on the ground and, using a large knife he had earlier
taken from a bag the deceased had been carrying, slashed the deceased’s
face. Having done so, he handed the knife to Kingma. The appellant then took
the knife from Kingma, apparently with the intention of also attacking the
deceased. Seeing this, Yahav grabbed hold of him and attempted to pull him
away from the deceased. However, the appellant slipped his grasp and
plunged the knife into the abdomen of the deceased as he lay on the ground.
Yahav said that he had extracted the knife from the deceased’s body and
went off with it. Later, when driving away from the scene, he threw it out of
the window of the vehicle.
[7] The appellant’s version of the incident was materially different. He
alleged that when Yahav had telephoned him, he had asked him to come and
fight the deceased. When he, Kingma and Moller arrived outside the
restaurant and saw Yahav with the deceased, Yahav told him that he had
contacted a policeman friend who was on his way to the scene and who had
said that they should keep the deceased there until he arrived. While he
agreed that the deceased had run off pursued by Kingma and Moller and that
he and Yahav followed shortly afterwards, he stated that Kingma, Moller and
the deceased were standing together when they reached them. He told the
deceased to stand still as the police were on their way, but when the
deceased heard this he tried to escape. The appellant said he had physically
restrained the deceased from making off and, when the deceased
unsuccessfully tried to hit him, had punched him hard on the nose, causing
him to collapse to the ground. Yahav then proceeded to kneel on the
deceased’s chest and slash his face with a large knife. Kingma intervened
and, grabbing hold of Yahav, pulled him away from the deceased. In the
process, Yahav dropped the knife and the appellant picked it up. Kingma and
Moller then headed back to where their vehicle was parked. The deceased’s
face was bleeding so profusely that the appellant was overcome by nausea.
He told Yahav that he wanted no part in what was going on, threw the knife
down and followed them, leaving Yahav with the deceased. When the
appellant reached the spot where he had left his vehicle he found that Kingma
and Moller had already driven off. Shortly thereafter, Yahav returned and gave
him a lift home. About an hour later, Yahav telephoned him and told him that
he had spoken to his friend, the policeman, who had told him that the
deceased had died as a result of a broken bone in his nose which had
penetrated the brain. He understood this to mean that the deceased had died
as a result of the blow he had struck him.
[8] There were therefore two mutually destructive versions before the trial
court as to who had been responsible for the fatal stab wound. On the state’s
case it was the appellant, while on the appellant’s version, although he had
not been present when it was inflicted, it must have been Yahav. The high
court found that the trial court had erred in rejecting the appellant’s version as
false beyond a reasonable doubt and held that the state had accordingly
failed to show that the appellant was guilty of murder and that such conviction
could not stand. However, the high court went on to conclude:
‘There can be no question either that the appellant did participate in the assault of the
deceased as well as the concealment of the knife that had inflicted the fatal wound.
He thus made himself guilty of being an accessory after the fact of that crime. He did
not report the true facts of the crime to the police immediately after the event. In fact
he colluded with Yahav in trying to conceal important evidence and furnish incorrect
statements. In the circumstances the appellant should have been convicted of being
an accessory after the fact of murder.’
[9] The findings that the appellant had concealed the knife used to inflict the
fatal wound, and that he had acted in collusion with Yahav to conceal
important evidence by furnishing incorrect statements, are startling, to say the
least. In regard to the concealment of the knife, on the state’s version it was
Yahav, and not the appellant, who threw it away. On the appellant’s version,
all he did was drop the knife near the scene. On either version, the appellant
did not attempt to conceal it and the finding that he had done so amounted to
a gross misdirection. So was the finding in regard to the furnishing of incorrect
statements to the police in collusion with Yahav. There is no evidence on
record as to either what the appellant had told the police or from which it can
be inferred that he had colluded with Yahav in attempting to conceal relevant
evidence, nor was it ever suggested that he had done so.
[10] In addition, in regard to the appellant’s alleged failure to immediately
report the incident to the police, on his version which has not been shown to
be false, he learned of the death of the deceased only an hour or so after he
had returned home. He was then brought under the impression that he, and
not Yahav, had been responsible for the deceased's demise. As he was
unaware that Yahav had killed the deceased, he could not have been guilty as
an accessory after the fact to that crime. In any event, once under the
impression that the deceased had died because he had punched him on the
nose, and that he was a potential suspect, he was under no lawful obligation
to implicate himself or to provide the police with a statement. Consequently,
even if he did fail to immediately report the incident to the police, he cannot be
found guilty as being an accessory after the fact to the deceased's murder.
[11] In the light of these considerations, and having regard to the evidence
on record, the finding that the appellant was guilty as an accessory after the
fact is insupportable and counsel for the respondent conceded, correctly, that
the appellant had been wrongly convicted of that offence.
[12] On the other hand, while the conviction as an accessory and the
sentence imposed in that regard cannot stand, the appellant on his own
version had neither been entitled to physically restrain the deceased from
leaving the scene nor to punch him in the face, and in doing so he unlawfully
assaulted the deceased. Under s 258(e) of the Criminal Procedure Act,
common assault is a competent verdict on a charge of murder and it was
conceded by both sides before this court that the appellant should have been
found guilty of that offence. It was also suggested by both sides that, as the
appellant is a first offender who has been on bail pending this appeal, a
sentence of direct imprisonment is not called for and that a robust fine, with a
period of imprisonment for several months as an alternative, would be
appropriate.
[13] I agree with this suggestion. I also consider that it would be best to
suspend a portion of the sentence to act as an inducement for the appellant to
desist from similar conduct in the future.
[14] The appellant’s conviction as an accessory after the fact to murder and
the sentence of five years’ imprisonment are set aside. The order of the court
below is replaced with the following:
‘(a) The appeal succeeds.
(b) The accused’s conviction and sentence of 15 years’ imprisonment are set
aside and replaced with the following:
“The accused is convicted of common assault and is sentenced to a
fine of R6 000 or six months’ imprisonment, half of which is suspended for
three years on condition that he is not convicted of an offence involving an
assault committed during the period of suspension and for which he is
sentenced to imprisonment without the option of a fine.”’
_______________
L E LEACH
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellant:
E S Classen (Attorney)
Instructed by
David H Botha, Du Plessis & Kruger Inc; Johannesburg
Symington & De Kok; Bloemfontein
For Respondent:
D Vlok
Instructed by
The Director of Public Prosecutions; Johannesburg
The Director of Public Prosecutions; Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
26 November 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
JONATHAN STREET
versus
THE STATE
The appellant in this matter was tried in the Regional Court on a charge of murder, it
having been alleged that he had stabbed Patrick Perreira Caetano to death during
an incident which occurred in Kyalami on 29 December 2002.
The appellant was convicted of murder in the regional court and sentenced to 15
years imprisonment. On appeal to the High Court, Johannesburg the conviction and
the sentence of 15 years imprisonment were set aside and were replaced by a
conviction as an accessory after the fact to the murder and a sentence of five years
imprisonment.
In a further appeal to the Supreme Court of Appeal, the conviction as an accessory
after the fact and the sentence of five years imprisonment were set aside and
replaced with a conviction of common assault and a fine of R6 000.00 or six months
imprisonment, half of which was conditionally suspended for three years.
|
3945
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 520/2021
In the matter between:
CENPROP REAL ESTATE (PTY) LTD FIRST APPELLANT
NAHEEL INVESTMENTS (PTY) LTD
SECOND APPELLANT
and
NICOLENE HOLTZHAUZEN
RESPONDENT
Neutral citation:
Cenprop Real Estate (Pty) Ltd v Holtzhauzen (Case no 520/2021)
[2022] ZASCA 183 (19 December 2022)
Coram:
ZONDI, MOLEMELA and MABINDLA-BOQWANA JJA and MOLEFE
and SALIE-HLOPHE AJJA
Heard:
16 September 2022
Delivered:
19 December 2022
Summary:
Law of delict – claim for damages due to injuries – slipping and falling –
whether plaintiff negligent – whether owner and manager of the mall negligent – whether
disclaimer notices absolve owner from liability.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Sher J with Allie
and Samela JJ concurring, sitting as full court):
The appeal is dismissed with costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Molefe AJA (Zondi, Molemela, Mabindla-Boqwana JJA and Salie-Hlophe AJA
concurring):
[1] On the rainy morning of Saturday, 1 June 2013, the respondent, Nicolene
Holtzhauzen, a 31-year-old woman, went to the Goodwood Mall (the mall) in Voortrekker
Road, Goodwood to draw money from the ATM. On her way to the ATM, she slipped and
fell on the tiled floor inside the mall and suffered a fracture on the elbow. She instituted a
claim in the Western Cape Division of the High Court, Cape Town (the high court) for
damages arising from her injury against the management company in charge of the mall
and its owner. The matter proceeded only on the merits by agreement between the
parties.
[2] The first appellant, Cenprop Real Estate (Pty) Ltd (Cenprop), managed the mall
on behalf of the second appellant, Naheel Investments (Pty) Ltd (Naheel) which was the
owner of the mall at the time of the incident, in terms of a management agreement
concluded with Naheel. In terms of the management agreement, Cenprop was to maintain
the buildings and grounds in good condition, but taking cognisance of cash flow
pressures.
[3] After hearing evidence, the trial court (per Gamble J), dismissed the respondent’s
claim. Aggrieved by the dismissal of her claim, the respondent appealed to the full court.
The full court upheld the appeal and substituted the trial court’s order with an order
granting the respondent’s claim. The appeal against the full court’s judgment is with the
special leave of this Court.
The pleadings
[4] The grounds for negligence that were pleaded by the respondent were the
following. First, that the appellants knew that the surface area was slippery when it
became wet and posed a danger to the members of the public including the respondent.
Second, the appellants failed to ensure that the surface did not become slippery. Third,
they allowed the floor to remain slippery despite knowing that the members of the public
used the area when entering and exiting the mall.
[5] The appellants denied negligence and/or causation. They pleaded that the incident
was caused solely by the respondent’s own negligence in that she did not keep a proper
lookout and did not take reasonable care.
[6] Naheel pleaded further that it had employed Cenprop as a competent independent
contractor, specialising in property management, to manage, physically inspect the
premises on a regular basis, and more specifically after any contractors had done work,
and assist in maintenance, including the surface area of the floors, which Cenprop did.
Cenprop was at all material times in control of the premises.
[7] The appellants further pleaded that Cenprop appointed a professional cleaning
company, JKL Cleaning Solutions CC (the cleaning company) to, inter alia, spot clean
daily any spillage in walkways with warning signage. It also appointed a professional
security service provider, Gabriel Protection Services (Pty) Ltd (the security company) to,
inter alia, call the cleaning staff, if none was available, for spillage and litter in corridors.
By appointing these independent contractors, the appellants pleaded that they took
adequate steps to ensure safety of members of the public and prevent the respondent in
particular, from slipping and falling as alleged. This defence is based on this Court’s
decision as articulated in Chartaprops 16 (Pty) Ltd and Another v Silberman
(Chartaprops).1 Notably, in this matter the cleaning company was not joined as a party in
the litigation.
[8] In the alternative, the appellants pleaded contributory negligence on the part of the
respondent. In the further alternative, the second appellant, Naheel contended that it was
excused from liability by the terms on the signage placed at the entrance and/or exit of
the mall (own risk sign which excluded liability).
The evidence
[9] The evidence presented on behalf of the respondent was that on the morning of
the incident, the floor in this particular passage of the mall was wet because of the rain
outside. There was a ‘wet floor’ sign placed at the entrance used to warn customers
visiting the mall. The tiles used on the floor in the mall, when wet, would have been
slippery. Although the evidence established that there was a liability disclaimer notice
placed at the entrance/exit of the mall, there was a dispute as to whether the notice was
visible to the shoppers on the day of the incident.
[10] The respondent testified that she was wearing rubber-soled boots. She proceeded
slowly and carefully along the corridor given that the floor was wet, but nonetheless fell
after walking for about 20 paces (14 metres). As a result of the fall, the respondent
suffered severe bodily injuries, particularly on her right elbow, which was fractured. At the
time of her accident, the respondent was holding her 11-month old baby. She was also
accompanied by her 13-year-old daughter and 8-year-old nephew. After her fall, she
instructed her daughter to fetch her mother, who was employed at a Pick ‘n Pay
supermarket in the same mall at the time. During the trial, the respondent’s mother, Ms
Holtzhauzen senior, confirmed the spot on which she found the respondent lying on the
tiled floor and had noticed that the tiles were very wet. With the assistance of the security
guard and a passer-by, the respondent was subsequently taken to hospital for medical
attention.
1 Chartaprops 16 (Pty) Ltd and Another v Silberman [2008] ZASCA 115; [2009] 1 All SA 197 (2009); 2009
(1) SA 265 (SCA) (Chartaprops).
[11] Ms Holtzhauzen senior testified that when she arrived at the scene of the incident
shortly after her daughter’s fall and found her lying on the wet floor, the respondent was
taken for medical treatment in a wheelchair. She further testified that on the Monday
following the incident, she met with the manager of the mall, Mr Albert de Jager (Mr de
Jager), who confirmed to her that he knew of the incident. He told her that, ‘when it rains,
he cannot put up wet signs everywhere, and he cannot clean everywhere, and it is not
his problem or his responsibility’.
[12] The respondent called Mr Michael Bester, an architect, to testify as an expert
witness. Mr Bester testified that the tiles used in the mall were not appropriate because
they lacked sufficient ‘non-slip’ qualities. They were smooth and would be dangerously
slippery when wet. Rainwater from the outside could be ‘carried into’ the mall by those
walking into the mall, as the mat that was placed at the entrance door was not sufficiently
wide to prevent water from being transported into the mall on pedestrians’ shoes. He
further testified that, in order to keep the tiles safe, one would have to take considerable
care with maintenance and cleaning. In wet weather this would pose a challenge on an
ongoing basis as it may be difficult to keep the floor dry with high levels of public traffic
constantly walking in from rainy conditions. In this regard, one ‘would have to have
somebody cleaning behind every person to keep the floor entirely dry. . . Those tiles are
undoubtedly slippery when wet, and it would be almost impossible to keep them
sufficiently dry so as to not be slippery when you’ve got wet weather’.
[13] The appellants called Mr de Jager, who was the shopping centre manager at the
time of the incident and an employee of Cenprop. He testified that he was an experienced
manager having worked in different malls. In June 2013, Cenprop had a contract with the
cleaning company which was appointed to attend to the cleaning service at the mall, as
an independent contractor. He found this company there in 2010. Although the contract
discovered was unsigned, he and the owner of the cleaning company agreed on the
scope of work as embodied in the unsigned written contract. Cenprop also had a contract
with the security company who would alert cleaners of spillages. He testified further that
on a daily basis between 06h00 and 11h00 there would be three cleaners on duty and
two cleaners would join at 11h00 and the earlier shift would leave at 14h00. It was his
practice to conduct a physical inspection of the premises of the mall daily to find out, other
than the cleaning, if anything further needed to be done. He would liaise with the cleaning
team from time to time, and if the need arose, he would give them additional duties to
attend to, where necessary.
[14] In cross-examination, he conceded that it was possible for water to be walked in,
depending on the quantities. It was put to him that he had told Ms Holtzhauzen senior
that he was unable to put wet signs everywhere because of the rain, but his response
was that, such a statement did not sound like something he would say. He further stated
that the mall had disclaimer signs outside, warning shoppers that they were entering at
their own risk. These signs, however, reflected the owner of the mall as St Tropez
Property Group (Pty) Ltd (St Tropez) and not Naheel. From the photographs presented
in court, the sign mounted adjacent to the entrance used by the respondent on the day of
the incident, was hidden behind merchandise displayed by the hardware store that was
a tenant at the mall. However, these photographs were taken about nine months after the
incident.
[15] The appellants also called an expert witness, Mr Anthony Hockly, an architect. Mr
Hockly testified that the make of the tiles at the mall was adequate for wet conditions and
used by other malls. He however was in agreement with Mr Bester that the tiles would be
slippery when wet. In his opinion, the ‘tile could be considered as potentially dangerous
underfoot only in the circumstance of the surface being wet and the wet conditions not
being easily perceived. “Perceived”, meaning “seen” or “experienced” if one is unaware
of the [surface]’.
Issues on appeal
[16] There are three issues for determination in this appeal. First, whether the
respondent was negligent. Second, whether the appellants had discharged their duty of
care that the premises were safe, by the employment of independent contractors (the
Chartaprops defence) and lastly, whether a disclaimer or display of a disclaimer notice
indemnified the second appellant from liability of the respondent’s injuries.
Negligence
[17] As a point of departure, it is important to set out what the test for negligence is as
stipulated in the oft-quoted case of Kruger v Coetzee (Kruger), since it also applies to
negligence in respect of the appellants, namely that:
‘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.
This has been constantly stated by this Court for some 50 years. Requirement (a)(ii) is sometimes
overlooked. 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. Hence the
futility, in general, of seeking guidance from the facts and results of other cases.’2
[18] The appellants contended that there was no negligence on their part and that if
there was any negligence present, it was caused solely by the respondent by not keeping
a proper lookout and not taking reasonable care under the circumstances in which she
found herself. According to them, having encountered a wet surface, she took the risk of
walking into the mall, holding a child in hand.
[19] It was contended on behalf of the appellants that the respondent knew the mall
very well and had often visited it in the past, even on rainy days. On the day of the incident,
she was fully aware that the floor was wet and could therefore be slippery. She even saw
the ‘wet floor’ warning signs at the entrance of the mall and walked 20 paces on the same
wet surface before she fell. She could not explain why she did not fall earlier if the cause
2 Kruger v Coetzee 1966 (2) SA 428 (A) Ibid at 430E-G.
of her fall was the wet floor. It was therefore, submitted that on the probabilities, it was
not the wet floor that caused the respondent to fall but her clumsiness or inattentiveness.
[20] It was further contended by the appellants that there were no reasonably
foreseeable steps that they could or should have taken to prevent the respondent’s fall
as there was no evidence that anyone else had ever fallen, rainy or dry, for the previous
three and a half years, nor was there evidence that anyone else had fallen on the day of
the incident. The appellants contended that it was, therefore, not reasonable to expect
them to have taken either of the two steps suggested by the full court, namely to prevent
the public from accessing the relevant surface areas which would mean closing the mall
on rainy days; and putting different and longer walking mats at the entrance of the mall.
They submitted that their expert also suggested that the mat would create an additional
hazard.
[21] On the other hand, the respondent contended that there was no negligence on her
part that caused the fall. Instead, her fall was caused by the wet floor in the mall, which
resulted from the rainwater brought in by pedestrian shoppers who were soaked from the
rain. Furthermore, the appellants failed to carry out their duties to ensure that the wet
floors were kept dry and safe for shoppers entering the mall, in particular the respondent.
On the day in question, the respondent was wearing rubber-soled boots, and upon
entering the mall she noticed that the floors were wet and so proceeded with caution by
walking slowly and carefully along the corridor as she also had a child in her arms, which
prompted her to take further caution. Despite her best efforts she still fell and was injured
as a result.
[22] In Probst v Pick n Pay Retailers (Pty) Ltd, Stegmann J stated that:
‘When the plaintiff has testified to the circumstances in which he fell, and the apparent cause of
the fall, and has shown that he was taking proper care for his own safety, he has ordinarily done
as much as it is possible to do to prove that the cause of the fall was negligence on the part of
the defendant who, as a matter of law, has the duty to take reasonable steps to keep his premises
reasonably safe at all times when members of the public may be using them . . ..’3 (My emphasis.)
[23] The respondent’s evidence that on the morning of the incident the floor she slipped
on was wet as a consequence of the rain remained uncontroverted. The respondent’s
evidence that she proceeded slowly along the tiled corridor but slipped and fell due to the
wet tiles that were slippery and posed danger to her is unimpeachable. Under the
circumstances, there is no basis to find the respondent in any way negligent.
The Chartaprops defence
[24] In Chartaprops, this Court dealt with questions of whether a principal may be held
liable for the negligence of an independent contractor. The respondent in that case sued
the shopping mall owner, Chartaprops and a cleaning company, Advanced Cleaning. The
majority judgment remarked about varying legal positions that were adopted by courts on
this issue. It set out principles to be followed when dealing with the liability of a principal
and an independent contractor. It observed that ‘the correct approach to the liability of a
principal for the negligence of an independent contractor is to apply the fundamental rule
of our law that obliges a person to exercise that degree of care that the circumstances
demand.’ In this regard, it referred to Cape Town Municipality v Paine,4 where it was held:
‘The question whether, in any given situation, a reasonable man would have foreseen the
likelihood of harm and governed his conduct accordingly, is one to be decided in each case upon
a consideration of all the circumstances. Once it is clear that the danger would have been
foreseen and guarded against by the diligens paterfamilias, the duty to take care is established,
and it only remains to ascertain whether it has been discharged. . ..’5
[25] The Court distinguished between the category of cases where work is committed
to a contractor and if properly done no injurious consequences could arise and those
cases where work is to be done from which mischievous consequences would arise,
unless preventative measures were taken. In the latter category it said, ‘if liability is to
3 Probst v Pick n Pay Retailers (Pty) Ltd [1998] 2 All SA 186 (W) at 197.
4 Cape Town Municipality v Paine 1923 AD 207 at 217.
5 Chartaprops fn 1 above para 39.
attach to the principal it would be in consequence of his/her negligence in failing to take
preventative measures to prevent the risk of harm from materialising that a reasonable
person in those circumstances would have taken, other than in accordance with a
proposition framed in terms of non-delegable duty.’6
[26] It endorsed the general rule in Langley Fox Building Partnership (Pty) v Da
Valence7 that a principal is not liable for the civil wrongs of an independent contractor
except where the principal was personally at fault and restated the classic test for culpa
as set out in Kruger.8 In determining the answer to the second enquiry into negligence set
out in Kruger, it noted the following factors emphasised in Langley, namely, ‘the nature of
the danger; the context in which the danger may arise; the degree of expertise available
to the employer and their independent contractor respectively; and the means available
to the employer to avert the danger’.
[27] Having set out the principles, the majority in Chartaprops then found:
‘This plainly is not the type of case where it can be said that Chartaprops negligently selected
an independent contractor or that it so interfered with the work that damage results or that it
authorised or ratified the wrongful act. The matter thus falls to be decided on the basis that the
damage complained of was caused solely by the wrongful act or omission of the independent
contractor, Advanced Cleaning, or its employees.
Chartaprops did not merely content itself with contracting Advanced Cleaning to perform the
cleaning services in the shopping mall. It did more. Its centre manager consulted with the cleaning
supervisor each morning and personally inspected the floors of the shopping mall on a regular
basis to ensure that it had been properly cleaned. If any spillage or litter was observed, he ensured
its immediate removal. That being so it seems to me that Chartaprops did all that a reasonable
person could do towards seeing that the floors of the shopping mall were safe. Where, as here,
the duty is to take care that the premises are safe I cannot see how it can be discharged better
than by the employment of a competent contractor. That was done by Chartaprops in this case,
who had no means of knowing that the work of Advanced Cleaning was defective. Chartaprops,
6 Ibid paras 40 and 41.
7 Langley Fox Building Partnership (Pty) Ltd v De Valence 1991 (1) SA 1 (A) at 13B.
8 Chartarprops fn 1 at 42.
as a matter of fact, had taken the care which was incumbent on it to make the premises
reasonably safe.
. . .
Chartaprops was obliged to take no more than reasonable steps to guard against foreseeable
harm to the public. In this regard, it is well to recall the words of Scott JA in Pretoria City Council
v De Jager:
“Whether in any particular case the steps actually taken were to be regarded as reasonable or
not depends upon a consideration of all the facts and circumstances of the case. It follows that
merely because the harm which was foreseeable did eventuate does not mean that the steps
taken were necessarily unreasonable. Ultimately the enquiry involves a value judgment.”.’9 (My
emphasis.)
[28] Turning to the facts of this case, the appellants’ argument that they were not liable
because of the employment of the cleaning company, as an independent contractor,
which was responsible for ensuring that the floors of the mall were clean, dry and safe,
should be rejected for the following reasons. Firstly, in the joint minutes prepared by the
experts, they agreed that ‘[t]he tile used in the [m]all could be considered slippery
underfoot when wet. That being the case reasonable measures had to be taken to guard
against members of the public slipping’. Hiring a cleaning company cannot be seen as all
that a reasonable person in the circumstances would do to discharge its duty towards the
members of the public. In my view, a reasonable person would ensure that, given the
potential danger posed by the wet tiles in rainy conditions, adequate measures are put in
place. Secondly, if ensuring the premises are safe in those conditions is the duty of the
contractor, that must be clearly set out in the scope of duties. I say so because this, as
the full court found, is not a case of spillages that sprout unexpectedly at the mall. It is a
reasonably foreseeable situation that is posed by the rainy conditions. Details as to what
the cleaning company was expected to do in these circumstances are scant. Annexure
‘B’ attached to the unsigned agreement only refers to cleaning of spillages.
9 Chartaprops 16 (Pty) Ltd and Another v Silberman [2008] ZASCA 115; [2009] 1 All SA 197 (2009); 2009
(1) SA 265 (SCA) paras 45, 46 & 48.
[29] Lastly, it cannot be disputed that in rainy conditions, more resources would be
necessary to be put in place. According to Mr De Jager there were two cleaning shifts.
Three cleaners started at 06h00 in the morning. At 11h00 they would be joined by two.
The earlier shift would be released at 14h00. It appears the incident would have occurred
when there were three cleaners servicing the mall. In this regard, for instance, Cenprop
would have had to ensure that an adequate number of cleaners are provided for
‘contractually’, in rainy weather given the wet floors at entrances caused by the water
carried in by customers in rainy weather. It does appear that during lunch hours, the staff
complement increased because of the shifts joining from 11h00 to 14h00. This helped
alleviate the pressure during that busy period, if regard is had to Mr de Jager’s evidence.
So, a measure recognising the uniqueness of the situation could be put in place even
during the rainy weather. Mr de Jager was ambivalent whether more cleaners would have
been required in rainy weather.
[30] I am mindful of what is said in City Council of Pretoria v De Jager10 quoted in
Chartaprops above,11 that the fact that a harm that is foreseeable eventuates does not
mean steps taken were necessarily unreasonable. In this case the only step that seems
to have been taken by the appellants was to appoint independent contractors but how
they were expected to carry out their function, given the slippery nature of the tiles and
constant carrying-in of water drops or wetness into the mall by customers during rainy
weather, is not explained. It may be different if the conditions were sudden, then in those
circumstances one would have to test what would be regarded as reasonable steps then.
The situation in this case seems to be different, there were tiles that posed potential
danger when wet. The fact that no one else had fallen in the past does not mean steps
ought not to have been taken to avert a danger that was reasonably foreseeable. This is
so because even Mr Hockly, the appellant’s own witness, stated that the evaluation of
what level of slipperiness is acceptable or not, is determined by common sense,
10 City Council of Pretoria v De Jager [1997] 1 All SA 635 (A); 1997 (2) SA 46 (A).
11 Fn 9 above.
experience and the circumstances of the application. This is all the more so because the
tiles were, according to Mr Hockly, safe only when they were dry.
[31] I take into account the inference that all tiles would potentially be dangerous when
wet. Unlike the situation of ad hoc spillages, rainy weather posed a special and
foreseeable situation which ought to have been mitigated. In this situation the role played
by the security company would not really assist, as the security guards would simply notify
the cleaners when they noticed a spillage. There was already a wet signage at the door,
which signalled knowledge of the wet conditions.
[32] So, to conclude on this issue: firstly, the extra attention required to keep the floors
dry during rainy conditions is not covered anywhere in the scope of work given to the
cleaning company. The fact that Mr de Jager interacted with cleaners in the mornings and
conducted an inspection to find out if additional work needed to be done, apart from
normal cleaning, is not helpful in this case because wetness brought by rainy conditions
was, unlike spillages that would be unknown to the management of the mall, clearly
visible. The rainy conditions on that day made it reasonably foreseeable that possible
danger and harm would occur, thus the appellants as the diligens paterfamilias in this
regard should have foreseen the possible danger that would be caused by trafficking in
of rainwater brought in by the shoppers and should have then taken active reasonable
steps to guard against this possible danger.
[33] Secondly, the appellants have given very cryptic and vague evidence as to the
appointment and competence of the cleaning company. They tendered as evidence an
unsigned job description with only one reference to cleaning ‘spillages’. When employing
the cleaning company, the scope should have taken into account the rainy seasons since
it must be reasonably foreseeable that the rainwater brought by the shoppers caused wet
floors and there must have been a system on how to manage that. The cleaning staff
employed seemed inadequate.
[34] Thirdly, the issue of the make of the tiles, which directly implicates the principal,
could not be put at the foot of the cleaning company. While experts differ as to the textural
suitability of the tiles, their evidence converge on the fact that when wet the tiles were
potentially dangerous. The circumstances of this case seem to put it in the category of
cases where the owner and manager would be personally at fault. That is why the
Chartaprops defence cannot come to the appellants’ aid.
Disclaimer defence
[35] In relation to the defence based on a disclaimer notice (disclaimer defence), the
second appellant alleged that they had placed the disclaimer signs, which were
conspicuous and visible at the entrances to the mall, stating that the shoppers enter the
mall at their own risk. They contended that the disclaimer signs exempted them from
liability. The respondent testified that she had never seen the disclaimer notices, either
on the day of the incident and prior to it.
[36] The second appellant’s defence based on disclaimer should fail for the following
reasons. The disclaimer notices on which the appellants were relying, displayed the name
of St Tropez Property and not the current owner, Naheel. However, it does not matter
whose name was on display – the issue is whether the disclaimer was there. There was
no evidence that it was there during the period of the incident. Even assuming it was, it
was not visible based on the photographs that were tendered for evidence. The disclaimer
notices as correctly found by the full court, were hidden or obstructed by the merchandise
displayed by a hardware store and could therefore not have been easily visible to
shoppers, let alone the respondent.
[37] In this matter, even though the disclaimer notices may have been stuck to the wall
at the entrances of the mall, the appellants did not take all necessary steps to ensure that
the disclaimer board placed inside the mall was visible to the shoppers, as there were
objects obstructing the notice and neither the second appellant as the owner, or the first
appellant’s manager, did anything to remove that obstruction. Therefore, the disclaimer
defence cannot stand.
[38] In conclusion, it is clear from the evidence that there was no basis on which it could
be said that the respondent was negligent. The appellants were negligent, as they were
personally at fault by failing to take reasonable steps to prevent harm that was reasonably
foreseeable. Accordingly, the defence that Cenprop employed a cleaning company does
not come to their assistance. Further, assuming the disclaimer notices were displayed at
the mall during the period of the incident, such were not visibly displayed so as to come
to the attention of customers, let alone the respondent. There is accordingly no reason to
interfere with the decision of the full court.
[39] In the result, the appeal is dismissed with costs.
_______________________
D S MOLEFE
ACTING JUDGE OF APPEAL
APPEARANCES
For appellant:
T Potgieter SC
Instructed by:
Everinghams Inc, Cape Town
Webbers Attorneys, Bloemfontein
For respondent:
RD McClarty SC
Instructed by:
Heyns & Partners, Cape Town
Phatshoane Henney Inc, Bloemfontein.
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
# DECEMBER 2022
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
Cenprop Real Estate (Pty) Ltd v Holtzhauzen (Case no 520/2021) [2022] ZASCA 183 (19
December 2022)
Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against a
decision of the Western Cape Division of the High Court, Cape Town (the high court).
The issues before the SCA were whether the respondent was negligent; whether the appellants had
discharged their duty of care that the premises were safe, by the employment of independent
contractors (the Chartaprops defence); and whether a disclaimer or display of a disclaimer notice
indemnified the second appellant from liability of the respondent’s injuries.
On the rainy morning of Saturday, 1 June 2013, the respondent, Nicolene Holtzhauzen, a 31-year-old
woman, went to the Goodwood Mall (the mall) in Voortrekker Road, Goodwood to draw money from the
ATM. On her way to the ATM, she slipped and fell on the tiled floor inside the mall and suffered a
fracture on the elbow. She instituted a claim in the high court for damages arising from her injury against
the management company in charge of the mall and its owner.
The first appellant, Cenprop Real Estate (Pty) Ltd (Cenprop), managed the mall on behalf of the second
appellant, Naheel Investments (Pty) Ltd (Naheel), which was the owner of the mall at the time of the
incident, in terms of a management agreement concluded with Naheel. The appellants denied
negligence and/or causation. They pleaded that the incident was caused solely by the respondent’s
own negligence in that she did not keep a proper lookout and did not take reasonable care. Naheel
pleaded further that it had employed Cenprop as a competent independent contractor, specialising in
property management, to manage and physically inspect the premises on a regular basis. Therefore,
Cenprop was at all material times in control of the premises. The appellants further pleaded that
Cenprop appointed a professional cleaning company, JKL Cleaning Solutions CC (the cleaning
company) to, inter alia, spot clean daily any spillage in walkways with warning signage. By appointing
these independent contractors, the appellants pleaded that they took adequate steps to ensure safety
of members of the public and prevent the respondent, in particular, from slipping and falling as alleged.
On the issue of negligence, the SCA found that the respondent’s evidence that on the morning of the
incident the floor she slipped on was wet as a consequence of the rain remained uncontroverted. The
respondent’s evidence that she proceeded slowly along the tiled corridor but slipped and fell due to the
wet tiles that were slippery and posed danger to her was unimpeachable. Under the circumstances,
there was no basis to find the respondent in any way negligent. As to the Chartaprops defence, the
SCA rejected the appellants’ defence on the basis that the system put in place to regulate the cleaning
and removal of water caused by wet weather conditions was deficient. Lastly, the SCA rejected the
appellants’ disclaimer defence on the basis that there was no evidence that the disclaimer notice was
there during the period of the incident.
~~~~ends~~~~
|
1242
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
CASE NO 509/2007
In the matter between
SIPHO SIANETH LAWRENCE MATSHONA
Appellant
and
THE STATE
Respondent
Coram:
Navsa, Ponnan JJA and Leach AJA
Heard:
07 MAY 2008
Delivered:
28 MAY 2008
Summary:
Appeal to Supreme Court of Appeal against the refusal in a high
court of a petition seeking leave to appeal against a sentence
imposed in a regional court – leave to appeal to the high court
should have been granted – merits of the appeal against
sentence to be determined by the high court.
Neutral citation:
Matshona v The State (509/2007) [2008] ZASCA 58
(28 May 2008)
___________________________________________________________
LEACH AJA
[1] The appellant was arraigned in the regional court in Pretoria on 45
charges of fraud. Following a plea of guilty to 37 of these charges which was
accepted by the State, the appellant was duly convicted on those counts.
They were taken together for the purposes of sentence and the appellant was
sentenced to seven years imprisonment. His application for leave to appeal to
the high court against the sentence brought under s 309B of the Criminal
Procedure Act 51 of 1977 was dismissed. A subsequent petition to the high
court under s 309C was similarly unsuccessful, as was a further application
for leave to appeal against the refusal of the petition. With the necessary
leave of this court, the appellant now appeals against the refusal of his
petition in the high court.
[2] It is necessary at the outset to consider the ambit of this appeal,
particularly as counsel on both sides urged us to deal with the merits of the
appeal against the appellant’s sentence. Tempting though it might be to do so
as the full record is available, for the reasons set out below the invitation must
be declined.
[3] In S v Khoasasa 2003 (1) SACR 123 (SCA) ([2002] 4 All SA 635), after
a detailed analysis of the relevant provisions relating to appeals, this court
concluded that an order of the high court refusing leave to appeal was an
order of a provincial division against which an appellant, either with leave of
the high court or with leave of this court, could appeal. It also held1 that a
sentence imposed in the regional court can only be appealed against in this
court when an appeal against such sentence has failed in the high court.
[4] In my view, the reasoning in Khoasasa is unassailable. The appeal of
an accused convicted in a regional court lies to the high court under section
309(1)(a), although leave to appeal is required either from the trial court under
s 309B or, if such leave is refused, from the high court pursuant to an
application made by way of a petition addressed to the judge-president under
s 309C(2) and dealt with in chambers. In the event of this petition
1 At [12].
succeeding, the accused may prosecute the appeal to the high court. But, if it
is refused, the refusal constitutes a " judgment or order " or a “ruling”
of a high court as envisaged in s 20(1) and s 21(1) of the Supreme Court Act
59 of 19592, against which an appeal lies to this court on leave obtained either
from the high court which refused the petition or, should such leave be
refused, from this court3 by way of petition.4
[5] It is clear from this that where, as is here the case, an accused obtains
leave to appeal to this court against the refusal in a high court of a petition
seeking leave to appeal against a conviction or sentence in the regional court,
the issue before this court is whether leave to appeal should have been
granted by the high court and not the appeal itself which has been left in
limbo, so to speak, since the accused first sought leave to appeal to the high
court. After all, in the present case, the appellant's appeal against his
sentence has never been heard in the high court and, as was held in S v N
1991 (2) SACR 10 (A) at 16, the power of this court to hear appeals of this
nature is limited to its statutory power.5 Section 309(1) prescribes that an
appeal from a magistrates’ court lies to the high court, and an appeal against
the sentence imposed on the appellant in the regional court is clearly not
before this court at this stage. As was observed by Streicher JA in Khoasasa:6
‘Geen jurisdiksie word aan hierdie Hof verleen om ‘n appél aan te hoor teen ‘n
skuldigbevinding en vonnis in ‘n laer hof nie. Dit is eers nadat ‘n appél vanaf ‘n laer hof na ‘n
Provinsiale of ‘n Plaaslike Afdeling misluk het dat ‘n beskuldigde met die nodige verlof na
hierdie Hof appél kan aanteken.’
[6] Not only does this court lack the authority to determine the merits of the
appellant's appeal against his sentence at this stage, but there are sound
reasons of policy why this court should refuse to do so even if it could. It
would be anomalous and fly in the face of the hierarchy of appeals for this
court to hear an appeal directly from a magistrates court without that appeal
2 Khoasasa at [14].
3 Section 20 (4)(b) as read with s 21(1) and (2) of the Supreme Court Act.
4 Section 23 of the Supreme Court Act.
5 See s 315(1).
6 At [12].
being adjudicated in the high court, thereby serving, in effect, as the court of
both first and last appeal. In addition, all persons are equal under the law and
deserve to be treated the same way. This would not be the case if some
offenders first had to have their appeals determined in the high court before
they could seek leave to approach this court if still dissatisfied while others
enjoyed the benefit of their appeals being determined firstly in this court. And
most importantly, this court should be reserved for complex matters truly
deserving its attention, and its rolls should not be clogged with cases which
could and should be easily finalised in the high court.
[7] Consequently this court cannot determine the merits of the appeal but
must confine itself to the issue before it, namely whether leave to appeal to
the high court should have been granted. It follows that in S v Nel 2007 (2)
SACR 481 (SCA) the court erred in assuming that it had jurisdiction to
entertain an appeal against sentence at this stage. While the judgment in that
case referred to Khoasasa, the ratio set out therein was not applied.
[8] I turn now to consider whether leave to appeal to the high court against
the sentence imposed by the regional court should have been granted. The
test in that regard is simply whether there is a reasonable prospect of success
in the envisaged appeal against sentence, rather than whether the appeal
against the sentence ought to succeed or not.
[9] The appellant was a first offender who, at the time of his trial, was 37
years of age. He was employed as the manager of a branch of a country
wide-chain store and abused the position of trust in which he had been placed
by making fraudulent credit refunds which led to substantial sums of money
being paid from his employer's bank account into the accounts of himself,
members of his family and friends. The charges to which he pleaded guilty
had resulted in a loss of more than R300 000 to his employer, and were
committed over a period of some eight months during which he had more than
adequate time to reflect on his actions and to decide to desist. He did not.
[10] On the other hand, the appellant has been left in no doubt that crime
does not pay. Not surprisingly, he was discharged by his employer and,
although he was fortunate enough to obtain other employment, it was at a
lesser rate of remuneration. His wife's reaction to learning of his criminal
conduct led to the failure of their marriage and, in addition, a confiscation
order in an amount of R309,000.00 was made against him under s 18 of the
Prevention of Organised Crime Act 121 of 1998.
[11] In the light of the outcome of this appeal, it is neither necessary nor
desirable to deal further with the facts. Suffice it to say that, bearing the
factors mentioned above in mind, there exists a reasonable prospect that a
court of appeal might consider the sentence imposed to be too severe, even
should it take the view that direct imprisonment is warranted. That much was
conceded by counsel for the state, and this appeal must therefore succeed.
[12] In the result:
(a) The appeal succeeds.
(b) The order refusing the appellant leave to appeal is set aside and is
replaced with an order granting the appellant leave to appeal to the High
Court (Pretoria) against the sentence imposed on him in the regional court.
____________________
L E LEACH
ACTING JUDGE OF APPEAL
CONCUR:
)
NAVSA JA
)
PONNAN 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 May 2008
Status: Immediate
S S L MATSHONA 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 appellant, who was at the time a branch manager of a country-wide retail chain of stores,
was tried in a regional court on numerous counts of fraud arising from false credits passed
for goods returned. Pursuant to a plea of guilty, he was convicted and sentenced to 7 years’
imprisonment.
The appellant applied unsuccessfully for leave to appeal against his sentence, and a petition
to a high court for leave to appeal was similarly dismissed as was an application for leave to
appeal against that dismissal. With leave of this court, he appealed against the dismissal of
his petition in the high court.
The court held that the appellant ought to have been granted leave to appeal to the high
court. However, despite the decision in S v Nel 2007(2) SACR A81 (SCA) the court
concluded that it could not hear the appeal against the sentence which had first to be dealt
with in the high court.
The appeal succeeded with the appellant being granted leave to appeal to the high court
against his sentence.
|
1813
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 344/10
In the matter between
JOHANNESBURG CITY PARKS
Appellant
and
ADV JAFTA MPHAHLANI NO
First Respondent
THE SOUTH AFRICAN LOCAL
Second Respondent
GOVERNMENT BARGAINING COUNCIL
SAMWU obo F MAGUVHE
Third Respondent
COMMISSIONER, CHAIRMAN WEBB NO
Fourth Respondent
Neutral citation: Johannesburg City Parks v Mphahlani NO & others (344/10)
[2011] ZASCA 56 (31 March 2011)
Coram:
Streicher, Nugent, Snyders, Bosielo and Majiedt JJA
Heard:
24 February 2011
Delivered:
31 March 2011
Summary:
Labour Law – Dismissal – Interpretation – s 62(3A)(a) and (b) –
whether the arbitrator had jurisdiction to hear the arbitration whilst
there was a demarcation dispute pending before the CCMA
ORDER
On appeal from: Labour Appeal Court, Johannesburg (Zondo JP, Patel JA and
Sangoni AJA sitting as a court of appeal).
The appeal is upheld with costs.
The order by the Labour Appeal Court is set aside and substituted with the
following order:
The appeal is upheld with costs.
The order made by the Labour Court is set aside and substituted with
the following order:
‘1
The arbitration award dated 17 November 2005 issued under
the auspices of the South African Local Government Bargaining
Council (case no GMD 080511) is set aside.
The third respondent is ordered to pay the costs of the
application.’
__________________________________________________________________
JUDGMENT
__________________________________________________________________
BOSIELO JA (Nugent, Snyders and Majiedt JJA concurring)
[1] This is an appeal with the leave of this Court against a judgment of the
Labour Appeal Court (LAC) dismissing an appeal by the appellant against the
judgment of the Labour Court (LC) in terms whereof the appellant’s application
for the review and setting aside of an arbitration award made by one Ms Webb
during 31 October 2005 was dismissed.
[2] The facts of this case are fairly straight-forward and to a large extent
common cause. Mr Maguvhe was employed by the appellant. He was a member of
a trade union called South African Municipal Workers Union (SAMWU), the third
respondent in this appeal. Following upon a formal disciplinary enquiry he was
dismissed on 21 April 2005. A dispute regarding the fairness of the dismissal arose
between the appellant and the third respondent, representing Maguvhe, which was
referred to second respondent (SALGBC). Second respondent is a duly registered
bargaining council. The appellant did not attend the conciliation meeting alleging
that it did not fall within the jurisdiction of SALGBC. The dispute was referred to
arbitration and the fourth respondent (Webb) was appointed the arbitrator.
[3] On 16 September 2005 the appellant sent a letter to the second respondent
stating that it would not attend the arbitration proceedings as it did not fall within
its jurisdiction. In addition, the appellant advised second respondent in the same
letter that this was due to the fact that there was a demarcation dispute still pending
before the Commission for Conciliation, Mediation and Arbitration (CCMA) and
that until that dispute is resolved, it would not be bound by any decision taken by
the second respondent. It stated further that by virtue of this fact its employees
were free to refer their disciplinary matters to the CCMA which the appellant
would duly attend.
[4] It is not in dispute that the letter aforesaid was received and read by the
fourth respondent. As foreshadowed in the letter the appellant did not attend the
arbitration proceedings. Notwithstanding the clear contents of the letter aforesaid
and in the absence of the applicant, the fourth respondent found that she had
jurisdiction and proceeded with the arbitration proceedings. She made a default
award in favour of third respondent.
[5] Aggrieved by the arbitrator’s decision, the appellant tried unsuccessfully to
have the award reviewed and set aside by the LC. This was followed by an
unsuccessful appeal to the LAC.
[6] This appeal revolves around the correct interpretation of s 62(3A) of the
Labour Relations Act 66 of 1995 (LRA). I therefore find it expedient to set out the
relevant part of s 62(3A) which reads:
‘In any proceedings before an arbitrator about the interpretation or application of a collective
agreement, if a question contemplated in subsection (1)(a) or (b) is raised, the arbitrator must
adjourn those proceedings and refer the question to the Commission if the arbitrator is satisfied
that –
(a)
the question raised –
(i) has not previously been determined by arbitration in terms of this section; and
(ii) is not the subject of an agreement in terms of subsection (2); and
(b)
the determination of the question raised is necessary for the purposes of the proceedings.’
[7] Before us counsel for the appellant submitted that s 62(3A) is clear and has
no inherent ambiguities. He contended that the section provides clearly and
unambiguously that when faced with a demarcation dispute, the arbitrator has no
choice but to adjourn the proceedings until the very issue of jurisdiction is
resolved, more so that the Bargaining Council itself does not possess the
jurisdiction to resolve a demarcation dispute. This issue falls within the exclusive
domain of the CCMA, so it was submitted.
[8] On the other hand, counsel for the third respondent, contended that even
where the issue of jurisdiction is raised, the arbitrator must first satisfy himself or
herself if he or she has jurisdiction on the facts before him or her and if the dispute
is unrelated to the pending demarcation dispute, to proceed to hear the matter on
the merits. He submitted that if the party raising lack of jurisdiction as a defence is
aggrieved by the decision of the arbitrator to proceed, he or she is free to take such
a decision on review to the LC where the matter can be referred to the appropriate
forum with authority being the CCMA.
[9] It is common cause that SAMWU and the Independent Municipal and Allied
Trade Union (IMATU) are both members of second respondent (SALGBC).
SAMWU and IMATU contend that the appellant falls within the scope of second
respondent. The appellant disputes this vigorously. It is this dispute that was
referred to the CCMA for determination in terms of section 62 of the LRA by both
SAMWU and IMATU. It follows logically in my view that, if the appellant is not a
party to second respondent, then the second respondent would not have jurisdiction
over it. This is the issue that was raised pertinently as a point in limine by the
appellant. The question therefore is whether the arbitrator acted correctly by
proceeding with the arbitration proceedings whilst there was this unresolved
demarcation dispute.
[10] The LAC found that the appellant relied on a wrong section as s 62(3A) is
restricted to an instance where the ‘proceedings before an arbitrator are about the
interpretation or application of a collective agreement’. The LAC found that the
dispute herein was not about the interpretation or application of a collective
agreement but about unfair dismissal. The LAC drew a distinction between s
62(3A) and s 62(3) and (5). The LAC found that the distinguishing feature is that s
62(3) speaks of ‘any proceedings’ whilst s 62(3A) restricts itself to ‘proceedings
before an arbitrator about the interpretation or application of a collective
agreement.’ The LAC concluded therefore that s 62(3A) was narrower than s 62(3)
and not applicable to this case. The LAC found that s 62(3A) did not apply to the
proceedings before the arbitrator as these were concerned with an unfair dismissal
dispute. Furthermore the LAC found that in the absence of any evidence being put
before the arbitrator, the arbitrator could not have been and was not satisfied about
the questions raised in s 62(3A)(a) and (b).
[11] I do not agree with the construction of s 62(3A) and s 62(3) and (5) as
adumbrated by the LAC. I found the distinction drawn by the LAC to be more
illusory than real. The nub of the enquiry is simply whether the arbitrator had the
jurisdiction to arbitrate this matter or not, given the admitted fact that there was a
demarcation dispute which addresses jurisdiction pending before the CCMA.
[12] It would appear to me to be illogical that the arbitrator, fully alerted to the
objection raised by the appellant in their letter of 16 September 2005, and whilst
the demarcation dispute is still pending before the CCMA, could ignore such an
objection and arrogate to herself the jurisdiction to arbitrate this matter. The
arbitrator could only have had jurisdiction if the collective agreement was binding
on the appellant. That was in issue and pending before the only body empowered
to decide it, the CCMA. In order to decide jurisdiction it had to be decided whether
the collective agreement applied to the appellant. That decision falls squarely
within the wording of s 62(3A). Logic dictates that in strict compliance with s
62(3A) which is couched in peremptory language that the arbitrator was obliged to
adjourn the proceedings as the demarcation dispute was still pending before the
CCMA.
[13] It is not in dispute that the demarcation dispute herein had been referred by
SAMWU and IMATU during 2004 to the CCMA for determination of the question
whether the appellant falls within the scope of the second respondent. It is
furthermore common cause that as at 16 September 2005 when the arbitration
proceedings were held this dispute was still pending before the CCMA. It makes
little sense to me that the arbitrator could proceed to arbitrate the matter against an
objection to the jurisdiction of second respondent (SALGBC) based on s 62(3A) of
the LRA. It appears to me plain that such conduct circumvents the mischief which
s 62(3A) seeks to address, ie that the arbitrator shall not adjudicate in a matter
where his or her jurisdiction is being challenged on the basis of whether one of the
parties is bound by the collective agreement. To say that, an arbitrator can act even
in the face of a pending demarcation dispute and that such a decision can later be
taken on review to the LC as submitted by counsel for the third respondent would
cause multiple streams of litigation in the same issue and is simply untenable. This
is so because even the LC itself will not be able to handle the matter until the
CCMA has finally determined the demarcation dispute. Manifestly, the
consequences of such an approach are so absurd that the legislature could never
have contemplated or intended them. An interpretation which leads to such patent
absurdities should in my view, not be countenanced. It follows in my view that this
appeal must succeed.
[14] In the result the following order is made:
The appeal is upheld with costs.
The order by the Labour Appeal Court is set aside and substituted with the
following order:
The appeal is upheld with costs.
The order made by the Labour Court is set aside and substituted with
the following order:
‘1
The arbitration award dated 17 November 2005 issued under
the auspices of the South African Local Government Bargaining
Council (case no GMD 080511) is set aside.
The third respondent is ordered to pay the costs of the
application.’
_______________
L O Bosielo
Judge of Appeal
STREICHER JA: (NUGENT, SNYDERS and MAJIEDT JJA concurring)
[15] This is an appeal against a judgment of the Labour Appeal Court (the LAC)
in respect of an unfair dismissal dispute between the third respondent and the
appellant.
[16] The third respondent was dismissed from the employ of the appellant on the
ground that he had been in breach of the appellant’s conditions of service in that he
had done private work during working hours. He contended that his dismissal was
unfair and referred the dispute to the second respondent, the South African Local
Government Bargaining Council (the SALGBC). The SALGBC is registered in
terms of s 29 of the Labour Relations Act 66 of 1995 (the LRA) as a bargaining
council with the ‘Local Government Undertaking in the Republic of South Africa’
as its registered scope. The collective agreements concluded in the SALGBC have
been extended in terms of s 32 of the LRA to non-parties falling within its
registered scope.
[17] Upon the dispute having been referred to the SALGBC it called on the
appellant and the third respondent to attend a conciliation meeting. The appellant
responded that it would not attend the meeting as it did not fall within the
jurisdiction of the SALGBC. It added:
‘There is a demarcation dispute pending at the CCMA case no SA 18299/04. Until this matter is
finalized by the CCMA Johannesburg City Parks will not be bound by any decision of the
Bargaining Council and our employees are free to refer disciplinary matters to the CCMA which
the company duly attend.’
The SALGBC thereafter called upon the parties to attend an arbitration of the
dispute to which the appellant responded in a similar manner.
[18] The appellant is an association established by the City of Johannesburg
Metropolitan Municipality and incorporated in terms of s 21 of the Companies Act
61 of 1973. The majority of the appellant’s workforce is represented by the South
African Municipal Workers Union (SAMWU) and the Independent Municipal and
Allied Trade Union (IMATU). SAMWU and IMATU contend that the appellant
and various other utilities, agencies and corporatized entities (UAC’s) established
by the Greater Johannesburg Transitional Metropolitan Council and/or the City of
Johannesburg Metropolitan Municipality, which succeeded it, fall within the
registered scope of the SALGBC. At all material times the appellant and the other
UAC’s have contended that they do not fall within the scope of the SALGBC.
During 2004 SAMWU and IMATU referred this dispute to the Commission for
Conciliation, Mediation and Arbitration (the Commission) in terms of s 62 of the
LRA. This is the demarcation dispute referred to in the appellant’s letters to the
SALGBC in response to its invitation to attend conciliation and arbitration
proceedings.
[19] The SALGBC proceeded with the arbitration by appointing Ms Webb, the
fourth respondent, to conduct the arbitration. The appellant did not attend the
arbitration hearing and after having heard the evidence of the third respondent the
arbitrator held that he had been unfairly dismissed and ordered that he be reinstated
retrospectively from the date of his dismissal. The appellant thereupon applied to
the Labour Court for an order reviewing and setting aside the arbitration award on
the ground that the SALGBC lacked jurisdiction to adjudicate the dispute. The
labour court held that the SALGBC did have jurisdiction in respect of the dispute
and dismissed the application for review with costs.
[20] An appeal by the appellant to the LAC was unsuccessful. Counsel for the
appellant submitted in that court, as he did before us, that, in terms of s 62(3A) of
the LRA the fourth respondent was obliged to adjourn the proceedings once she
became aware that a demarcation dispute was pending before the Commission. The
section reads:
‘In any proceedings before an arbitrator about the interpretation or application of a collective
agreement, if a question contemplated in subsection (1)(a) or (b) is raised, the arbitrator must
adjourn those proceedings and refer the question to the Commission if the arbitrator is satisfied
that –
(a)
the question raised -
(i) has not previously been determined by arbitration in terms of this section; and
(ii) is not the subject of an agreement in terms of subsection (2); and
(b)
the determination of the question raised is necessary for the purposes of the proceedings.’
[21] Section 62(1) deals with demarcation disputes and provides that any
registered trade union, employer, employee, registered employers’ organisation or
council that has a direct or indirect interest in the application may apply to the
Commission for a determination as to (a) whether any employee, employer, class
of employees or class of employers, is or was employed or engaged in a sector or
area; (b) whether any provision in any collective agreement is or was binding on
any employee, employer, class of employee or class of employers.
[22] The LAC held that one should distinguish between a dispute and an issue in
a dispute and that ‘proceedings before an arbitrator about the interpretation or
application of a collective agreement’ referred to in s 62(3A) were intended to refer
to proceedings where the main dispute between the parties was about the
interpretation or application of a collective agreement. In the case under
consideration, so it held, the main dispute concerned the fairness of the dismissal
of the third respondent whereas the application of the collective agreement was
only an issue in that dispute. For that reason the LAC held that the section was not
applicable to the arbitration proceedings conducted by the fourth respondent and
that the appeal should be dismissed with costs.
[23] In terms of s 191 of the LRA a dismissed employee may refer a dispute
about the fairness of his dismissal to a bargaining council if the parties to the
dispute fall within the registered scope of the council or to the Commission if no
council has jurisdiction (s 191(1)(a)). The council or the Commission must
thereupon attempt to resolve the dispute through conciliation (s 191(4)). If the
council or a commissioner certifies that the dispute remains unresolved, or if 30
days have expired since the council or the Commission received the referral, and
the dispute remains unresolved the council or the Commission must arbitrate the
dispute at the request of the employee if the employer alleged that the reason for
dismissal is related to the employee’s conduct (s 191(5)(a)(i)). Section 51(4)
provides that if one or more of the parties to a dispute that has been referred to a
bargaining council do not fall within the registered scope of that council, it must
refer the dispute to the Commission. It is therefore clear that a bargaining council
has no jurisdiction to arbitrate an unfair dismissal dispute if one of the parties to
the dispute does not fall within the registered scope of the council.
[24] If the employer disputes that he falls within the registered scope of the
bargaining council to which a dispute has been referred, as happened in the present
case and that issue has not been determined by a body having authority to do so, it
obviously needs to be determined in order to establish whether the bargaining
council has jurisdiction in respect of the dispute. But, quite understandably, the
LRA does not confer jurisdiction on a bargaining council to arbitrate a dispute
about its own registered scope. In terms of s 62 it is the Commission that has
jurisdiction to decide demarcation disputes.
[25] Counsel for the third respondent did not submit that a bargaining council has
jurisdiction to resolve a demarcation dispute. He submitted that the unfair
dismissal proceedings between the appellant and the third respondent were not
proceedings about the interpretation or application of a collective agreement and
that s 62(3A) by implication authorised an arbitrator in such proceedings, in the
event of a demarcation issue being raised, to proceed with the matter without
determining the demarcation issue. Thus, leaving it to the party contending that he
fell outside the registered scope of the bargaining council, to review the arbitrator’s
award once the demarcation issue had been decided by the Commission.
[26] I can understand an argument to the effect that because the legislature said
that in proceedings about the interpretation or application of a collective agreement
a demarcation dispute which has not been decided must be referred to the
Commission, the legislature intended that in other proceedings such a dispute need
not be referred to the Commission. But, that argument does not deal with the
question as to what the arbitrator in such other proceedings is to do about the
demarcation dispute if the proceedings are not adjourned and the demarcation
dispute is not referred to the Commission. According to counsel for the third
respondent’s argument the arbitrator simply has to ignore the dispute about its
jurisdiction, proceed with the matter, make an award which may subsequently,
maybe months later, be reviewed and set aside. Meanwhile the award would
presumably be treated as a valid award which may be enforced. I am satisfied that
the legislature could not have intended such an extraordinary result and that had it
intended such a result it would have made its intention clear.
[27] Section 62(3A) provides that ‘no arbitrator’ may in the circumstances
mentioned in the section proceed with an arbitration in the event of a demarcation
dispute being raised. The reference to an arbitrator is therefore not a reference only
to the SALGBC as arbitrator but is a reference to any arbitrator ie also an arbitrator
appointed by agreement between the parties which, in terms of the agreement may
have had jurisdiction to decide the demarcation dispute between the parties, had it
not been for the section. This section must therefore have been intended to deprive
arbitrators of jurisdiction to decide demarcation disputes between the parties in the
circumstances mentioned in the section. That being so, there is no way it can be
interpreted to have been intended to confer jurisdiction on an arbitrator, such as a
bargaining council, which in any event does not have jurisdiction to arbitrate a
demarcation dispute to proceed with the arbitration.
[28] For these reasons I agree that the appeal should succeed and that the order
proposed by my colleague Bosielo JA should be made.
__________________
P E STREICHER
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
Adv Timothy Bruinders SC
Instructed by:
Sim & Botsi, Johannesburg,
Symington & De Kok, Bloemfontein;
For Respondent:
Adv JG van der Riet SC
Instructed by:
Cheadle Thompson & Haysom, Johannesburg;
Matsepes Inc, Bloemfontein;
McIntyre & Van der Post, Bloemfontein
|
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
31 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.
Johannesburg City Parks v Adv. Jafta Mphahlani NO & others (344/10) [2010] ZASCA
56 (31 March 2011)
The Supreme Court of Appeal upheld an appeal against a judgment of the Labour Appeal
Court (LAC) with costs. It furthermore set aside the order of the Labour Court (LC) and
substituted it with an order setting aside the arbitration award issued under the auspices of
the South African Local Government Bargaining Council (SALGBC).
The third respondent (Mr Maguvhe) was dismissed from his employment with the appellant on
the ground that he had been in breach of the appellant’s conditions of service when he did
some private work during office hours. He challenged the fairness of his dismissal and
referred the dispute to second respondent SALGBC which is registered as a bargaining
council in terms of s 29 of the Labour Relations Act 66 of 1995 (LRA). Its registered scope is
the ‘Local Government Undertaking in the Republic of South Africa.’ SALGBC called the
appellant and the third respondent to attend a conciliation meeting. The appellant declined on
the basis that it did not fall within the jurisdiction of the SALGBC. The SALGBC then called on
the parties to attend arbitration. The appellant wrote a letter to the arbitrator stating that it will
not attend the arbitrator’s proceedings as there was a pending demarcation dispute before the
CCMA. The appellant reiterated that the arbitrator does not have jurisdiction to hear the
arbitrator.
In the absence of the appellant, and notwithstanding the objection raised, the arbitrator
proceeded with the arbitration, found that the third respondent had been unfairly dismissed
and ordered that he be reinstated from the date of his dismissal. An application for the review
of the order to the LC failed, as well as an appeal to the LAC.
The SCA found that the arbitrator was bound by the peremptory terms of s 62(3A) of the LRA,
which provides in explicit and peremptory terms that in any proceedings before an arbitrator
about the interpretation or application of a collective agreement, if a question contemplated in
subsection (1) (a) or (b) is raised, the arbitrator must adjourn the proceedings and refer the
question to the Commission.
The SCA found that as the demarcation dispute was still pending before the CCMA, that the
SALGBC did not have the authority or jurisdiction to adjudicate a dispute about its own
registered scope. In terms of s 62 it is the CCMA which has the jurisdiction to determine the
dispute.
Finally the SCA found that the arbitrator acted wrongfully in the circumstances. The appeal is
therefore upheld.
|
1884
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No. 248/11
THE STATE Appellant
and
ARTHUR TSHEPO MEJE First Respondent
EDWARD MQAHAYI Second Respondent
Neutral citation: S
v
Meje
(248/11)
[2011] ZASCA
(13 September 2011)
Coram:
Mthiyane, Maya, Shongwe, Seriti JJA and Plasket AJA
Heard:
2 September 2011
Delivered:
13 September 2011
Summary:
Criminal Procedure – territorial jurisdiction of court to be
determined at date of commencement of proceedings – s 110 of Criminal
Procedure Act 51 of 1977 vests territorial jurisdiction in a court in the
absence of objection to jurisdiction.
ORDER
On appeal from: North Gauteng High Court (Pretoria) (Engelbrecht AJ and
Vorster AJ sitting as a court of appeal):
(1) The appeal is upheld and the order of the court below is set aside.
(2) The respondents’ convictions and sentences are re-instated.
(3) The matter is remitted to the court below for the appeal to proceed on
the merits.
JUDGMENT
PLASKET AJA (MTHIYANE, MAYA, SHONGWE and SERITI JJA
concurring)
[1] The respondents were convicted, in a regional court sitting in
Pretoria, of five and 14 counts of fraud respectively. The first respondent
was sentenced to seven years’ imprisonment of which two years were
conditionally suspended and the second respondent was sentenced to eight
years’ imprisonment of which two years were conditionally suspended. They
appealed against both their convictions and sentences and when their
appeals were heard in the North Gauteng High Court (Pretoria), the court
(Engelbrecht AJ and Vorster AJ) raised the issue of whether the trial court
had had jurisdiction to try the respondents. They duly found that it did not
and set aside the respondents’ convictions and sentences without dealing
with the merits of the appeal.
[2] The sole issue in this appeal brought by the State1 in terms of s 311
of the Criminal Procedure Act 51 of 1977 is whether the trial court had
jurisdiction to try the respondents. It is clearly a question of law. The issue
arose as a result of the restructuring of the regional court in the province of
Gauteng after the date of the commission of the offences of which the
respondents had been convicted but before the date on which they first
appeared in the trial court.
1 There was no appearance by or on behalf of the respondents although they were aware of
the appeal and the date on which it was argued.
[3] According to the charge sheet the respondents had committed
various acts of fraud during 1998 and 1999 ‘at or near Kagiso in the
Regional Division of Gauteng’. They first appeared on 24 June 2004 in the
regional court for that division sitting in Pretoria and were, as stated above,
subsequently tried and sentenced in that court.
[4] At the time of the commission of the offences the Southern Transvaal
Regional Division had territorial jurisdiction in respect of offences committed
in Kagiso (in the magisterial district of Krugersdorp).2 Later, however, the
Regional Divisions of the Southern Transvaal and the Northern Transvaal
were amalgamated into one regional division called the Regional Division of
Gauteng with seats at 23 places including Pretoria. This occurred with effect
from 1 April 2004.3
[5] The court below set aside the convictions and sentences of the
respondents on two bases. The first was that as the offences were
committed within the territorial jurisdiction of the erstwhile Regional Division
of the Southern Transvaal, a court sitting in Pretoria, within the territorial
jurisdiction of the erstwhile Regional Division of the Northern Transvaal, did
not have jurisdiction to try the respondents. Secondly, it held that s 110 of
the Criminal Procedure Act could not avail the State because it did not
‘create substantive jurisdiction’. It appears to me that the logical conclusion
of the reasoning of the court below is that no court could have tried the
respondents as the only court that had jurisdiction had ceased to exist when
the proceedings commenced.
[6] In my view – and for the reasons that follow – the court below erred
in respect of both of the issues on which it relied.
2 Government Notices 641 and 642, promulgated in Government Gazette 7515 of 27 March
1981 created, out of the Transvaal Regional Division, the Regional Divisions of the
Northern Transvaal and the Southern Transvaal respectively.
3 Government Notice 219, Government Gazette 26091 of 27 February 2004.
[7] In the first instance, the court below found that the jurisdiction of a
court to try an accused must be determined at the time the offence with
which the accused is charged was committed. That is contrary to what this
court found the position to be in S v Mamase & another.4 Snyders JA held in
that case that the ‘jurisdiction of a court is determined at the stage that
proceedings are commenced’ and that, in terms of s 76(1) of the Criminal
Procedure Act, proceedings commence when, as in this case in which the
respondents were not summoned to court but were arrested, the charge
sheet is lodged with the clerk of the court.5
[8] The respondents first appeared in court on 24 June 2004. They were
first provided with the charge sheet on a date between their appearances on
5 October 2004 and 30 November 2004 because, on the latter date, it is
recorded that they had confirmed that they had received both the docket
and the charge sheet. While there is no record of when the charge sheet
was lodged with the clerk of the court, it can be accepted that the earliest
date on which this could have occurred was 24 June 2004. Consequently,
the proceedings against the respondents commenced, at the earliest, on 24
June 2004. As at that date, one regional division, the Regional Division of
Gauteng which had came into existence on 1 April 2004, had territorial
jurisdiction over the entire province of Gauteng. As Kagiso falls within the
province of Gauteng, any court of that Regional Division, including one
sitting in Pretoria, had jurisdiction to try the respondents on charges of
fraud.
[9] In the second instance, the court below erred in its application of s
110 of the Criminal Procedure Act. This section provides:
‘(1) Where an accused does not plead that the court has no jurisdiction and it at
any stage-
(a) after the accused has pleaded a plea of guilty or of not guilty; or
(b) where the accused has pleaded any other plea and the court has
determined such plea against the accused,
4 S v Mamase & another 2010 (1) SACR 121 (SCA).
5 Para 12.
appears that the court in question does not have jurisdiction, the court shall for the
purposes of this Act be deemed to have jurisdiction in respect of the offence in
question.
(2) Where an accused pleads that the court in question has no jurisdiction and the
plea is upheld, the court shall adjourn the case to the court having jurisdiction.’
[10] In S v Pale & ‘n ander6 this court set out the purpose and effect of s
110 and, in so doing, stated in terms that it was intended precisely for cases
such as the present (on the court below’s assumption that the trial court had
no territorial jurisdiction). In that case Viviers JA held:7
‘Artikel 110 is hoofsaaklik bedoel om voorsiening te maak vir die geval waar ‘n
bepaalde hof wel jurisdiksie het om die misdaad waarvan die beskuldigde
aangekla word, te bereg, maar die verkeerde hof is vanweë een of ander
jurisdiksionele feit soos bv dat die misdaad buite die hof se regsgebied gepleeg is.
Die artikel skep nie substantiewe jurisdiksie nie en kan nie aan ‘n landdros ‘n groter
jurisdiksie verleen as wat hy regtens het nie. Dit verleen bv nie regsbevoegdheid
aan ‘n landdros om ‘n saak te verhoor wat hy ingevolge art 89 van die Wet op
Landdroshowe nie mag verhoor nie, al betwis ‘n beskuldigde nie die
regsbevoegdheid van die hof nie. . . . So ook kan art 110 nie jurisdiksie verleen
aan ‘n hof om ‘n misdaad wat in ‘n ander land gepleeg is, te bereg nie. Artikel 110
verleen wel territoriale jurisdiksie aan ‘n hof wat dit nie gehad het nie, suiwer op
grond van die beskuldigde se stilswyende aanvaarding daarvan, deurdat hy die
verhoor laat voortgaan sonder om die punt te opper wanneer hy pleit’. (Emphasis
added)
[11] Regrettably, it appears that the distinction between the concepts of
substantive jurisdiction – the jurisdiction, in this case, to try accused
charged with fraud – and territorial jurisdiction eluded the court below.
Section 110 does not confer substantive jurisdiction on a court but, in the
absence of a plea of absence of jurisdiction,8 it may acquire territorial
jurisdiction it otherwise does not have.
6 S v Pale & ‘n ander 1995 (1) SACR 595 (A).
7 At 598d-h. (References omitted.) See too Etienne Du Toit, Frederick J De Jager, Andrew
Paizes, Andrew St Quintin Skeen and Steph van der Merwe Commentary on the Criminal
Procedure Act 16-1 (service issue 45, 2010).
8 Criminal Procedure Act, s 106(1)(f).
[12] As a result of the above, I am of the view that the appeal must
succeed. Section 311(1)(a) of the Criminal Procedure Act empowers this
court, when it upholds an appeal by the State from a high court sitting as a
court of appeal, to ‘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’. The convictions and
sentences of the respondents must obviously be re-instated in their original
form but their appeals have not been heard on the merits. While s 311 does
not explicitly provide that this court may remit a matter to the appeal court of
first instance, it was held in Attorney-General (Transvaal) v Steenkamp9
(dealing with a predecessor of s 311) that in circumstances such as these
the matter could be remitted as ‘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, some of those issues must …
be left hanging in the air’.
[13] The following order is made.
(1) The appeal is upheld and the order of the court below is set aside.
(2) The respondents’ convictions and sentences are re-instated.
(3) The matter is remitted to the court below for the appeal to proceed on
the merits.
_____________________
C PLASKET
Acting Judge of Appeal
9 Attorney-General (Transvaal) v Steenkamp 1954 (1) SA 351 (A) at 357F-G.
APPEARANCES
APPELLANT: J M Ferreira (with him K Malapane)
Office of the Director of Public Prosecutions, Pretoria
RESPONDENTS: No appearance
|
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
13 September 2011
STATUS: Immediate
THE STATE V ARTHUR TSHEPO MEJE AND ANOTHER
Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal
Today the Supreme Court of Appeal (SCA) upheld an appeal by the State, and set
aside an order of the North Gauteng High Court (Pretoria).
The respondents were convicted in the regional court, Pretoria of five and 14 counts
of fraud respectively and sentenced to seven years and eight years imprisonment,
conditionally suspended for two years.
They appealed against both their convictions and sentences to the North Gauteng
High Court. It found that the trial court did not have the jurisdiction to try the
respondents and set aside both the convictions and sentences. It held that as the
offences were committed within the territorial jurisdiction of the erstwhile Regional
Division of the Southern Transvaal, a court sitting in Pretoria within the territorial
jurisdiction of the erstwhile Regional Division of the Northern Transvaal did not have
jurisdiction to try the respondents despite the fact that, by the time the respondents
first appeared in court, these courts had been amalgamated into the Regional
Division of Gauteng, having jurisdiction throughout the province of Gauteng.
Secondly, the high court held that s 110 of the Criminal Procedure Act 51 of 1977
could not avail the State because it did not ‘create substantive jurisdiction’.
The sole issue raised by the appellant before the SCA was whether the trial court
had the jurisdiction to try the respondents.
The SCA held that the jurisdiction of a court to try an accused is determined at the
time when the proceedings commenced. At that time only one Regional Division, the
Regional Division of Gauteng existed and it had jurisdiction over the whole of the
province of Gauteng, including Kagiso where the offences were alleged to have
been committed. Secondly, it found that while s 110 of the Criminal Procedure Act
did not confer substantive jurisdiction on a court, it conferred territorial jurisdiction on
it in the absence of a plea of absence of jurisdiction.
The SCA went on to state that s 311(1)(a) of the Criminal Procedure Act empowered
it to re-instate the conviction and sentence, which it did, and ordered that the matter
be remitted to the court below for the appeal to proceed on the merits.
--- ends ---
|
3590
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 139/2020
In the matter between:
JULIUS SELLO MALEMA
APPELLANT
and
THEMBINKOSI RAWULA
RESPONDENT
Neutral citation: Malema v Rawula (139/2020) [2021] ZASCA 88 (23 June
2021)
Coram:
PETSE AP, DAMBUZA AND SCHIPPERS JJA AND LEDWABA
AND ROGERS AJJA
Heard:
25 February 2021
Delivered: 23 June 2021
Summary: Civil Procedure – motion proceedings – application for declaratory
order that published statements defamatory – defence of justification – truth and
public interest – sustainable foundation in papers – declarator sought and interdict
not justified – appeal dismissed.
ORDER
On appeal from: Eastern Cape Division of the High Court, Port Elizabeth
(Mullins AJ sitting as court of first instance):
The appeal is dismissed.
JUDGMENT
Schippers JA (Petse AP, Dambuza JA and Ledwaba AJA concurring):
[1] The appellant, Mr Julius Sello Malema, is the President of the Economic
Freedom Fighters (EFF), the third largest political party in South Africa, and a
Member of Parliament (MP). The Deputy President of the EFF is Mr Floyd
Shivambu, also an MP. The respondent is a former member of the EFF who
resigned from the party in April 2019. He served on its highest decision-making
body, the Central Command Team (CCT), represented it in Parliament and was the
National Chairperson of the EFF’s National Disciplinary Committee (NDC).
[2] On 5 April 2019 the respondent posted a statement on his Facebook page
entitled, ‘EFF REMAINS A FINANCIAL FISHING NET FOR THE PAIR, AN
ANTITHESIS OF EVERYTHING IT [PURPORTS TO BE]. I AM NOW
UNLEASHED, WHO CARES?’. I shall refer to the statement as the Facebook
post.
[3] On 18 April 2019 the appellant applied to the Eastern Cape Division of the
High Court, Port Elizabeth (the high court), for an order declaring that the
Facebook post was unlawful and defamatory; restraining the respondent from
publishing any further defamatory statements; and directing him to pay damages
in the sum of R1 million. The high court dismissed the application. The appeal is
with its leave.
[4] The respondent appeared in person at the hearing of the appeal, as he had
done in the high court. He indicated that he did not wish to address this Court and
would abide by its decision.
Facts
[5] Shortly before his resignation from the EFF on 10 April 2019, the respondent
published the Facebook post. It reads:
‘EFF REMAINS A FINANCIAL FISHING NET FOR THE PAIR, AN ANTITHESIS OF
EVERYTHING IT PURPORT[S TO BE]. I AM NOW UNLEASHED WHO CARES?
"Since when [is] the individual interest . . . asserted above the interest of the collective and the
organization?" Lenin once lamented in his death bed when he learnt that Stalin had taken
decisions that undermined the organization but assert[ed] and affirm[ed] his grip over the
organization.
When Jacob Zuma was facing his corruption charges, the liberation movement was confronted
with a possibility of fracturing like a glass into pieces. The SACP, Cosatu and the faction of the
liberation movement were up [in] arms against the leadership of Mbeki.
Mbeki equally like Lenin, lamented as well, since when [is] the individual . . . held above the
organizational interest? Have we arrived to the time where [a] personality cult and individual
interest has come to reign over the collective and organizational interest?
No one dared to listen to Mbeki sanity because many of us in the SACP and organized labour
Cosatu were emotionally perturbed by the macro economic policies, position [on] HIV/ AIDS
and the disorientation of the ANC led alliance on decision making processes in particular as it
relates to the marginalization of SACP and Cosatu under the Mbeki leadership. Accordingly, the
climate was emotiona[l] and denied many of us an opportunity to allow sanity to prevail.
History has a way of repeating itself, yes, we are angry with the current economic policy direction
of the country which embraces NDP a graduation of gear, the macro economic policy. Yes we
are angry that our economy is not growing and instead it is leading us to job shedding and failing
to create jobs. Indeed all this is taking place under the leadership of ANC and indeed the
leadership of the ANC is guilty as charged when it comes to corruption.
Fellow fighters and comrades, whilst we are emotional about these objective realities, it gives no
one a licence to climb on the band wagon in the name of left working-class politics to commit
corruption and hide behind the slogans of Economic Freedom for dejected African masses of our
people.
If we demand clean governance and corrupt free and accountable government from the ANC and
the state apparatus in the name of our respect for the rule of law, supremacy of our Constitution,
[s]urely we must lead the society in abiding with the rule of law as an advance movement of the
working class, the Economic Freedom Fighters. We ought to demonstrate highest discipline in
the management of the state and our organization fiscus.
In parliament, the Presidency and the executive remain accountable to the legislature for
everything, policy direction and the management of the state funds and the fiscus in general. It is
so because those who are elected to public office are accountable through the representatives of
the people. The mechanism of the legislature is meant to hold the executive accountable on behalf
of the people.
In our organizations, we go to National conferences or National Peoples Assemblies to elect
leadership and the top 6 led by the Presidency is the executive and latter number of 35 or 90
remains the NEC/ CCT additional members. Whilst the executive is in charge for the direction
and management of resources of the organization . . . it remains accountable to the full
complement of the NEC/ CCT both for political direction and management of resources including
money.
The point is that, no one must be a holy cow when it comes to accountability including the
Economic Freedom Fighters.
The EFF receives levies from 61 MPs / MPLs and each pays not less than R6800 monthly x61.
EFF has 852 Councillors comprising metros, district and local municipalities. On average these
Councillors contribute R2000.00 monthly x852. Whilst on it, the EFF is recorded to have reached
a million paid up membership, R10 x1 000 000.
EFF is receiving from parliament per quarter not less than R25 Million from National Assembly
and Provincial Legislatures comprising of Party Funding, Constituency Funds and Caucus funds.
The Constituency funds [are] suppose[d] to assist MPLs and MPs to assist them with logistical
traveling arrangements such as accommodation and transport. The Caucus funds . . . [are]
suppose[d] to enable the Caucus in the legislature to plan their approach and direction in the
Province.
All these [monies] are centralized in the EFF under the control, abuse and dictatorship of Julius
Malema and Floyd Shivambu. [The] pair have made it clear, this is their organization and all of
you have come to join us not the other way round. In the EFF there is . . . a Treasurer General
called Leigh Ann Marthys, unfortunately she only administers petty cash of the EFF.
I have been a national leader, a Central Command Team member of the EFF since 2014 and we
have never had a Financial Report and when occasionally we find courage to ask about it, we are
chastised as spouses and treated with disdain and threatened to be removed from Parliament, so
for the past 5 years we had to think with our stomachs rather than objectively engaging the
executive, holding it accountable.
The Parliament money of the EFF cannot be cashed in terms of treasury rules, but the pair would
use Training Providers who would inflate costs [by] 250% so that they can run away with 150%
of the inflated cost, in the absence of financial reports from the pair, we would be forced to
conclude as such. These service providers are in the form of alcohol party retailers, lawyers,
security (Defenders of Revolution and Body and logistics service providers).1 No report
whatsoever.
On the VBS saga which has led to my sacrifice in the EFF list conference and ultimate
endorsement on the list.
The political overview of Julius Malema in the most recent CCT meeting admitted to EFF taking
VBS money to finance the revolution. In fact he said, "sometimes we are forced to kiss dogs or
[the] devil to get funding". The VBS money was done under the full knowledge of the leadership.
The meeting was preceded by two important occasions. When the VBS saga broke out one of the
EFF senior CCT members, Cmsr. Sam Matiase, wrote a letter to Julius Malema and pleaded for
a special meeting which in short he denied and claimed to have everything under control as
officials. The fellow was dismissed like that.
We are further aware, that there is a letter in which Dr Mbuyiseni Ndlozi wrote to the officials
complaining about the lifestyle of Julius Malema and how he abuse[s] the EFF funds. It is
reported that Ndlozi went to tell people closer to Julius Malema who reported him . . . . Ndlozi
was summoned to officials where he was embarrassed and reduced into nothing to a point he was
told that he joined the EFF through an interview. So he must not come here and be curious here.
1 This is an unknown entity to the Court. Presumably it is a reference to the private security services hired by the
EFF.
The contrast in between the above two letters, one was given audience and the other one was
dismissed.
Back to VBS, when given the opportunity to raise our views on the political input. We had further
learnt that prior to the CCT meeting there was a Caucus meeting of Chairperson's convened by
the pair instructing them to defend the officials.
When I rose to raise my views, I argued that whilst we appreciate to be taken into confidence
about the VBS by the leadership . . . it would have been better that we were taken into confidence
prior to the acquisition of the VBS money, not after.
I further argue[d] that the people of Limpopo had lost hope [in] the ANC and SACP and EFF was
providing the glimmer of hope, now EFF is mentioned in the same line with these organizations.
It is my submission that the scandal of VBS has put the EFF cardinal pillar number 7 on trial in
the Court of the public opinion. EFF will have a tough time to remedy itself to the poor grannies
of Limpopo and the country as the whole.
I landed in the meeting by saying, the EFF has two options: to remove cardinal pillar number 7
which states that we will fight for a corrupt-free and accountable government. Accordingly, we
have failed to pass the test of morality we have set for the society.
The other option is to simply close shop and renounce the position we have held and mobilize[d]
the society under. If we fail to pass the test of corruption, how are you going to be trusted to
nationalize mines and put under your regime state custodianship because instead of committing
to equitable redistribution you will squander the funds.
How are you going to build state capacity when you are engaged in activities that weaken the
state through engagement in corruption? How will people trust you with freeing this country from
corruption?
Lastly I refused to take collective responsibility on VBS. I am poor, live like a church mouse
despite the fact that I have been a member of Parliament for the past 4 years. The pair has milked
every cent I worked for in Parliament but despite that, my integrity remains intact.
I will wait for those who demonstrate that they are fighters with zero revolutionary content, the
populist who will do mudslinging to appease the pair.
I endured the past 4 years for convenience and the only leash they had on me was deployment to
parliament. Now that I am not in the list, I am leashed away so let the ball roll.
We are made to believe that we were picked from the streets with no prospects of employment.
When EFF called me for deployment to Parliament I was a professional public servant in the
sphere of local government with post graduate qualifications. I left the ANC because amongst
the reason[s] was the dispensation of patronage and corruption, it is hypocritical to stand for it in
the EFF.
In terms of the subjective and objective analysis, Rawula is emotional because he does not find
expression on the deployment list and now is getting back at EFF leadership, sour grapes. Say
for argument[’s] sake, there is truth in that. None of the subjective factors can outweigh the
objective reality.
You commit to an open and corrupt-free society and you instead you are found at the centre of
corruption. In your analysis kindly JUXTAPOSE THE SUBJECTIVE REALITY OF
EMOTIONALISM AND THE OBJECTIVE REALITY OF A PARTY ENGAGE[D] IN A
CASH HEIST OF THE STATE MONEY.
Bring it on, insult me.
Bloody crooks.’
[6] The respondent’s publication of the Facebook post led to extensive media
coverage, and repetition and republication of the statements complained of. These
included the following publications: an article published on News24, entitled
‘Former EFF leader accuses Malema, Shivambu of taking VBS donation, party
denies claims’; and two articles on the website of Eyewitness News, entitled
‘SNUBBED EFF COMMITTEE MEMBER MAKES SERIOUS ALLEGATIONS
AGAINST MALEMA’ and ‘SNUBBED EFF COMMITTEE MEMBER GIVES
REASONS FOR SPEAKING OUT’, respectively. A further article entitled,
‘Malema, Shivambu accused of financial mismanagement’ was published on the
website of eNews Channel Africa (eNCA). An article was also published by Ms K
Madisa on the Sowetan Live website entitled, ‘EFF MP accuses Malema,
Shivambu of using party millions to fund their lifestyles’.
[7] These publications, the repetition of the statements in the Facebook post
during an interview with the respondent on eNCA on 5 April 2019 and a radio
interview with Power FM the next day, led the appellant’s attorneys to write to the
respondent on 6 April 2019. The letter recorded that the following statements were
defamatory of the appellant. Monies received ‘are centralised in the EFF under the
control, abuse and dictatorship of Julius Malema and Floyd Shivambu’. They had
used training providers who inflated costs to the EFF by 250% and in the absence
of financial reports from them, the respondent would be forced to conclude that
they ‘[ran] away with 150% of the inflated cost’. In a meeting of the CCT, the
appellant had ‘admitted to EFF taking VBS money to finance the revolution’.
[8] VBS Mutual Bank, which held the savings of many disadvantaged people
and local municipalities, collapsed in 2018 with more than R2 billion in debt. The
aged of Limpopo lost their lifetime savings. Investigations revealed that much of
this money had been siphoned into private bank accounts and some spent on
property or luxury cars. The Head of the National Prosecuting Authority has
described the VBS scandal as ‘probably the biggest bank robbery in this country’.2
Officials of VBS have been arrested on charges of corruption, racketeering, money
laundering, fraud and theft.3
[9] The letter of 6 April 2019 went on to state that the alleged defamatory
statements were deliberately intended to impugn the appellant’s integrity and good
name by suggesting, alternatively implying, that he was corrupt; was stealing
money; conducted himself in an unlawful and undemocratic manner; and was
engaged in various unlawful activities, including irregularities in respect of VBS
bank. In the letter it was also alleged that during the radio interview, the respondent
had conceded that he had no evidence of these allegations. The letter ended with a
demand that the respondent retract the offending statements in a public apology,
2 Jason Burke ‘South African police make arrests over notorious bank corruption scandal’ 17 June 2020 The
Guardian, available at https://www.theguardian.com/world/2020/jun/17/south-african-police-make-arrests-vbs-
bank-scandal-notorious-corruption.
3 NPA and Hawks media briefing on the VBS investigation, 17 June 2020 Times Live, available at
https://www.timeslive.co.za/news/south-africa/2020-06-17-watch-live-npa-and-hawks-media-briefing-on-vbs-
investigation/.
by way of a press statement to all the media houses which had interviewed him
concerning the Facebook post.
[10] In reply to the letter of 6 April 2019, the respondent said that he would not
retract the offending statements and that he had referred to the appellant and Mr
Shivambu in the Facebook post because they were the most senior members of the
EFF. He went on to say that his statement concerning the absence of evidence ‘was
a reference to hardcopy evidence only’. He also requested the EFF to provide
audited statements, invoices showing payments to service providers, and minutes
showing reports concerning the EFF’s finances and documents proving financial
accountability. He challenged the appellant to prove that he had never used EFF
funds for his personal benefit or abused his power. The respondent made it clear
that he had never said that the appellant had stolen money, and that the latter had
admitted that the ‘EFF did receive money from the VBS’ in a meeting of the CCT.
[11] As already stated, the appellant launched an application in the high court for
an order declaring that the statements contained in the Facebook post were
defamatory and unlawful. He sought consequential relief in the form of an order:
(a) directing the respondent to remove the Facebook post from all his social media
accounts and his Facebook account in particular; (b) that the respondent publish an
unconditional retraction and apology on all his social media accounts; (c)
interdicting the respondent from publishing any further statement that says or
implies that the appellant engages in conduct of the kind described in the Facebook
post; and (d) that the respondent pay damages in the sum of R1 million.
[12] In the founding affidavit the appellant alleged that the respondent was
‘motivated by political self-interest’; that he was ‘deliberately engaging in acts of
political sabotage’ aimed at inflicting maximum damage on the appellant and the
EFF; and that the respondent had ‘admitted that he has no evidence to support any
of the claims he has made’. The specific statements alleged in the founding
affidavit to be defamatory of the appellant and the EFF, were these:
‘5.1
. . . All these [monies] are centralised in the EFF under the control, abuse and dictatorship
of Julius Malema and Floyd Shivambu. [The] pair have made it clear, this is their organization
and all of you have come to join us not the other way round.
5.2
. . . the pair would use Training Providers who would inflate costs by 250% so that they
can run away with 150% of the inflated cost, in the absence of financial reports from the pair,
we would be forced to conclude as such.
5.3
The political overview of Julius Malema in the most recent CCT meeting admitted to
EFF taking VBS money to finance the revolution. In fact he said, “sometimes we are forced to
kiss dogs or [the] devil to get funding”. The VBS funding was done under the full knowledge of
the leadership.’
These will be referred to as the offending statements.
[13] The offending statements, the appellant said, were made with the intention,
alternatively, had the effect of being defamatory and were understood to mean or
imply that he:
‘66.1 is corrupt;
66.2
is stealing money;
66.3
conducts himself in an unlawful and undemocratic manner;
66.4
is of base moral character.’
[14] In his answering affidavit the respondent denied that he had failed to
‘dislodge [the appellant] from the party leadership’. He said that there had been no
elective conference or assembly at which the leadership of the EFF could be
challenged, and that he had no ambition of becoming the leader of the EFF. He had
already occupied a leadership position, namely, National Chairperson of the NDC,
which, in his words, ‘put me on [a] collision course with the [appellant] and other
officials of the organization in the efforts to assert the independence and the
integrity of the National Disciplinary Committee’.
[15] As to his alleged disgruntlement, the respondent said that he was an elected
leader of the EFF and was not at risk of losing that position at least until the
National People’s Assembly, which would have been convened in December 2019.
In any event, his name had never been included in the list of candidates for
Parliament in 2014, as he had been working in the South African Local
Government Association.
[16] The respondent’s detailed answers to the offending statements quoted in
paragraph 12 above, are dealt with below. For now, it suffices to say that the
Facebook post was not a random publication, but as the respondent put it, based on
‘privileged information because [he] was sitting in the highest structure of the
EFF’. The reason for publishing the Facebook post is summed up in the following
statement in the answering affidavit:
‘I have never had any personal business with the applicant, Mr Julius Malema and have no reason
to tarnish his personal image, but have every right to expose his leadership in the interest of the
public as the public figure and public representative and most importantly as the leader of the
political party that has mobilised the public on an anti-corruption ticket.’
The high court’s judgment
[17] The high court (Mullins AJ) dismissed the application and made no costs
order. The document quoted in the judgment as being the Facebook post, is in fact
not the Facebook post, but the respondent’s letter of resignation from the EFF.
Nothing however turns on this as the court’s decision is based on the former. Its
main conclusions were these. The appellant had established the first two
requirements for the grant of a final interdict, namely a clear right to his good name
and an injury: his good name had been besmirched by the Facebook post. The third
requirement – the absence of any other satisfactory remedy – was however not met.
In this regard the judge said:
‘As far as I have been able to ascertain, bringing a defamation claim by way of application for a
final interdict and damages is a new phenomenon in our law (as opposed to an interim interdict
pending an action for damages). In my view, it is inappropriate and undesirable. The reason I say
this is the following: the person making the defamatory statement may have a very good reason
for doing so but may not have the hard evidence to hand, which evidence may be in the
possession of the person who claims to have been defamed and/or third parties; in an action a
defendant will have the benefit of the pleadings in which the issues are narrowly defined, of the
discovery process, of requesting particulars for trial, of a pre-trial conference and the
subpoenaing of witnesses and documents duces tecum; he/she will be entitled to cross-examine
the plaintiff and the witnesses called on behalf of the plaintiff in order to test their version and to
give evidence and call his/her own witnesses; evidence of an expert nature might be necessary.
An application deprives a respondent of all these extremely valuable and necessary litigation
tools.’
[18] This, the judge said, was precisely what had happened in this case. The
respondent had been a member of the CCT and had good grounds to believe that
the EFF’s financial and other records in its possession would prove the truth of his
statements, were he to be given access to those documents. He also said that there
were witnesses who would support his version. The respondent had laid a factual
foundation in the evidence and had done enough to establish a triable issue in
relation to the defences of truth and public benefit, privileged occasion and fair
comment.
[19] The judge concluded as follows:
‘Taking everything into account, I am of the view that bringing a defamation claim by way of
application for a final interdict and damages was misguided and bad in law. The Applicant has a
perfectly acceptable and appropriate alternative remedy, namely the institution of an action.’
[20] The judge then went on to consider whether there were material disputes of
fact that could not be resolved on the papers. He ruled that there were none and for
that reason declined to exercise a discretion to refer the matter to oral evidence in
terms of rule 6(5)(g) of the Uniform Rules of Court.4 He concluded that the
respondent had not merely relied on his say-so, neither was his defence to the relief
claimed a bare denial of the appellant’s allegations. The respondent had
demonstrated that he would be able to produce evidence to the contrary.5
[21] The judge also considered that the statements were made in the run-up to the
general election of 8 May 2019, and the suppression of speech in an electoral
context had severe negative consequences. Further, the EFF had refuted the
respondent’s allegations in the press. The application for an interdict was dismissed
also on the ground that the Facebook post had been removed on 9 April 2019.
[22] The appropriateness of bringing a defamation claim by way of application
for a final interdict and damages, in contradistinction to an interim interdict
restraining the publication of defamatory material pending an action for damages,
was a reason for granting leave to appeal. In this regard, the high court held that
there were conflicting judgments as to whether the use of application proceedings
in a case such as the present was appropriate, and that future litigants were entitled
to clarity as to the proper procedure.
[23] It is necessary to deal with this issue before considering the appellant’s
contentions. The remedy of an interdict to restrain the imminent or continued
4 Rule 6(5)(g) provides:
‘Where an application cannot properly be decided on affidavit the court may dismiss the application or make such
order as it deems fit with a view to ensuring a just and expeditious decision. In particular, but without affecting the
generality of the aforegoing, it may direct that oral evidence be heard on specified issues with a view to resolving
any dispute of fact and to that end may order any deponent to appear personally or grant leave for such deponent or
any other person to be subpoenaed to appear and be examined and cross-examined as a witness or it may refer the
matter to trial with appropriate directions as to pleadings or definition of issues, or otherwise.’
5 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163.
publication of a defamatory statement is not new.6 In 1931 in Heilbron v Blignaut,7
an application for an interdict to stop publication of a newspaper article allegedly
defaming a boxing referee as being dishonest and unfair, Greenberg J said:
‘If an injury which [would] give rise to [a] claim in law is apprehended, then I think it is clear
law that the person against whom the injury is about to be committed is not compelled to wait
for the damage and sue afterwards for compensation, but can move the Court to prevent any
damage being done to him. As he approaches the Court on motion, his facts must be clear, and
if there is a dispute as to whether what is about to be done is actionable, it cannot be decided on
motion. The result is that if the injury which is sought to be restrained is said to be a defamation,
then he is not entitled to the intervention of the Court by way of interdict, unless it is clear that
the defendant has no defence. Thus if the defendant sets up that he can prove truth and public . .
. benefit, the Court is not entitled to disregard the statement on oath to that effect, because, if his
statement were true, it would be a defence, and the basis of the claim for an interdict is that an
actionable wrong, i.e. conduct for which there is no defence in law, is about to be committed.’
[24] This dictum was cited with approval in Hix Networking Technologies,8 in
which it was held that the Heilbron case was not based on English law but on
accepted principles in our law. As to how the phrase ‘set up a defence’ in Greenberg
J’s judgment was to be interpreted, Plewman JA said:
‘As the detailed analysis . . . by Coetzee J shows, Greenberg J had not held (as was suggested
by counsel in the Buthelezi case) that the mere ipse dixit of a deponent alleging a defence of
justification should be accepted. It is, I think, implicit in this discussion and I think also in both
judgments read as a whole, that no departure from the established rules was being proposed or
indeed applied.’9
6 See 14 Lawsa 3 ed at 164 para 136 and the authorities there cited.
7 Heilbron v Blignaut 1931 WLD 167 at 168-169.
8 Hix Networking Technologies CC v System Publishers (Pty) Ltd and Another 1997 (1) SA 391 (A).
9 Hix Networking Technologies fn 8 at 399G. The Buthelezi case referred to is Buthelezi v Poorter and Others 1974
(4) SA 831 (W).
[25] Recently, the above analysis was explained by Wallis JA in Herbal Zone v
Infitech Technologies10 in this way:
‘The clarification was to point out that Greenberg J did not hold that the mere ipse dixit of a
respondent would suffice to prevent a court from granting an interdict. What is required is that a
sustainable foundation be laid by way of evidence that a defence such as truth and public interest
or fair comment is available to be pursued by the respondent. It is not sufficient simply to state
that at a trial the respondent will prove that the statements were true and made in the public
interest, or some other defence to a claim for defamation, without providing a factual basis
therefor.’
[26] The high court was thus incorrect to hold that a claim for defamation by way
of application for an interdict (as opposed to an action in which a defendant has the
benefit of the issues defined in the pleadings, discovery, further particulars and
cross-examination), is a new phenomenon in our law, and is inappropriate and
undesirable. Most recently, in EFF v Manuel,11 this Court affirmed the
appropriateness of the remedy of an interdict as follows:
‘There is, of course, no problem with persons seeking an interdict, interim or final, against the
publication of defamatory statements proceeding by way of motion proceedings, on an urgent
basis, if necessary. If they satisfy the threshold requirements for that kind of order, they would
obtain instant, though not necessarily complete, relief. There is precedent for this in the well-
known case of Buthelezi v Poorter, where an interdict was granted urgently in relation to an
egregious piece of character assassination. Notably, however, the question of damages was dealt
with separately.’12
[27] Damages for defamation however, may not be claimed in motion
proceedings. It appears that the appellant followed the approach in EFF v Manuel,
in which the applicant, Mr Trevor Manuel, a former MP and Minister of Finance
10 Herbal Zone (Pty) Ltd v Infitech Technologies (Pty) Ltd and Others [2017] ZASCA 8; [2017] 2 All SA 347 (SCA)
para 38.
11 EFF and Others v Manuel [2020] ZASCA 172; [2021] 1 All SA 623 (SCA); 2021 (3) SA 425 (SCA).
12 EFF v Manuel fn 11 para 111, footnotes omitted.
of this country, obtained a declaratory order in the High Court, Johannesburg, that
certain allegations published by the EFF concerning him were defamatory, together
with an order that the EFF pay damages in the sum of R500 000. The High Court
refused leave to appeal.
[28] This Court referred the EFF’s application for leave to appeal to it for oral
argument. At that hearing it dealt with all the issues on their merits, in the context
of assessing the prospects of success. It refused leave against the order declaring
that the allegations concerning Mr Manuel were defamatory and false, and that
their publication was unlawful. However, it granted leave and simultaneously
upheld with costs, an appeal against the orders directing the respondents to publish
a retraction and apology, and to pay the applicant damages in an amount of
R500 000. These issues were remitted for evidence in the High Court.
[29] This Court held that motion proceedings ‘are particularly unsuited to the
prosecution of claims for unliquidated damages, whether in relation to defamation
or otherwise’.13 Its reasons, tersely stated, were these:
‘In contested cases, following on the close of pleadings, evidence is led in an attempt to justify
the amount claimed. The defendant is entitled to challenge that evidence and present
countervailing evidence. How else would a court be able to determine an appropriate award?
Relevant evidence has to be presented and fully explored. The factors to be considered by a trial
court in determining an appropriate award include: the character and status of the plaintiff; the
extent of the defamatory publication; its envisaged and actual impact on the plaintiff; and the
subsequent conduct of the person who made the defamatory statement, including his or her
efforts, if any, to make amends after the publication. This list is not exhaustive.’14
13 EFF v Manuel fn 11 para 105. In fn 83 of the judgment this Court noted the approach of the high court quoted in
paragraph 17 above.
14 EFF v Manuel fn 11 para 96, footnotes omitted.
[30] The appellant did not persist in his claim for damages of R1 million and no
more need be said about it. The appellant also abandoned his claims for a retraction
and apology and an interdict against further publication.
Did the appellant make out a case for an interdict?
[31] The high court found that the appellant had demonstrated a clear right to his
good name and reputation and that the Facebook post was defamatory, ie it was
likely to injure the appellant’s reputation by lowering him in the estimation of right-
thinking members of society.15 That being so, it is presumed that publication of the
Facebook post was both wrongful and intentional.16 The onus was thus upon the
respondent to raise and establish a defence to rebut either wrongfulness or
intention.17
[32] As stated earlier, the respondent opposed the application in person in the
high court. This is how he described his defence:
‘My prayer to the honourable High Court is that:
a.
The court must declare that there is no ground or basis [for a] defamation order.
b.
The published statement [should] not be declared defamatory as the respondent has made
the remarks in the public interest and from [a] privileged position.’
[33] The publication of a defamatory statement which is true, provided that the
publication is in the public interest, is not wrongful.18 A defendant relying on this
defence must plead and prove that the defamatory statement is substantially true
and was published in the public interest.19
15 Lawsa fn 6 at 134 para 111. Le Roux and Others v Dey (Freedom of Expression Institute and Restorative Justice
Centre as amici curiae) [2011] ZACC 4; 2011 (3) SA 274 (CC) para 89.
16 Lawsa ibid.
17 Borgin v De Villiers [1980] 2 All SA 261 (A); 1980 (3) SA 556 (A) at 571F; National Media Ltd v Bogoshi [1998]
4 All SA 347 (SCA) at 364; Khumalo v Holomisa 2002 (5) SA 401 (CC) para 18.
18 Lawsa fn 6 at 151 para 124; Modiri v Minister of Safety and Security [2011] ZASCA 153; 2011 (6) SA 370;
[2012] 1 All SA 154 (SCA) para 20.
19 Lawsa fn 18 para 124.
[34] Thus, the central question that the high court had to decide was whether the
respondent had established a sustainable foundation by way of evidence that the
defence of truth and public interest (or fair comment or the absence of animus
iniuriandi), was available to be pursued.20 Put simply, did the respondent produce
evidence sufficient to establish a defence of truth and public interest, or that he
acted without animus injuriandi?
[35] Counsel for the appellant submitted that the high court had ignored the prima
facie burden that an applicant bears in defamation cases and ‘imposed a false
burden on the appellant to pre-emptively and conclusively disprove allegations that
needed to be proved by the respondent’. The appellant, so it was contended, had
presented ‘strong and indisputable facts’ whilst the respondent failed to establish a
sufficient factual basis to overcome a defamation interdict. Simply stated, the
respondent, like the appellants in EFF v Manuel, had not put up any facts to justify
his defamatory statements. It was further contended that the high court had
misdirected itself by having regard to the respondent’s motives in raising the issues
contained in the Facebook post; and in grounding the respondent’s opposition to
the application in freedom of speech.
[36] Two preliminary points are required to be made at the outset. The first is that
inasmuch as the appellant sought an interdict declaring that the statements
contained in the Facebook post were defamatory, a reasonable or right-thinking
person would read the Facebook post in context and as a whole. In Demmers v
Wyllie,21 Muller JA stated the principle thus:
‘From the above it is clear, I think, that the words “reasonable person” or “reasonable man”
referred to in the decisions cited is a person who gives a reasonable meaning to the words used
20 Herbal Zone (Pty) Ltd and Others v Infitech Technologies (Pty) Ltd and Others fn 10 para 38; Mohamed v Jassiem
1996 (1) SA 673 (A) at 709H-I; Le Roux v Dey fn 15 para 85.
21 Demmers v Wyllie [1980] 1 All SA 391 (A), 1980 (1) SA 835 (A) at 842H.
within the context of the document as a whole and excludes a person who is prepared to give a
meaning to those words which cannot reasonably be attributed thereto.’
[37] The second is that on its facts, this case is entirely distinguishable from EFF
v Manuel. There, the EFF published a statement alleging that the process of
selecting the Commissioner of the South African Revenue Service (the
Commissioner), chaired by Mr Manuel was ‘patently nepotistic, and corrupt’. Mr
Manuel alleged that the sting of the statement was that he had conducted a corrupt,
unlawful and clandestine process in the selection of the Commissioner, who was
said to be a relative and close associate. These statements, he said, cast aspersions
on his character, were false and could not be justified. The EFF’s counsel accepted
that the statement was defamatory.22
[38] The EFF’s defence was that the statement that Mr Manuel was related to the
Commissioner, which had been disclosed to it by a confidential source, was
substantially true, was reasonable in the circumstances and was also fair comment.
The defence of truth and public interest failed for the simple reason that the
foundation for the defamatory statement – that Mr Manuel was related to the
Commissioner and that they were business associates and companions – was
untrue. The EFF had made no attempt to refute Mr Manuel’s statements to the
contrary.23 The defence of fair comment that the appointment process was
nepotistic and corrupt failed for the same reason: it was based on the allegation that
the Commissioner was Mr Manuel’s relative, business associate and companion.24
[39] By contrast, in this case the respondent laid a supportable foundation that
the defence of truth and public interest was available to be pursued. To begin with,
22 EFF v Manuel fn 11 para 35.
23 EFF v Manuel fn 11 para 35.
24 EFF v Manuel fn 11 para 39.
the statements in the Facebook post did not emanate from an unidentified source.
When the post was published the respondent was a member of the EFF and served
on the CCT – its highest decision-making body. As he put it:
‘The Court will note that I have privileged information because I was sitting in the highest
structure of the EFF and the information could not be manufactured but could be received as
communicated by the applicant himself.’
[40] The statement that the EFF had received VBS funding with the full
knowledge of its leadership illustrates the point. It is clear from the answering
papers that the appellant had disclosed receipt of VBS funding at a meeting of the
CCT. That disclosure and the respondent’s reaction to it was described in the
answering affidavit as follows:
‘Furthermore, the irritation [of the appellant at the Facebook post] was further informed by my
publication of the applicant’s admission to have received the VBS money under the guise of
financing of the revolution since there was no capital nor government that could finance the
revolution and therefore called for collective responsibility, a request that I refused to give into.
(RA 6 Cmsr. Xalisa affidavit).
I further commented that, whilst we appreciate that the CIC [Commander-in-Chief] is taking us
into confidence, it would have been better that we could have been taken into confidence prior
[to] the acquisition of the funds not after, the people of Limpopo had known that the ANC and
its alliance partners as corrupt and have seen the EFF as the bearer [of] hope, but for the EFF to
be mentioned in [a] corruption scandal involving the VBS which had carried the savings of poor
people of Limpopo is unacceptable. As a result of that, our Cardinal pillar number 7 is now on
trial in terms of the public opinion. (Annexure RA 16, applicant admitted in an interview with
Scopa of Daily Maverick of having received donations from VBS & RA 6 Cmsr. Xalisa
affidavit).
I further called for the EFF to consider two options, one to expunge Cardinal Pillar number 7
since we have failed to pass the moral test we have set for the society, or two, to close shop as
we will lose relevance on the stance of corruption in particular to the people of Limpopo.’
[41] The appellant’s counsel sought to make much of the fact that the appellant
had informed journalists that neither he nor the EFF had benefited directly or
indirectly from illicit VBS money. But that misses the point and ignores the
evidence. First, could the respondent’s version quoted above have been rejected on
the papers as being patently implausible, far-fetched or clearly untenable?25 I think
not. It shows that (a) the appellant had disclosed his receipt of VBS funds at a
meeting of the CCT; (b) when the disclosure was made, and before publication of
the Facebook post, it was already known that VBS had corruptly misappropriated
the funds of poor people in Limpopo; (c) the money was received ‘under the guise
of financing the revolution’; (d) the respondent refused to accept responsibility for
that decision and had taken the view that the appellant should not have disclosed
receipt of VBS funds only after the fact; and (e) the EFF had failed the moral test
that it had set for itself and society.
[42] Second, the respondent’s version was confirmed by Mr Zolile Rodger
Xalisa, a member of the EFF and MP who also served on the CCT and the War
Council (the body responsible for the execution of decisions of the CCT). In a
handwritten affidavit he said:
‘On the 05-06 February 2019 the CCT convened its ordinary meeting of the term. The President
and the CIC of the EFF during the political overview made an admission that the EFF had
received donations from VBS which is the Subject of Corruption. He said that no Capitalist or
government is willing to support a revolutionary movement like EFF so VBS saw an opportunity
that the EFF could be in government, it could assist to ensure that it thrives better.
Then . . . the President confirmed that they could not receive the donation with [the] EFF account
of theirs (him and Floyd Shivambu) but had to devise other means, he said sometimes you must
kiss dogs or [the] devil to get money. After this . . . CCT members were invited to speak on the
25 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C. The rule was
crisply stated by Schutz JA in Simelane NO and Others v Seven-Eleven Corporation SA (Pty) Ltd and Another
[2002] ZASCA 141; [2001-2002] CPLR 13; [2003] 1 All SA 82 (SCA) para 10, as follows: ‘[T]he decision must
be based on those facts averred by the applicant which are admitted by the respondent, together with the facts averred
by the respondent.’
impact. All CCT members were present and some are MPCs, MPs and councillors could also
attest [and were] given [an] opportunity.’
[43] Mr Xalisa’s affidavit makes three things clear. First, the appellant, when he
received funding from VBS, knew that VBS was ‘the subject of corruption’.
Otherwise viewed, there would have been no need ‘to devise other means’ to get
the money, when according to Mr Xalisa the EFF had two bank accounts: one at
First National Bank and the other at Standard Bank. Second, this is underscored by
the appellant’s utterance, which is not commonplace: ‘sometimes you must kiss
dogs or the devil to get money’. Third, the appellant apparently had no difficultly
in accepting funds that were the subject of corruption as an opportunity for the EFF
to be in government.
[44] Therefore, the conclusion in the minority judgment that the appellant’s
admission of the receipt of VBS funds was not made at a time when VBS was the
subject of scandal or known to be fleecing its depositors, in my respectful opinion,
is at odds with the evidence – a fortiori when the appellant denied that the meeting
took place at all. On this issue he said that the respondent’s version was ‘based on
hearsay evidence’ and lacked specificity. Mr Xalisa’s evidence (an affidavit sworn
to at a police station) was brushed aside on the basis that it ‘purports to be an
affidavit’; and that ‘in the absence of a confirmatory affidavit by the deponent’,
inexplicably, fell to be struck out. All of this, of course, was no answer to the facts
set up by the respondent that formed the foundation of a defence of truth and public
interest.
[45] What is more, statements that the EFF had in fact received VBS funding and
that the appellant had personally benefited from those funds, were already in the
public domain. It will be recalled that the Facebook post was published on 5 April
2019. The respondent annexed an email to the answering affidavit, which the
appellant had sent to the media on 19 November 2018 in response to questions by
Scorpio, Daily Maverick. It reads inter alia:
‘Questions to Mr Malema:
6. During the press conference of 16 October 2018, I asked very specifically if you or the EFF
have ever benefited directly or indirectly and in any shape or form from the illicit VBS money.
You denied the allegation. I have now proved that you lied. Your comment?
I don’t lie Sesi, I stand by what I said in the press conference.
7. During the press conference of 16 October 2018 I asked whether you or the EFF ever received
money from Sgameka or Mahuna.26 At first you denied the allegation, and later backtracked by
stating that you may have received “donations”. I have now proved that you lied. Your comment?
I stand by what I said in the press conference, I don’t lie Sesi.’
[46] Concerning this exchange, two observations are necessary. First, and
tellingly, the appellant has not sought declaratory relief nor damages against the
print or electronic media for any injury to his good name or reputation, arising from
his or the EFF’s receipt of funds from VBS bank. And this, when on 21 November
2018, the Daily Maverick published an article on its Scorpio website (also annexed
to the answering affidavit) entitled, ‘VBS bank heist: EFF’s family ties and
moneyed connections’, after receiving the appellant’s email of 19 November 2018.
It reads in relevant part:
‘EFF President Julius Malema and his “corruption busting” political party directly benefited from
the VBS Mutual bank heist, a Scorpio investigation has found. Scorpio traced the flow of illicit
VBS funds, earmarked for a property in the affluent Johannesburg suburb of Sandown, through
three fronts that also dished out money to the EFF. Julius Malema stayed for years at the property
which is now registered as an EFF asset. Over R1.8 million of the same illicit VBS funds were
used to prop up the EFF, Scorpio has found. Stripped to its essence, a company officially owned
by Floyd Shivambu’s brother made questionable payments to a company owned by Malema’s
26 It has been reported that Mahuna Investments received significant funds from VBS (some R6 million) that the
appellant allegedly used as a slush fund to pay personal expenses such as designer clothing and school expenses to
maintain an affluent lifestyle. See Pauli van Wyk ‘VBS Theft, Money Laundering & Life’s Little Luxuries: Julius
Malema’s time of spending dangerously’ 8 September 2019 Daily Maverick Scorpio, available at
https://www.dailymaverick.co.za/article/2019-09-08-vbs-theft-money-laundering-lifes-little-luxuries-julius
malemas-time-of-spending-dangerously/.
cousin. Both these companies operated like slush funds which dispersed money to where it was
needed. This is a story of how the constituency Malema claims to fight for – the poor, the young
and vulnerable – was robbed to feed the EFF leader’s private and political interests.’
[47] The appellant did not deny the statements in this article in reply. He merely
responded that the article ‘falls to be struck out on account of the fact that it is
irrelevant to these proceedings’. It was highly relevant – the appellant sought an
interdict on the basis that his admission to taking VBS money in a meeting of the
CCT, was defamatory.
[48] Second, the mere fact that the respondent had access to the email of 19
November 2018, reinforces his claim that he had access to ‘privileged information’
because he served on the CCT. There is nothing in the record to gainsay this. In
this regard, I respectfully disagree with the statement in the minority judgment that
the email of 19 November 2018 was a public document which the respondent
attached to his affidavit. That was not the appellant’s evidence. On the contrary,
his statement: ‘It is curious that the respondent has come into possession of this e-
mail when he is not a recipient thereof’, shows that the appellant was of the view
that the respondent was not entitled to be in possession of it.
[49] That brings me to the statements in the Facebook post that the ‘pair have
made it clear, this is their organisation and all of you have come to join us not the
other way round’, and that costs had been inflated by the EFF’s leadership. When
these statements are considered in the context of the Facebook post as a whole,
they are but examples of a recurring theme: a lack of accountability and abuse of
funds on the part of the leadership of the EFF.
[50] The immediate context of these statements, as is evidenced by the Facebook
post quoted in paragraph 5 above, can be summarised as follows. The EFF received
levies from 61 MPs of not less than R6800 each and 852 councillors contributed at
least R2000 per month to the EFF. It had 1 million members who each paid R10.
The EFF received not less than R25 million per quarter from the National
Assembly and provincial legislatures. All these funds were centralised in the EFF
‘under the control, abuse and dictatorship’ of the appellant and Mr Shivambu, who
had made it clear that the EFF was their organisation which members had joined,
not the other way around. The Treasurer General of the EFF, the respondent said,
‘only administers petty cash’. Since 2014 no financial report has been tabled before
the CCT. When the respondent and others questioned this, they were chastised,
treated with disdain and threatened with removal from Parliament. As a result, in
the respondent’s words, they had to ‘think with [their] stomachs’, rather than
holding the executive of the EFF accountable.
[51] What then follows is the respondent’s statement about the inflation of costs.
The context speaks for itself:
‘The Parliament money of the EFF cannot be cashed in terms of treasury rules, but the pair would
use Training Providers who would inflate costs [by] 250% so that they can run away with 150%
of the inflated cost, in the absence of financial reports from the pair, we would be forced to
conclude as such.27 These service providers are in the form of alcohol party retailers, lawyers,
security (Defenders of Revolution and Body and logistics service providers).28 No report
whatsoever.’
[52] The answering affidavit states that the appellant refused to disclose the
EFF’s financial state of health to its leadership, or to be held accountable for the
administration of EEF funds. The respondent said:
‘The applicant has refused to disclose EFF’s financial state of health from the 1st April 2014 to
31 March 2019. . . . The applicant is not honest when he says, he is ready to open the financial
27 Emphasis added.
28 This is an unknown entity to the Court. Presumably it is a reference to the private security services hired by the
EFF.
books of the EFF to journalists when he has not been able to open the EFF financial books to
EFF national leadership as provided by the constitution since 2014 to 2019/03/30.
As the Senior leader of the Economic Freedom Fighters serving in the national leadership and
Member of Parliament, I have the privileged information in terms of the sources of funds of the
Economic Freedom Fighters and [am] further alert [to] the constitutional obligation at least in
the organisation in terms of democratic use of the finances of the organisation. It is my
submission that the EFF funds are used in terms of the wisdom of the applicant and those closer
to him to the exclusion of the collective of the national leadership as dictated by the Constitution.
The provisions of the constitution are not complied with.’
[53] The respondent cited three instances in March 2017, May 2017 and
November 2018 respectively, where officials of the EFF had appeared before its
NDC on charges of lack of financial accountability. The respondent presided over
those hearings and attached the findings of the NDC. The sanctions imposed were
expulsion from the EFF and suspension of membership of the organisation for a
period of at least three years. He went on to say:
‘I am raising the above 3 incidents . . . to demonstrate the extent to which I am privileged to
understand and know the information and the extent to which the EFF as the organisation is
intolerant and strict [with regard] to . . . any conduct that is inconsistent with its policies in
handling of the finances. . . . [T]he lack of financial accountability from the applicant and other
officials should be deemed serious as it was deemed to the Northern Cape Provincial leaders that
were expelled.’
[54] Then, under the heading ‘PUBLIC INTEREST’ in the answering affidavit,
the respondent said this:
‘The applicant is not an ordinary citizen but a President and the Commander-in-Chief of the third
biggest political party in South Africa, a Member of Parliament and the leader of the opposition
and a champion of anti-corruption. The applicant cannot demand accountability from the former
State President of South Africa on the public funds mismanagement resulting in failure to be
held accountable yet the applicant refuses to be held accountable for the organizational funds
coming from the state. . . .
. . . [P]ublic representatives that are presiding over organizations that receive state funds have an
obligation to remain accountable to the organisation they lead and the state equally. The public
has the right to know that the applicant as the public representative does not account to the
organization about the use of organizational funds and therefore is in violation of the EFF
Constitution.’
[55] Again, the respondent’s statements about the lack of accountability and
abuse of funds by the leadership of the EFF were confirmed by Mr Xalisa. He said:
‘I further wish to state under oath that the EFF is receiving money from Parliament and 9
legislatures, Party levies from 852 councillors, R6800 from 61 MPs and MPL’s including R10
membership for an EFF member but has never given a financial report in the CCT since we were
elected [in] 2014. . . The money that is used is not disbursed by the CCT but by President Julius
and the Deputy President as Senior Authorities of the organisation.’
[56] The facts in the Facebook post referred to in paragraphs 49 to 51 and 54
above, and those relating to the appellant’s admission of his receipt of VBS funds
when it was the subject of corruption, would never have been known to outsiders.
Therefore, the respondent’s position as an insider serving on the CCT, and the
evidence he presented to demonstrate that the defence of truth and public interest
was available to him, cannot be over-emphasised.
[57] What remains is the allegation that in the absence of financial reports, the
respondent would be forced to conclude that the leaders of the EFF had inflated the
costs of training providers so that they could pocket the difference. When this
statement is read in the context of the Facebook post as a whole, it means no more
than this. In keeping with the ‘control, abuse and dictatorship’, and lack of
accountability regarding the funds of the EFF by its leaders, and in the absence of
financial reports from them, the inference is compelling that the costs of service
providers, such as alcohol retailers, lawyers, security and logistics service
providers, were inflated. Indeed, the Facebook post says so.
[58] In addition, the respondent put up sufficient facts to show that on this score
also, the defence of truth and public interest, and fair comment,29 could be
mounted. He immediately went on to say:
‘The recent function of the EFF, GALA dinner which was held in Pretoria after the Soshanguve
Rally. The service provider of beverages, both alcohol and soft drinks, told us [in] no uncertain
terms that a bottle of Tanqueray with a normal price of R200.00 was sold for R800.00. On
enquiry we were told that it was [the appellant's] instruction that prices must be inflated, in the
result we could not drink the bottle.’
[59] On the facts, the respondent demonstrated that there was a dinner in Pretoria
after a rally of the EFF; that on enquiry he was told that the price of alcohol had
been inflated; that he was not alone when the enquiry was made; that they could
not buy the alcohol because of its exorbitant price; and that there are persons who
would be able to verify his version. Even if the respondent’s statement as to who
gave the instruction that the price of alcohol should be inflated, that alone was not
defamatory. His evidence of inflated prices at an EFF event was first hand. In these
circumstances, it cannot be said that the respondent’s version is far-fetched, clearly
untenable or palpably implausible that it could be rejected as false merely on the
papers,30 which warranted the grant of a final interdict.
[60] Neither was the respondent’s statement that the price of alcohol had been
inflated, untrue: the very reason why the alcohol was not bought. The appellant’s
reply once more, was a bald denial. He said that the statement lacked specifics and
was hearsay. This, when the facts show that the costs of service providers and the
manner in which EFF funds are expended lie purely within the appellant’s
knowledge. Despite this, he did not produce a single document to show that those
costs had not been inflated, or to rebut the allegation that there were no financial
29 See in this regard EFF v Manuel fn 11 paras 38 and 39.
30 Plascon-Evans fn 25.
reports tabled since 2014. Thus, the respondent’s inability to cite further examples
of the inflation of costs by service providers was potentially at least a product of
the secrecy regarding the accounts of the EEF, which was not rebutted. In the
circumstances, in my opinion, and apart from the facts stated in paragraphs 58 and
59 above, the inference drawn by the respondent that costs had been inflated was a
readily apparent and plausible one.
[61] In addition, the respondent, in his capacity as a senior leader of the EFF and
an MP, had personally raised all the issues which he had published in the Facebook
post, with the appellant. This too, was denied and dismissed with an allegation that
the appellant should have raised the issues within the structures of the EFF. The
appellant’s answer to the respondent’s claim that he had not produced a financial
report in the CCT since 2014, which was confirmed by Mr Xalisa, was also a bald
denial.
[62] As to the hearsay statement by the service provider, it must be borne in mind
that the respondent was an unrepresented litigant in person, who is not legally
qualified. The claim he was called upon to answer was a not a simple legal matter,
as EFF v Manuel and this case illustrates. In his affidavit, the respondent said:
‘2. I am a 39 year old male currently employed and [a] student at Nelson Mandela University, I
will be representing myself in this case.
3. I pray that the Honourable High Court bear with me.’
[63] This, of course, is not to say that the respondent was entitled to any better
treatment than a represented party. That said, the advice to judges when dealing
with litigants in person, referred to most recently by the UK Supreme Court in
Serafin v Malkiewicz,31 is instructive:
31 Serafin v Malkiewicz and others [2020] UKSC 23 para 46. The extract is from the Equal Treatment Bench Book,
issued by the Judicial College which provides training for judges in England and Wales.
‘Litigants in person may be stressed and worried: they are operating in an alien environment in
what is for them effectively a foreign language. They are trying to grasp concepts of law and
procedure about which they may have no knowledge. They may well be experiencing feelings of
fear, ignorance, frustration, anger, bewilderment and disadvantage, especially if appearing
against a represented party.’
[64] The defence of truth and public interest is founded on the recognition of a
right to publish a defamatory statement which is true, where the publication is in
the public interest.32 The facts put up by the respondent demonstrated that the
defence was available to be pursued. These facts comprise not only direct
information placed before the court, but material showing other information not in
his control but potentially available at a trial in due course, such as the EFF’s
financial records and documents relating to receipt of VBS funds. All these factors
must be weighed up in order to decide whether there is a dispute of fact regarding
the existence of a defence. Since Heilbron,33 the position has been that a final
interdict for defamation cannot be granted unless a respondent has no defence.
[65] Further, as this Court has affirmed in Herbal Zone,34 and Tau v Mashaba,35
an interdict is always directed at future conduct. If there is no risk of future re-
publication by the respondent – as the appellant seems to have accepted – an
interdict will not be granted, because there is nothing left to restrain and no risk of
future injury. The high court rightly concluded that the appellant failed to make out
a case for this relief.
[66] In the result the appeal is dismissed.
32 See Lawsa fn 18.
33 Heilbron fn 7.
34 Herbal Zone fn 10 para 36.
35 Tau v Mashaba and Others [2020] ZASCA 26; 2020 (5) SA 135 (SCA) para 26.
__________________
A SCHIPPERS
JUDGE OF APPEAL
Rogers AJA:
[67] I have read the judgment of my colleague Schippers JA (the first judgment),
which sets out the relevant factual background. I shall adopt the abbreviations used
in the first judgment. I agree with what is said in the first judgment (paras 22-30)
about bringing defamation claims on motion. I also agree with the first judgment’s
conclusion (paras 49-56) that the appellant failed on the papers to show that the
respondent acted unlawfully by publishing statements that the appellant’s conduct,
as leader of the EFF, was undemocratic and unlawful (in the sense of behaviour
inconsistent with the EFF’s constitution). Contrary to the first judgment, however,
I consider that the respondent acted unlawfully by publishing statements conveying
that the appellant was corrupt, stole money and was of base moral character.
[68] At the hearing of the appeal, counsel for the appellant said that if the appeal
succeeded he pressed only for the relief claimed in paras 1 and 2 of the notice of
motion. In those paragraphs the appellant prayed for orders declaring that the
statements made by the respondent in the Facebook post published on 5 April 2019
are defamatory and unlawful. Para 3 sought the removal of the offending
statements from the respondent’s social media accounts, but it is common cause
that this has occurred. The appellant does not persist with his claims in para 4 for
a retraction and apology; in para 5 for an interdict against further publication; or in
para 6 for damages.
[69] The relief in paras 1 and 2 is directed at statements contained in the Facebook
post. Although the appellant made allegations about later statements by the
respondent (these include those quoted in para 12 of the first judgment), these were
not the subject of the relief claimed, though they were relevant, at the time the
proceedings were launched, to the question of an apprehension of continuing
unlawful conduct.
[70] In para 66 of the founding affidavit the appellant alleged that the defamatory
statements were understood to mean and imply (a) that he is corrupt; (b) that he is
stealing money; (c) that he conducts himself in an unlawful and undemocratic
manner; and (d) that he is of base moral character. Meaning (d) is a conclusion
from meanings (a) and (b). Since the appellant only sought relief in connection
with statements contained in the Facebook post, I read para 66 to be his case as to
the defamatory meaning of statements contained in the Facebook post. In this
respect, I differ from the first judgment, which (in para 12) treats para 66 of the
founding affidavit as referring to statements made by the respondent in a
subsequent media interview, though perhaps not much turns on the distinction.
[71] The respondent did not deny that the Facebook post had the meanings
alleged in para 66. Although the appellant should, in his founding affidavit, have
identified the precise passages in the Facebook post which conveyed these
meanings, no point was taken about inadequate pleading, either by the respondent
or by the high court or in this Court. The Facebook post must be read as a whole.
So read, the passages which would have been understood by the ordinary reader as
meaning that the appellant is corrupt and steals money are readily identifiable:
(a) The post identified ‘the pair’ as the appellant and Mr Floyd Shivambu.
(b) The post’s heading was: ‘EFF remains a financial fishing net for the pair . . .’.
(c) In the post, the respondent, after stating that the ANC leadership was guilty of
corruption, said that no one should have ‘a license to climb on the band wagon in
the name of left working class politics to commit corruption and hide behind the
slogans of Economic Freedom for dejected African masses of our people’.
(d) After identifying various sources of EFF funding, the respondent alleged that
‘[a]ll these moneys are centralized in the EFF under the control, abuse and
dictatorship of Julius Malema and Floyd Shivambu’.
(e) Among the abuses alleged by the respondent was the following: ‘The
parliament money of the EFF cannot be cashed in terms of treasury rules, but the
pair would use Training Providers who would inflate costs 250% so that they can
run away with 150% of the inflated cost, in the absence of financial reports from
the pair, we would be forced to conclude as such’. Such service providers were
said to include ‘alcohol party retailers, lawyers [and] security’.
(f) The respondent referred to a letter written by Dr Mbuyiseni Ndlozi to party
officials ‘complaining about the lifestyle of Julius Malema and how he abuse the
EFF funds’.
(g) With reference to the ‘VBS saga’, the respondent claimed that the appellant
had, at the most recent meeting of the party’s CCT, ‘admitted to EFF taking VBS
money to finance the revolution’. The respondent stated that the party had ‘failed
to pass the test of morality we have set for the society’: ‘If we fail to pass the test
of corruption, how are you going to be trusted to nationalize mines and put under
your regime state custodianship because instead of committing to equitable
redistribution you will squander the funds’. He followed this with another
rhetorical question: ‘How are you going to build state capacity when you are
engaged into activities that weaken the state through engagement into corruption?
How will people trust you with freeing this country from corruption?’.
(h) The respondent stated that he had refused to take collective responsibility on
VBS. He remained poor, despite having been in parliament for four years: ‘The
pair has milked every cent I worked for in parliament . . .’.
(i) The respondent declared that among the reasons for which he left the ANC was
‘the dispensation of patronage and corruption’ and that it was ‘hypocritical to stand
for it in the EFF’.
(j) He concluded his post thus (capitalisation is the original):
‘You commit to an open and corrupt free society and instead you are found at the centre of
corruption. In your analysis kindly JUXTAPOSE THE SUBJECTIVE REALITY OF
EMOTIONALISM AND THE OBJECTIVE REALITY OF A PARTY ENGAGED IN CASH
HEIST OF THE STATE MONEY.
Bring it on, insult me.
Bloody crooks.’
[72] In defamation proceedings, the delictual element of fault is styled animus
iniuriandi. Proof of animus iniuriandi is a necessary element of a claim for
damages. Where, however, an injured party seeks an interdict, he does not need to
prove fault, and this applies also to interdicts alleging defamation and injurious
falsehood.36 It is thus irrelevant whether or not the respondent honestly believed
that he was entitled to publish the defamatory material. The same is true of the
declaratory relief aimed at establishing that the statements in question were
defamatory and that their publication was unlawful.
[73] We are also not dealing, in this case, with an anticipatory interdict in respect
of defamatory material which has not yet been published (cf Herbal Zone v Infitech
Technologies).37 The Facebook post was published, and the question is whether it
was lawfully published.
[74] Since the Facebook post was defamatory of the appellant, the onus rested on
the respondent to neutralise the presumption of unlawfulness by establishing a
defence going to lawfulness. The only one which need detain us is that the
publication was true and in the public interest. Although the onus rested on the
36 See Hawker v Life Offices Association of South Africa and Another 1987 (3) SA 777 (C) at 780I-J; Elida Gibbs
(Pty) Ltd v Colgate Palmolive (Pty) Ltd (1) 1988 (2) SA 350 (W) at 353F-355I; Democratic Alliance v African
National Congress and Another [2015] ZACC 1; 2015 (2) SA 232 (CC) para 52 (minority) and para 159 (majority);
Nativa (Pty) Limited v Austell Laboratories (Pty) Limited [2020] ZASCA 11; 2020 (5) SA 452 (SCA) para 33.
37 Fn 10 above, para 26.
respondent to raise some such defence, this did not alter the operation of the
Plascon-Evans rule.38 If there was a material dispute of fact as to whether or not
the published statements were true and in the public interest, the dispute of fact had
to be resolved in the respondent’s favour, meaning that the appellant would not
have been entitled to the declaratory relief he sought.
[75] In regard to interdicts against the publication of defamatory material, we
were referred to the judgment of Greenberg J in Heilbron v Blignaut.39 The learned
judge said that there were no features peculiar to defamation. The law to be applied
‘is the law which would apply to any apprehended injury’.40 As this Court said in
Hix Networking Technologies,41 Heilbron did not signal any departure from
established rules. Hix Networking Technologies was a case about an interim
interdict. Particularly in the constitutional era, the elements of balance of
convenience and discretion are where a court will factor in the right to freedom of
speech.42 Where one is dealing with a final interdict or declaratory relief, however,
the focus is on whether the applicant has established his right and its unlawful
invasion. Since we were not asked to develop the common law, defamation does
not in this respect stand on a different footing from other allegedly unlawful
conduct, though naturally the Constitution may affect the assessment of elements
of conventional defences, such as, for example, whether publication of particular
allegations was in the public interest.
[76] This Court’s judgment in Herbal Zone cannot be read as altering, in relation
to defamation, the ordinary law of interdicts. This Court emphasised, as had already
been made clear in Hix Networking Technologies, that Heilbron was not authority
38 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634-635.
39 Fn 7 above.
40 At 169.
41 Fn 8 above at 399B-H.
42 Hix Network Technologies at 401D-402F.
for the proposition that in an application for an order to interdict the publication of
defamatory material the respondent’s mere ipse dixit suffices. Wallis JA
explained:43
‘What is required is that a sustainable foundation be laid by way of evidence that a defence such
as truth and public interest or fair comment is available to be pursued by the respondent. It is not
sufficient simply to state that at a trial the respondent will prove that the statements were true
and made in the public interest, or some other defence to a claim for defamation, without
providing a factual basis therefor.’
[77] In Herbal Zone, the appellant had, by admissible evidence, made out the case
that its allegation of counterfeiting against the first respondent was true and in the
public interest. Wallis JA said that it was unnecessary to determine whether the
appellant’s defence would succeed at trial; the appellant had raised ‘a colourable
defence’ and laid a ‘factual basis … for it that cannot be rejected out of hand’.44
By using the expression ‘colourable defence’, Wallis JA was not signifying
anything less than admissible evidence which, if true, made out the defence. His
concluding words (‘that cannot be rejected out of hand’) shows that he had in mind
evidence that passed the Plascon-Evans test. ‘Colourable’ here means ‘appearing
to be correct or justified’.
[78] Since truth and public benefit is obviously a good defence in law, the
question for present purposes is whether the respondent laid a factual foundation
for it by way of evidence. In the context of judicial proceedings, evidence means
admissible evidence. While some leeway could properly be allowed to the
respondent as a litigant in person, departure from accepted principles should not be
allowed to prejudice the appellant. The rules of evidence exist to ensure fair play
and reliable outcomes. While one can readily accept, as stated in the first judgment,
that the respondent was an insider who might have had access to information not
43 Herbal Zone para 38.
44 Para 39.
available to the general public, the question remains whether, by virtue of his inside
position, he had evidence to support the defamatory allegations and, if so, whether
he adduced that evidence in the proceedings before the high court. One cannot
assume that his defamatory statements are true just because he was an insider.
[79] What admissible evidence did the respondent put up in support of his
allegation that the appellant was corrupt, stole money and was of base moral
character? The respondent claimed in his answering affidavit to have been present
at a meeting, held in early February 2019, where the appellant admitted to having
received money from VBS to fund the revolution. In support of this allegation, he
also filed an affidavit from Mr Zolile Xalisa who swore that he was present at the
meeting and that the appellant, in the course of giving a political overview,
admitted that the EFF had received donations from VBS. In context, the
respondent’s allegations convey that the appellant was instrumental in allowing the
EFF to receive donations from VBS in order to finance its political activities. The
respondent stated in his affidavit that on receiving this information he had observed
that while he appreciated the fact that the appellant was taking them into his
confidence, it would have been better for this to have happened before rather than
after receipt of the money.
[80] Although these allegations were denied by the appellant in his replying
affidavit, they cannot, on the Plascon-Evans approach, be rejected out of hand. If
true, they support the respondent’s complaint of the appellant’s lack of financial
accountability and a complaint that the VBS scandal tarnished the EFF by
association. But they fall well short of making the case that the appellant is corrupt
and steals money. Although VBS later became the subject of scandal, the
respondent does not allege that the donations, the receipt of which the appellant
allegedly admitted, were made at a time when VBS was known to be fleecing its
depositors or that the appellant admitted taking the money for himself rather than
for the EFF.
[81] Publicly available information, including court judgments, reveal that in
February 2018 VBS experienced a liquidity crisis as a result of withdrawals of
deposits. This may have been precipitated by a circular which National Treasury
sent to municipalities in August 2017 stating that they were not permitted by the
Local Government: Municipal Finance Management Act 56 of 2003 to place
deposits with mutual banks such as VBS. The liquidity crisis led to VBS being
placed under curatorship on 11 March 2018 at the instance of the South African
Reserve Bank. By late July 2018 its curator had formed the view that certain of
VBS’ officers had, as from 2017, embarked on a massive fraud which continued
until the curatorship order.45 On 5 October 2018 the South African Reserve Bank
published a report by an advocate, Terry Motau SC, with the title ‘The Great Bank
Heist’, which set out Mr Motau’s findings of malfeasance at VBS.46 With no
prospect of being restored to well-being, VBS was placed in final liquidation on
13 November 2018.
[82] I mention this information not because it is admissible evidence in the
present proceedings but to show that one needs to be cautious, in the absence of
clear evidence, about inferring that an admission made by the appellant in February
2019 that the EFF had received donations from VBS meant that the appellant had
taken donations from a bank at a time when he knew it to be engaged in looting. In
fact, since VBS’ curator and liquidator would not have caused the bank to make
donations to the EFF or the appellant, any such donations must have predated 11
45 Cf VBS Mutual Bank (In Liquidation) v Ramavhunga and Others [2018] ZAGPJHC 516 (3 August 2018) para
13. (The reference in the case title to VBS being in liquidation is an error – it was still under curatorship.)
46 Some of the history in this regard is recorded in Msiza v Motau NO and Another [2020] ZAGPPHC 366; 2020
(6) SA 604 (GP).
March 2018, ie at a time, so it seems, that there was no public scandal surrounding
VBS.
[83] In the first judgment it is stated, at para 41, to be beside the point that the
respondent failed to allege or provide evidence that the appellant personally
benefited from the VBS donations. In my respectful view, however, evidence to
this effect, together with evidence that the donations were received at a time when
VBS was known to be engaged in widespread theft from vulnerable depositors,
was crucial if the respondent wished to establish the truth of statements conveying
that the appellant was corrupt or a thief.
[84] In his answering affidavit the respondent claimed that the appellant had
admitted to a Scorpio journalist, Ms Pauli van Wyk, that he (or the EFF) had
received donations from VBS. The document he attached in support of this
allegation (being questions posed to the EFF, the answers furnished by Messrs
Malema and Shivambu and Dr Ndlozi, and the journalist’s subsequent article) do
not contain any such admission. (Scorpio is the investigative arm of Daily
Maverick.) To the extent that my colleague considers that the passage he quotes in
para 44 of the first judgment embodies such an admission, I respectfully disagree,
though not much turns on this because there is other evidence (albeit disputed) that
the appellant made such an admission at the CCT meeting of February 2019. I also
disagree, in passing, with the statement in para 48 of the first judgment that the
respondent’s possession of these email exchanges is evidence of his access to
inside information. Ms van Wyk’s Daily Maverick article contained links to
supporting documentation, one such link being the email exchanges between her
and the three EFF functionaries. It was this linked document, ie a linked document
available to the public at large, which the respondent attached to his affidavit.
[85] The respondent alleged in the answering affidavit that it was publicly known
that the appellant had stayed in a house in Sandown, Johannesburg, for more than
three years as from 2012 and that the house ‘has been the subject of investigation
due to the VBS financial illicit flows to the property’. He said that R430 000 had
allegedly been ‘pumped’ into the property from VBS funds. The EFF had later
bought the property (he attached a deed of transfer dated 21 June 2017). The
acquisition of this property had not been reported to the CCT. The EFF’s
spokesperson, Dr Ndlozi, allegedly told the Scorpio journalist, when asked about
the R430 000, that ‘at least the money was not for the purposes of the [EFF],
implying that the funds were pumped for the tenant of the house owned by EFF
under the leadership of [the appellant]’. In this context, the respondent again
referred to the questions posed by the Scorpio journalist and her article.
[86] The question which the journalist posed was: ‘Is the above-mentioned EFF
leadership – along with its national chair – aware that at least R430 000 in illicit
VBS funds were pumped into the property?’ The recorded response from Dr Ndlozi
was: ‘It is not true, at least not for EFF purposes.’ In her article, the journalist
remarked, ‘It is unsure why Ndlozi felt the need to qualify his answer.’ According
to the journalist’s article, the payments totalling R430 000 were made in the
months after the EFF took transfer. Dr Ndlozi’s answer, assuming it to be
accurately recorded, does not show that the appellant is corrupt or a thief. Not even
the journalist drew that conclusion.
[87] Once again, the appellant in his replying affidavit objected to the
admissibility of the Scorpio article. I do not question the value of investigative
journalism, but articles of this kind cannot simply be put up in court proceedings
as evidence of the truth of what the journalist has written. Apart from the fact that
Ms van Wyk did not make an affidavit (there is no evidence that she was asked),
self-evidently the content of the article is not within her personal knowledge.
Understandably, she does not identify all her sources. The documents to which she
refers would, if they were to constitute evidence in court, have to be produced and
properly proved. Production of the article by the respondent constituted double or
triple hearsay.
[88] The respondent alleged in his answering affidavit that the appellant
appointed service providers without being accountable to the CCT and that these
service providers inflated their costs. He claimed that at a recent gala dinner in
Pretoria following a Soshanguve rally, the service provider of the beverages told
them in no uncertain terms that a bottle of Tanqueray with a normal price of R200
was sold for R800 and that ‘[o]n enquiry we were told that it was your instructions
that prices must be inflated, as the result we could not drink the bottle’. Later in his
affidavit the respondent described his informant as the ‘bar lady’.
[89] The occasion on which the respondent queried the Tanqueray price is the
only incident he identified. No other examples of service providers (whether
training providers, as alleged in the Facebook post, or otherwise) inflating their
charges (whether by 250%, as alleged in the Facebook post, or otherwise) were
given. And in relation to the Tanqueray incident, he does not state under oath that
the bar lady told him that the price was inflated so that the appellant could pocket
the difference. In his replying affidavit the appellant objected to the evidence about
the Tanqueray incident. The respondent’s evidence on this score was undoubtedly
hearsay. The respondent did not identify his informant by name. He did not produce
an affidavit by her or say that he had tried to get her evidence. It is not self-evident
that a bar lady could speak reliably about the appellant’s interactions with the
service provider. In the circumstances, the respondent’s allegations about this
incident do not constitute admissible evidence that the appellant instructed the
supplier of beverages to inflate prices or that he did so in order to steal the
difference.
[90] The respondent made allegations that the appellant is undemocratic and
dictatorial in his running of the EFF, that he and Mr Shivambu are not accountable
to the party’s structures in their management of its money, and that he has failed to
produce financial reports to the CCT. Although the appellant denied these
allegations in reply, they must in terms of the Plascon-Evans rule be accepted for
present purposes, but they do not show that the appellant is corrupt or a thief.
[91] The high court referred to the well-known passage from Room Hire Co v
Jeppe Street Mansions47 where Murray AJP identified the main ways in which
disputes of fact arise. The first and clearest instance, he said, was when the
respondent denies all the material allegations made by the applicant’s deponents,
and produces ‘or will produce’ positive evidence by deponents or witnesses to the
contrary. With reference to the words I have placed in quotation marks, Murray
AJP observed that the respondent ‘may have witnesses who are not presently
available or who, though adverse to making an affidavit, would give evidence viva
voce if subpoenaed’. The high court in the present case considered that the
respondent fell into this category: ‘Due to his senior position in the EFF he has
certain information and he says that the statements are true, and given the
opportunity he will prove it. He does not rely on a bare denial or his ipse dixit’.
[92] I disagree. Save for the Tanqueray incident, there was no evidence, not even
hearsay, of occasions when service providers inflated their prices so that the
appellant could steal the difference from the EFF. As to the Tanqueray incident,
the respondent did not say that he knew where the bar lady was or that he had asked
47 Fn 5 above at 1163.
her for an affidavit or that he would be able or wished to obtain her evidence under
subpoena at trial. In regard to the Scorpio article, the respondent did not express
any intention of procuring admissible evidence of the matters stated therein.
[93] I should add that in my respectful view the high court’s reasoning on this
part of the case was also conceptually flawed. The high court considered that the
appellant had made out the first two requirements for a final interdict, namely a
clear right (the appellant’s right to his good name) and injury (the besmirching of
the appellant’s good name). The high court treated the supposed dispute of fact as
going to the question whether the appellant had another satisfactory remedy. That
is incorrect. If the respondent raised a genuine dispute of fact, it was a dispute as
to whether the defamatory material was true and its publication in the public
interest, ie whether the publication was unlawful. Injury, in the delictual sense,
means an unlawful invasion of the claimant’s right.48 If there was a genuine dispute
of fact about whether the publication was true and in the public interest, the
appellant failed to establish the element of injury. If an applicant for a final interdict
does not establish the unlawfulness of the respondent’s conduct, an interdict cannot
be granted,49 and the question of alternative remedies is irrelevant.
[94] Before concluding, I wish to make brief reference to this Court’s recent
judgment in EFF v Manuel,50 since counsel for the appellant placed some reliance
on passages in that case (paras 70 ff) in which this Court criticised the EFF for
having relied on an undisclosed source without investigating the accuracy of the
source’s information. I agree with the first judgment that this case does not assist
48 Bredell v Pienaar 1924 CPD 203 at 209; Perlman v Zoutendyk 1934 CPD 151 at 155. This is the essential meaning
of the Roman Law term iniuria: J C van der Walt (ed J Labuschagne) Principles of Delict 4 ed paras 2, 8 and 72.
49 See, eg, Van Deventer v Ivory Sun Trading 77 (Pty) Ltd [2014] ZASCA 169; [2015] 1 All SA 55 (SCA) paras 27-
28; Liberty Group Limited and Others v Mall Space Management CC t/a Mall Space Management [2019] ZASCA
142; 2020 (1) SA 30 (SCA) para 35.
50 Fn 11 above.
the appellant, though my reasons for that conclusion differ from those expressed
in paras 37-39 of the first judgment.
[95] Manuel, in the passages upon which counsel for the appellant relied, was not
dealing with the question whether the defamatory publication was justified. In that
case the EFF did not seriously contend that its allegations about Mr Manuel were
true. Although a defence of truth and public benefit was raised, this Court gave it
short shrift (para 37). What thereafter engaged this Court’s attention was whether
the EFF had nevertheless acted reasonably in publishing the defamatory statement.
This was treated as being relevant either to a defence of reasonable publication (if
such a defence applied to parties other than the press, a question which this Court
left open) or to a conventional defence by a non-press respondent of an absence of
animus iniuriandi. (In Manuel the complainant was persisting with his claim for
damages, so animus iniuriandi was an essential element of the cause of action.)
[96] The nature of evidence bearing on the question whether a respondent acted
reasonably in publishing defamatory material, or whether the respondent honestly
though mistakenly believed that the defamatory material was true and in the public
interest, is qualitatively different from evidence bearing on the question whether
the defamatory material was in fact true and in the public interest. Evidence of the
sources of information known to a respondent at the time of publication might be
inadmissible to prove the truth of the information but might be highly relevant to
the question whether the respondent had a reasonable basis for publishing or an
honest belief that the allegations were true. For the latter purposes, it would also
be relevant to know whether the respondent took reasonable steps to verify his or
her sources, and it is in these respects that this Court in Manuel criticised the EFF.
[97] In the present case, however, we are not concerned with reasonable
publication or a defence of absence of animus iniuriandi. We are dealing with an
objective enquiry: were the defamatory allegations true or not? The enquiries
which the respondent made or should have made do not bear on that question.
Either he has or has not adduced admissible evidence that the defamatory
allegations are true. In the respects I have identified, the respondent did not produce
such admissible evidence.
[98] In the circumstances, while the respondent put up a ‘colourable defence,
based on evidence’ to justify saying that the appellant conducted himself in an
unlawful and undemocratic way, he did not in my opinion do so in relation to the
allegations that the appellant was corrupt, stole money and was of base moral
character. It follows that I would have upheld the appeal in part. Since this is a
minority judgment, there is little point in considering how his partial success would
have affected costs in this Court and in the high court.
____________________
O L ROGERS
ACTING JUDGE OF APPEAL
APPEARANCES
For appellant:
T Ngcukaitobi SC
K Premhid
Instructed by:
Ian Levitt Attorneys, Sandton
Lovius Block Attorneys, Bloemfontein
For respondent:
In person
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
23 June 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and
does not form part of the judgments of the Supreme Court of Appeal
Julius Sello Malema v Thembinkosi Rawula (139/2020) [2021] ZASCA 88 (23 June 2021)
On 18 April 2019, the appellant, Mr Julius Malema, applied to the Eastern Cape Division of
the High Court, Port Elizabeth (the high court) for an order declaring that a Facebook post
published on 5 April 2019 by the respondent, Mr Thembinkosi Rawula, was defamatory. He
also sought an order interdicting the respondent from publishing any further defamatory
statements and directing him to pay damages in the sum of R1 million. The respondent is a
former member of the Economic Freedom Fighters (EFF), who served on its highest decision-
making body, the Central Command Team (CCT). The high court dismissed the application.
The Supreme Court of Appeal (SCA) today dismissed the appeal against the high court’s
order. The statements in the Facebook post alleged to be defamatory of the appellant were
that funds received by the EFF were centralised under the ‘control, abuse and dictatorship’ of
the appellant and the Deputy President of the EFF, Mr Floyd Shivambu, who had made it clear
that the EFF was their organisation; that they had used training providers who inflated costs
to the EFF and in the absence of financial reports (which had not been tabled before the CCT
since 2014), the respondent was forced to conclude that they had pocketed the difference;
and that the appellant, in a meeting of the CCT had admitted to receiving money from VBS
Bank, saying ‘sometimes we are forced to kiss dogs or the devil to get funding’. These
statements, the appellant said, were understood to mean or imply that he is corrupt; is stealing
money; conducted himself in an unlawful and undemocratic manner; and is of base moral
character.
The majority judgment of the SCA (Petse AP, Dambuza and Schippers JJA and Ledwaba
AJA) held that the respondent, an unrepresented litigant in person, had established a
sustainable foundation by way of evidence that a defence of truth and public interest or fair
comment was available to be pursued. There was nothing in the evidence to gainsay his claim
that he had obtained access to privileged information because he served on the CCT. When
the appellant received the money from VBS, he knew that it was the subject of corruption and
said that it could not be paid into the EFF’s account and that he had to ‘devise other means’
to receive the money. Further, the fact that he or the EFF had received VBS money – which
he denied in the papers – and that the appellant had personally benefited from it were in the
public domain in September 2018 already. It was telling that the applicant had taken no action
against the print or electronic media for any injury to his good name or reputation.
The statement that the EFF ‘was their organisation’, when considered in the context of the
Facebook post as a whole was an example of a recurring theme: a lack of accountability and
abuse of funds on the part of the leadership of the EFF. It received levies from 61 members
of Parliament and provincial legislatures of not less than R6 800 each and 852 councillors
contributed at least R2 000 a month. It had a million members who each paid R10. The EFF
received not less than R25 million per quarter from the National Assembly and provincial
legislatures. All these funds were centralised ‘under the control, abuse and dictatorship’ of the
appellant and Mr Shivambu. As to the inflation of costs, the respondent alleged that at a
function of the EFF held in Pretoria, they could not purchase alcohol, because its price had
been inflated threefold. The majority judgment held that his inability to cite further examples of
the inflation of costs by service providers was potentially at least the product of the secrecy
regarding the accounts of the EFF, which was not rebutted. The position has been that a final
interdict for defamation cannot be granted unless a respondent has no defence. The high court
had thus rightly concluded that the appellant did not make out a case for a final interdict.
Moreover, since the appellant accepted that there was no risk of future re-publication by the
respondent, an interdict could not be granted, as there was nothing left to restrain and no risk
of future injury. The appeal was accordingly dismissed.
In a minority judgment by Rogers AJA, it was found that the appellant had failed to show that
the respondent acted unlawfully by publishing statements that the appellant’s conduct as
leader of the EFF was undemocratic and unlawful. However, the minority judgment held that
the respondent did not put up admissible evidence in support of his allegations that the
appellant was corrupt, stole money or was of base moral character. This was essentially for
the following reasons: There was no evidence that when the appellant received the money
from VBS, it was the subject of scandal or known to be fleecing its depositors. The newspaper
article which the respondent had put up to show that the applicant had received VBS money
and had benefited from it could not be produced as evidence of the truth of what the journalist
had written. The facts concerning the inflation of the price of alcohol were hearsay and
inadmissible evidence, that the appellant had instructed the supplier to inflate prices or did so
in order to steal the difference. Rogers AJA would thus have upheld the appeal in part.
~~~~ends~~~~
|
3787
|
non-electoral
|
2022
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 51/2019
In the matter between:
DAVID PAPIKI KOMANE APPELLANT
and
THE STATE RESPONDENT
Neutral Citation: David Papiki Komane v The State (51/2019) [2022] ZASCA
55 (20 April 2022)
Coram:
ZONDI, MOLEMELA and MBATHA JJA and MATOJANE
and SMITH AJJA
Heard:
16 February 2022
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the website of the Supreme
Court of Appeal and release to SAFLII. The date and time for hand-down are
deemed to be 10h00 on 20 April 2022.
Summary: Criminal law – evidence – what constitutes sufficiency of
circumstantial evidence – conviction based on circumstantial evidence well-
founded – convicted on the strength of DNA evidence and confession –
importance of conducting proper pointing out – conviction confirmed.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Makgoba JP,
sitting as court of first instance):
The application is dismissed.
________________________________________________________________
JUDGMENT
________________________________________________________________
Mbatha JA (Zondi, Molemela JJA and Matojane and Smith AJJA
concurring)
[1] On 26 January 2018, the applicant, Mr David Papiki Komane, together
with three of his erstwhile co-accused, was convicted of robbery with aggravating
circumstances in the Limpopo Division of the High Court, Polokwane (the high
court). The high court found no substantial and compelling circumstances that
warranted the imposition of a sentence less than the one prescribed in the
Criminal Law Amendment Act 105 of 1997 (the CLAA). As a result, the
applicant was accordingly sentenced to 18 years’ imprisonment. His application
for leave to appeal against both conviction and sentence was dismissed by the
high court.
[2] The applicant subsequently petitioned this Court for leave to appeal against
the conviction. The petition met with the same fate. The applicant, in terms of
s 17(2)(f) of the Superior Courts Act 10 of 2013 (the Superior Courts Act), lodged
a further application to the President of this Court for reconsideration of the
decision dismissing the leave to appeal. The application for reconsideration was
heard by Navsa AP on 28 March 2019, who 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. The parties were directed to be prepared, if called upon to do so, to
address this Court on the merits of the appeal.
[3] The applicant applied in terms of rule 12 of the Rules of the Supreme Court
of Appeal 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.
[4] The only issue in this appeal is whether there are reasonable prospects of
success in the applicant’s appeal.1 The applicant’s conviction arose as a result of
a robbery that took place at a G-Force Security Solutions Depot (G4S) in Marble
Hall. Shortly before midnight on 9 December 2015, camouflaged in female
clothing, a group of armed men broke into the cash depot of the G4S premises.
Having bludgeoned open the security doors and the roller garage door, they went
in and removed over R11 million in cash. The petrified female cashiers, who were
busy counting the money, sought refuge in the office within the counting hall.
According to Mr Mphake, the technical support officer who was operating the
1 Van Wyk v The State and Galela v The State [2014] 4 All SA 708 (SCA); 2015 (1) SACR 584 (SCA).
cameras, the incident lasted no more than 30 minutes. After the mayhem at the
scene, the robbers fled the premises in various motor vehicles whilst firing
gunshots.
[5] The arrest of the applicant occurred on 9 December 2015 at the Marble
Hall Police Station, where he was employed as a constable in the South African
Police Service (SAPS). Following his arrest, his motor vehicle and home were
searched by the arresting officer, but no money was found. He was then booked
into the police cells at Polokwane Police Station for the night. On 10 December
2015, he was booked out by police officers involved in the investigation of the
robbery. It is common cause that he directed Warrant Officer Ramotebele and
other police officers to a homestead of a healer/priest in Siyabuswa where he
collected a parcel. The parcel turned out to be money, which was handed over to
Warrant Officer Lombard. The money, totalling over R600 000, was counted in
the applicant’s presence. Later in the day, he made a statement to Colonel
Serfontein.
[6] It is necessary that I should briefly summarise the evidence at the trial. A
substantial part of the evidence on behalf of the State was given by Messrs Papo
and Segoapa, who, upon their arrests, were indemnified in terms of s 204 of the
Criminal Procedure Act 51 of 1977 (the CPA). They turned state witnesses. They
were responsible for soliciting information and for recruiting a notorious robber,
identified as Mr David Mokete, to organise a cash in transit heist. In turn, Mr
Mokete, who had organised a group of men as part of the syndicate, met with
Messrs Mpheroane, Papo and Segoapa at a taxi rank in Marble Hall. Amongst the
men that came with Mr Mokete, were the applicant’s erstwhile co-accused one
and two, who came in a red BMW motor vehicle (BMW). In that meeting, Mr
Mpheroane detailed the route to be taken by the G4S truck transporting the
money.
[7] A few days later, Mr Mokete called Messrs Papo, Segoapa and Mpheroane
to a meeting. At the designated meeting place, besides the red BMW, there was
another motor vehicle, a Volkswagen Caddy. As Mr Mpheroane was delayed at
work, Messrs Papo and Segoapa were sent to meet him on the way. Having picked
up Mr Mpheroane, the meeting place was moved to a place near Modimolle Road
where they all assembled. At that meeting, they learnt that the targeted G4S truck
on the route previously disclosed to them by Mr Mpheroane had been robbed by
another group. This information angered Mr Mokete and the rest of the men who
were at the meeting. Mr Mpheroane was accused of having double-crossed them.
At that stage, a person only known as “Jeff” or “General”, the erstwhile accused
number two, demanded from Mr Mpheroane that he disclose information about
the G4S cash depot in Marble Hall which he did. Thereafter they all parted ways.
According to the two state witnesses, all the meetings were held at night and were
attended by several men unknown to them. That was the end of their role.
[8] A few days later they received a call from Mr Mokete in which he
requested that they meet him at the Park Hotel. Mr Mokete, who came in a
Mercedes Benz Sprinter, invited them in and gave them each a parcel. The parcels
were placed in the school bags, which Mr Mokete had requested that they bring
along. They each received a paltry amount of R200 000, when one considers that
R11 million was stolen. They were also given a third parcel with money to give
to Mr Mpheroane. They both hid their share of the loot in various places.
[9] Messrs Papo and Segoapa had then arranged to meet Mr Mpheroane at
night on 10 December 2015 at a garage in Mokopane. On the day in question,
unbeknown to them, Mr Mpheroane was in the company of members of the
SAPS’ Directorate for Priority Crime Investigation (the Hawks) and the SAPS.
They proceeded to the meeting as arranged. Upon their arrival at the meeting
place, whilst walking around looking for Mr Mpheroane, the police arrested them.
Mr Mpheroane had been the one to point them out to the police. Thereafter, they
were taken into custody and detained. Mr Mpheroane was accused number four
in the trial.
[10] According to Mr Mphake, who was alone in the control room with security
cameras when the robbery took place, he had reported to his manager that a
robbery had taken place and the robbers were leaving with the money. He testified
that some security measures had been breached that night as certain cameras were
bypassed, and the truck, which was often parked outside the shutter door to the
counting hall, was not in place that night. He pointed out that Mr Mpheroane was
the officer responsible for those security measures.
[11] I now relate how the erstwhile co-accused of the applicant were arrested.
On 9 December 2015, Mr Frans Stone (Mr Stone), a police reservist with the
SAPS, was on crime prevention duty in Pretoria. At about 15h00, he received a
call from a Warrant Officer de Klerk, from the Hawks, Pretoria, alerting him of a
red BMW with registration number JGG 791 GP that was coming from
KwaMhlanga towards Pretoria. Shortly thereafter, the BMW drove past him at
high speed, and he gave chase. It proceeded to Mamelodi Extension 17. At that
stage he observed a police helicopter pass above him and shots were fired at the
red BMW from the helicopter. Soon thereafter, the occupants exited the BMW.
One of them, who had been shot in the leg, lay on the ground a few metres from
the BMW. Whilst the helicopter hovered above them, Mr Stone handcuffed the
two men and secured the crime scene. He confiscated a bag filled with money
from the injured man and took it back to the BMW. Inside the BMW, he found a
25-litre yellow plastic bin also filled with money. He then handed over the scene
to Captain Beheit, who took photographs at the scene. Captain Beheit also took
DNA swabs from various parts of the motor vehicle, the yellow plastic bin, plastic
bags and the paper money and collected the various exhibits. The two men
arrested at Mamelodi were accused one and two at the trial. It turned out that
accused one was the person known as “Jeff” or “General” to the two state
witnesses. This evidence was corroborated by Sergeant Masubulele, the officer
in the helicopter that cornered the BMW and shot at one of its occupants.
[12] This application turns on whether the trial court should have convicted the
applicant based on the confession, the DNA evidence, the pointing out, and
whether the applicant had a case to answer.
[13] I will deal first with the quality and sufficiency of the DNA evidence upon
which the trial court convicted the applicant. It was submitted on behalf of the
applicant that this kind of circumstantial evidence was inadequate to sustain a
conviction.
[14] On this aspect, the State led the evidence of Ms Jenny Cooks, a forensic
analyst, attached to the Biology Section of the Forensic Science Laboratory in
Arcadia, Pretoria (the Forensic Laboratory). She testified that she received case
files from Mamelodi East Case 166/12/2015 and Case 58/12/2015 Marble Hall
for DNA profiling. The case files from Marble Hall bore the following reference
samples: Kgabo Mpheroane in kit 15DBAD1743EP in seal bag number
PA4002643268, Maphaki Jojo in kit 10DBAC7654XX in seal bag number
10DBAC7654EB, and Sekwapa Johannes in kit 10DBAC7653XX in seal bag
10DBAC7653EB.
[15] At a later stage, further reference samples from Pretoria were received at
the Forensic Laboratory. They bore the following references: Mokete D in kit
16DBAC6024EB in seal bag number PW4001364037, Moshe Moses Mogashane
in kit 13DBAE0052EP in seal bag number PA5002190462 and Maphaki Jeffrey
in kit 13DBAC1482EP in seal bag number PA5002161493. The samples were
analysed, and DNA profiles were obtained from them.
[16] The DNA profiles obtained from the Pretoria samples were compared to
swab F14 taken from the steering wheel, swab F24 from the left rear door panel
and swab F32 which was from an earbud found in the BMW. These swabs
matched the DNA results obtained from the reference samples marked Moshe
Moses Mogashane. The subsequent finding related to swab F16 taken from the
window control switch and F30 taken from the inside handle door. They matched
the profile from the reference sample marked Maphaki Jeffrey. The DNA results
obtained from swab F38 were taken from the yellow bin. The swab gave a mixture
contributed by at least two persons. From this sample, the DNA characteristics
matched the reference sample marked Komane David. This finding gave the most
conservative occurrence of one in eight million people. Ms Cooks explained that,
although this was a combination of different characteristics, including other
individuals, it did not take away from the fact that the features of the sample
marked Komane David were found in every region analysed in the mixture.
[17] Similarly, another mixture profile obtained from one of the swabs taken
from the grocery bag in kit 14DCAY3024 contained in seal bag number
PA4002025002 matched the DNA results of the reference sample marked
Komane David. The most conservative occurrence for this mixture was one in
340 billion people. Lastly, the DNA results from the R50 notes in seal bag number
PA4002283483 matched the reference sample marked Moshe Moses Mogashane.
[18] Two uncontroverted pieces of evidence against the applicant were
established by the DNA evidence. First, a grocery bag and the yellow bin placed
him at the place where the money was counted and shared. Secondly, the DNA
evidence linked him to his erstwhile co-accused one and two, as the grocery bag
and the bin were found in their motor vehicle. This conclusively proved that the
applicant had been in their company shortly after the robbery and that he shared
in the spoils of the robbery. To reject this evidence would require findings that
the officers who apprehended the BMW in Pretoria lied about the origin of the
bag and the yellow bin. The probabilities also do not support the submission made
on behalf of the applicant that he could have touched the said items somewhere
in Marble Hall, as there was no explanation proffered as to how the said items
ended up in possession of his former co-accused persons. Though I accept that
the applicant’s DNA was not the extremely rare type, its concentration on the
swabs, conclusively proved that he was likely the donor out of millions of people.
[19] Most conclusively, the DNA of the applicant was found in a single place
with the DNA of his erstwhile co-accused one and two, who were involved in the
planning and execution of the robbery from the outset. This cannot be said to have
been a coincidence. The applicant sought to challenge the chain of evidence
regarding the DNA evidence on the basis that the origin of the bin was not
established. This was correctly rejected by the trial court as there was no evidence
that suggested that the seals were tampered with.
[20] One must bear in mind that the cardinal rule is whether, on the conspectus
of the evidence, it was established beyond a reasonable doubt that the applicant
committed the offences. It is unacceptable that any possibility, no matter how
farfetched, should be elevated to a defence in law. Furthermore, no foundation
was laid that the evidence may have been contaminated. Therefore, I conclude
that the submission made on behalf of the applicant that this type of circumstantial
evidence was not sufficient to sustain a conviction is without merit.
[21] Another issue raised on appeal was whether the trial court was correct to
have admitted into evidence the applicant’s statement made to Colonel
Serfontein. It is trite that the State bears the onus to prove the admissibility of
such evidence on a balance of probabilities. This means that the State bore the
onus to prove that the statement made by the applicant was made freely and
voluntarily (See S v Kotze 2010 (1) SACR 100 (SCA) para 20). Section 35(5) of
the Constitution also provides that ‘evidence obtained in a manner that violates
any right in a Bill of Rights must be excluded if the admission of that evidence
would render the trial unfair or otherwise be detrimental to the administration of
justice’.
[22] With these principles in mind, I closely examine the facts of the case in
relation to the admissibility of the statement made to Colonel Serfontein. The
applicant appeared before Colonel Serfontein in Marble Hall at about 22h25 on
10 December 2015. This was due to the late arrival of Colonel Serfontein, who
was coming from Pretoria. On behalf of the applicant, it was contended that
Warrant Officer Makhubela should have been called as a witness in the trial-
within-a-trial regarding an alleged assault. It was further submitted that the
applicant was not afforded legal representation when he appeared before Colonel
Serfontein. Lastly, that the statement that he made to Colonel Serfontein was
dictated to him by Colonel Brinkman, who was involved in the investigation of
the matter.
[23] In giving the statement to Colonel Serfontein, it was contended that due to
threats and assaults that had been meted out to the applicant earlier, he did not act
freely and voluntarily. The fear of further assault induced him to make a statement
to Colonel Serfontein, so it was contended. The evidence of the police officer and
the interpreter who assisted Colonel Serfontein was that they did not observe any
eye injury on the applicant that was allegedly inflicted by Warrant Officer
Makhubela and the other police officers at the time of his arrest. The evidence
given in the trial clearly showed that the assault related to the pointing out, not
the making of the statement to Colonel Serfontein. It was not explained why he
denied to Colonel Serfontein that he had been assaulted or induced in any form
to make a statement to him. I accept that Colonel Serfontein knew that the
applicant was entitled to legal representation specifically for the purpose of taking
the statement. This is clear from the recording of the response given by the
applicant, where he said: ‘I have a legal representative who will come to court, I
do not need him now’. He mentioned that his legal representative’s name was Mr
John Grobler. The emphasis on whether he required the services of an attorney
there and then is clear from the articulated response, with an emphasis on the
word now. The proforma document was completed perfectly and read back to the
applicant in English. This was confirmed by the interpreter, who was present
when the statement was taken.
[24] The detailed nature of the statement given by the applicant to Colonel
Serfontein showed that he had personal knowledge of the events. The time at
which Colonel Brinkman had allegedly spoon-fed him what to state would not
have enabled him to recall with such precision the names of people and how the
events unfolded in such detail. There was also no explanation for why the
applicant failed to report Colonel Brinkman to Colonel Serfontein. Consequently,
I cannot find that the trial court erred in its admission of the statement by the
applicant to Colonel Serfontein. Neither did the trial court err in finding that the
statement made amounted to an unequivocal admission of guilt by the applicant.
[25] The applicant challenged the evidence adduced by Warrant Officers
Ramotebele, Makhubela and Siyebi regarding the pointing out. In its judgment,
the trial court did not detail the process of the pointing out, save to acknowledge
that the police officers corroborated one another as to how the money was
recovered, and the trial court rejected the evidence of the healer/priest, Mr
Johannes Mampane, that the applicant came to collect medication from him. The
transcript reveals that the learned judge referred to Mr Mampane’s evidence as
follows: ‘It is sh…t’. Assuming that this transcription is accurate, it warrants this
Court noting its disapproval. It is unacceptable for a judicial officer to use profane
language in a judgment. It is offensive, to say the least. As judicial officers, we
need to show decorum and respect to everyone, irrespective of their station in
society or the nature of the evidence they give. Nothing stopped the judicial
officer from making credibility findings if he did not believe in the veracity of
Mr Mampane’s testimony.
[26] The evidence relating to the recovery of the money was not treated as
evidence in a pointing out, nor was a trial within a trial held in respect thereof.
The testimony of Warrant Officers Makhubela and Ramotebele indicated that the
applicant volunteered to show them what they believed was his share of the loot,
whereas Warrant Officer Siyebe’s testimony was that the pointing out of the loot
came out after they had interrogated the applicant. To the extent that there is a
discrepancy between the testimonies of the three officers, who were all referring
to the conduct of one person, the prosecutor should have cautioned the trial judge
to rather hold a trial within a trial to clear up the glaring discrepancy. This would
have given the Warrant Officers an opportunity to explain it as best as they could.
The prosecutor is placed in a better position than the trial judge as he/she is in
possession of the witness statements and consults with witnesses before they give
testimony in court.
[27] Warrant Officer Makhubela should have arranged for a pointing out as he
testified that during the arrest of the applicant on 9 December 2015, he had
offered to point out where the money was hidden. Warrant Officer Ramotebele,
together with the rest of the non-commissioned officers, ought not to have
proceeded with the pointing out. This is because the pointing out process must be
conducted by an officer who was not involved in the investigation of the matter.
In this case Warrant Officer Ramotebele and others, by virtue of being the
investigating officers in the case, were precluded from carrying out the pointing
out. Warrant Officer Ramotebele’s assertions that the applicant had been apprised
of his legal rights did not ratify the flawed process, as the law requires that the
accused be apprised of the right to legal representation specifically for the
purposes of conducting a pointing out. The evidence of Warrant Officer
Ramotebele that the applicant allegedly stated that he was well versed in his legal
rights should not have been accepted by the trial court as the applicant was a
constable, a very junior officer in the SAPS. In S v Lubaxa [2002] 2 All SA 107
(A), this Court held that what entails a fair trial must be determined by the
circumstances of the case. The circumstances of the present case required that
independent persons conduct the pointing out.
[28] During the trial, in cross-examination, the applicant challenged the
admissibility of the evidence obtained by the pointing out on the basis that it was
not made freely and voluntarily. Section 218(2) of the CPA entitles the
prosecution to adduce evidence of a pointing out of a thing or discovery of a fact
and, to that end, the accused person is precluded from objecting to such evidence
on the ground that the pointing out formed part of an inadmissible confession.
However, it does not do away with the applicability of s 217(1) of the CPA, which
provides that a confession should have been made freely and voluntarily by a
person in his sound and sober senses without having been unduly influenced to
do so.
[29] The contradiction between the evidence of Warrant Officers Ramotebele
and Siyebe as to how the applicant offered to disclose where the money was
hidden should have been considered by the trial court judge. Counsel for the
applicant correctly conceded that what was collected was the money and not
medication for the applicant. Section 217(1) of the CPA is clear irrespective of
what was collected. The applicant was entitled to the procedural safeguards that
apply to arrested, detained and accused persons in the criminal process. Section
35(3) of the Constitution sets out an accused’s right to a fair trial. Equally trite is
that the rights contained in s 35(1) of the Constitution, including the right not to
be compelled to make a confession or an admission that can be used against them,
apply to arrested and detained persons from the inception of the criminal process
(see S v Sebejan and Others 1997 (1) SACR 626 (W)). Even if it can be accepted
that the applicant waived his rights to legal representation, that did not extend to
a waiver of a procedurally fair criminal process. Mr Ramotebele acted contrary
to the procedure followed by the officers who arrested Mr Mpheroane.
[30] In Gama v S [2013] ZASCA 132, a confession was made to an undercover
policeman. This Court held, at para 13, that such evidence should have been tested
by a trial within a trial because of the oral nature of the confession. It also held,
at para 6, that ‘[i]t is necessary to record at the outset that the State did not alert
the trial court at all that it would be tendering evidence which may amount to a
confession’. It concluded that ‘this was a fundamental miscarriage of justice’. On
these facts, even if the prosecutor did not indicate that the evidence of the pointing
out may be challenged, the trial court, when it became clear that it was challenged,
should mero motu have embarked on a trial within a trial.
[31] In Makhokha v S [2013] ZASCA 171, the sole basis for a conviction was a
statement made by the appellant to Inspector Ramovha. The statement was read
informally into the record, and the appellant did not, during the trial, challenge
the admissibility thereof, and no trial within a trial was held. The appellant on
appeal, argued that the statement amounted to a confession. This Court held that
the statement was not made to a peace officer as Inspector Ramovha was not a
commissioned officer, and the statement did not comply with the other
requirements of s 217(1) of CPA, which provides that a confession shall only be
admissible if confirmed and reduced to writing by a magistrate. This Court held
that the confession was inadmissible because the confession was made to an
inspector and not a peace officer, nor was it confirmed and reduced to writing by
a magistrate or justice.
[32] In S v Nkosi 1980 (3) SA 829 (A), this Court affirmed the view that,
although it is the duty of the prosecuting counsel to investigate the surrounding
circumstances to satisfy themselves of the propriety of proving the admission, it
is the ultimate duty of the trial judge to satisfy themselves as to the admissibility
of the admission.
[33] The manner in which the pointing out by the applicant was conducted goes
against what is prescribed in s 217(1) of the CPA, which ought not to be
countenanced in any court under a constitutional democracy (see S v Molimi
[2008] ZACC 2; 2008 (3) SA 608 (CC); 2008 (5) BCLR 451 (CC); 2008 (2)
SACR 76 (CC)).
[34] However, there is sufficient circumstantial evidence on which the applicant
was convicted. The failure by the applicant to testify in his defence and in the
face of overwhelming prima facie evidence against him, led that prima facie
evidence to be proof beyond reasonable doubt. This Court has stated and repeated
this trite principle of the right to remain silent. It held in S v Boesak [2000]
ZASCA 24 that an accused has the right to remain silent but does so well-advised
of the consequences of the exercise of his right to remain silent. It is a choice
made consciously.2 The applicant’s silence also indicates that he was not taking
the court into his confidence. As a result, the evidence adduced on behalf of the
State was the only evidence that was before the trial court as the applicant failed
to testify. I can only repeat what this Court stated in S v Chabalala 2003 (1) SACR
134 SCA at para 20, where it said:
‘As was pointed out in S v Mthetwa 1972 (3) SA 766 (A) at 769D:
“Where . . . there is direct prima facie evidence implicating the accused in the commission of
the offence, his failure to give evidence, whatever his reason may be for such failure, in
general, ipso facto tends to strengthen the State case, because there is nothing to gainsay it, and
therefore less reason for doubting its credibility or reliability; see S v Nkombani and Another
1963 (4) SA 877 (A) at 893G and S v Snyman, 1968 (2) SA 582 (A) at 588G.”.’
[35] The applicant’s challenge to the evidence is in a piecemeal fashion. This
Court, in S v Reddy and Others 1996 (2) SACR 1(A) at 8C-D warned against this,
where it stated as follows:
‘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 of
2 See also 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).
whether it excludes the reasonable possibility that the explanation given by an accused is true.
The evidence needs to be considered in its totality. It is only then that one can apply the oft-
quoted dictum in Rex v Blom 1939 AD 188 at 202-203, where reference is made to two cardinal
rules of logic which cannot be ignored. These are firstly that the inference sought to be drawn
must be consistent with all the proved facts and secondly, the proved facts should be such “that
they exclude every reasonable inference from them save the one sought to be drawn”.’
[36] I am satisfied that the trial court’s approach to the evaluation of the
evidence was correct. It considered the totality of the evidence and, in that
process, weighed the evidence of the state witnesses holistically against that of
the applicant. As appears above, the applicant failed to explain how his DNA
ended up on a grocery bag and the yellow bin containing the stolen money. He
also failed to explain why his DNA was found on the articles found in the motor
vehicle belonging to people who were found to have been involved in the robbery.
The trial court, in my view, rightfully rejected his untested evidence.
[37] The sentiments expressed by this Court in S v Ntsele 1998 (2) SACR 178
(SCA) are relevant, where it held that the onus rests upon the State in criminal
proceedings to prove the guilt of the accused beyond a reasonable doubt, not
beyond all shadow of a doubt. The Court in Ntsele further held that when dealing
with circumstantial evidence, as in the present matter, the court was not required
to consider every fragment individually. It was the cumulative impression, with
all the pieces of evidence made collectively, that had to be considered to
determine whether the accused’s guilt had been established beyond a reasonable
doubt. The applicant’s challenge to the evidence was in a piecemeal fashion.
Courts are warned to guard against the tendency to focus too intensely on separate
and individual components of evidence and view each component in isolation.
[38] In sum, the DNA evidence and the confession, together with all the other
evidence, was sufficient to prove beyond reasonable doubt that the applicant,
together with all his erstwhile co-accused, were complicit in the commission of
the robbery with aggravating circumstances, as proven by the State. The trial
court, therefore, convicted him correctly. The application is dismissed.
_______________________
Y T MBATHA
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
L M Manzini
Instructed by:
Legal Aid, Polokwane
Legal Aid, Bloemfontein
For Respondent:
L Mashiane
Instructed by:
Director of Public Prosecutions, Polokwane
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 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
David Papiki Komane v The State (51/2019) [2022] ZASCA 55 (20 April 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the application for leave
to appeal against the decision of the Limpopo Division of the High Court, Polokwane (the high court).
The issue before the SCA was whether the trial court should have convicted the applicant based on the
confession, the DNA evidence, the pointing out, and whether the applicant had a case to answer.
On 26 January 2018, the applicant, Mr David Papiki Komane, together with three of his erstwhile co-
accused, was convicted of robbery with aggravating circumstances in the high court. As a result, the
applicant was accordingly sentenced to 18 years’ imprisonment. His application for leave to appeal
against both conviction and sentence was dismissed by the high court.
The applicant’s conviction arose as a result of a robbery that took place at a G-Force Security Solutions
Depot (G4S) in Marble Hall. The arrest of the applicant occurred on 9 December 2015 at the Marble
Hall Police Station, where he was employed as a constable in the South African Police Service (SAPS).
Following his arrest, his motor vehicle and home were searched by the arresting officer, but no money
was found. He was then booked into the police cells at Polokwane Police Station for the night. On 10
December 2015, he was booked out by police officers involved in the investigation of the robbery. It is
common cause that he directed Warrant Officer Ramotebele and the other police officers to a
homestead of a healer/priest in Siyabuswa, where he collected a parcel. The parcel turned out to be
money, which was handed over to Warrant Officer Lombard. The money, totalling over R600 000, was
counted in the applicant’s presence. Later in the day, he made a statement to Colonel Serfontein.
It was submitted on behalf of the applicant that the DNA was circumstantial evidence and was
inadequate to sustain a conviction. Furthermore, the applicant contended that the high court should not
have admitted the applicant’s statement made to Colonel Serfontein, as the applicant was not afforded
legal representation when he appeared before Colonel Serfontein and that the statement that he made
to Colonel Serfontein was dictated to him by Colonel Brinkman, who was involved in the investigation
of the matter.
The SCA found that the DNA of the applicant was found in a single place with the DNA of his erstwhile
co-accused one and two, who were involved in the planning and execution of the robbery from the
outset, which could not be said to have been a coincidence.
The SCA also found that the detailed nature of the statement given by the applicant to Colonel
Serfontein showed that the applicant had personal knowledge of the events. In addition, the SCA
accepted that Colonel Serfontein knew that the applicant was entitled to legal representation specifically
for the purpose of taking the statement. This was clear from the recording of the response given by the
applicant, where he said: ‘I have a legal representative who will come to court, I do not need him now’.
Consequently, the SCA held that the trial court was correct in its admission of the statement by the
applicant to Colonel Serfontein. In respect of the pointing out, the SCA held that the manner in which
the pointing out was conducted went against what is prescribed in s 217(1) of the Criminal Procedure
Act 51 of 1977 (the CPA). However, the SCA found that there was sufficient circumstantial evidence on
which the applicant was convicted.
In conclusion, the SCA held that the DNA evidence and the confession, together with all the other
evidence, was sufficient to prove beyond reasonable doubt that the applicant, together with all his
erstwhile co-accused, were complicit in the commission of the robbery with aggravating circumstances,
as proven by the State. The trial court, therefore, convicted him correctly.
~~~~ends~~~~
|
2227
|
non-electoral
|
2009
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 380/2008
PETRUS JOHANNES RUDOLPH First Appellant
WENTZEL LAUBSCHER Second Appellant
MARTHINUS ANDRIES VAN DER WALT Third Appellant
and
THE MINISTER OF SAFETY AND
SECURITY First Respondent
THE MINISTER OF CORRECTIONAL
SERVICES Second Respondent
Neutral citation: Rudolph
v
Minister
of
Safety
and
Security
(380/2008)[2009] ZASCA 39 (31 March 2009)
Coram:
Farlam, Mthiyane, Brand, Lewis and Van Heerden
JJA
Heard:
9 March 2009
Delivered:
31 March 2009
Summary:
Claim for damages ─ Arrests and detention of
appellants unlawful as no offence committed in the
presence of peace officer ─ Prosecution of
appellants malicious ─ Requirement of ‘malice’
considered in the context of animus injuriandi held
to have been met ─ Substantial damages awarded
on appeal.
___________________________________________________________
ORDER
On appeal from: Transvaal Provincial Division (Mokgoatlheng AJ
sitting as court of first instance)
The appeal succeeds with costs, the costs to be paid by the first
respondent. The order of the court a quo is set aside and replaced
with the following order:
‘1.
Judgment is granted in favour of the first plaintiff as follows:
(a)
(i)
against the first and second defendants jointly and
severally, the one paying the other to be absolved, for
payment of damages in the sum of R100 000 in respect of
claim 1;
(ii)
against the first defendant for payment of damages in
the sum of R50 000 in respect of claim 2;
(iii)
against the first defendant for payment of damages in
the sum of R50 000 in respect of claim 3.
(b)
Interest on each of the above amounts will run at the
prescribed rate a tempore morae (from 5 April 2007) to date
of payment.
(c)
The first defendant is ordered to pay the costs of suit.
2.
Judgment is granted in favour of the second plaintiff as follows:
(a)
(i)
against the first and second defendants jointly and
severally, the one paying the other to be absolved, for
payment of damages in the sum of R100 000 in respect of
claim 1;
(ii)
against the first defendant for payment of damages in
the sum of R50 000 in respect of claim 2.
(b)
Interest on each of the above amounts will run at the
prescribed rate a tempore morae (from 5 April 2007) to date of
payment.
(c)
The first defendant is ordered to pay the costs of suit.’
___________________________________________________________
JUDGMENT
MTHIYANE and VAN HEERDEN JJA (FARLAM, BRAND and
LEWIS JJA concurring):
[1] This is an appeal from a judgment of the Pretoria High Court
(Mokgoatlheng AJ) dismissing with costs three claims instituted by the
appellants against the respondents, in which they claimed damages
arising out of their alleged unlawful arrest, detention and malicious
prosecution. The appeal is with the leave of the trial judge.
[2] The first claim arises out of the unlawful arrest of the first
appellant on 18 July 2003 near Capital Park in Pretoria and the
subsequent unlawful detention of both appellants. Both were taken to
Pretoria Moot Police Station (via Wonderboompoort Police Station) and
detained in a police cell until 21 July 2003. On that day they appeared
before a magistrate where they were granted bail of R500 each. Although
a member of the first appellant’s group, the second appellant was
apparently not arrested, as will be discussed in more detail below.
[3] When the appellants tendered payment of bail at the magistrate’s
court on the afternoon of Monday 21 July 2003, the prisoner’s friend was
not available to receive bail money. The appellants were then removed to
the Pretoria Central Prison. At the prison the appellants again tendered
payment of bail in vain; there, too, nobody was prepared to receive
payment of it.
[4] The appellants remained in custody until the following day, viz
Tuesday 22 July 2003, having been arrested on the previous Friday.
Although their bail was paid at 08h30, they were only released at 12h00.
They were therefore detained from about 17h00 on the Friday until
approximately midday on the Tuesday.
[5] After several appearances in the magistrate’s court, the charge
against the appellants was withdrawn by the State in January 2004.
[6] The second claim, for damages for malicious prosecution, is based
on the fact that the members of the South African Police Service (SAPS)
brought false charges against the appellants, in that the former had neither
evidence, nor reason to believe, that the appellants had committed any
offence; that they acted with ‘malice’, and that the charges were
subsequently withdrawn.
[7] The third claim arises out of the first appellant’s arrest by Captain
Ngobeni near Rayton on 26 July 2003, on a charge of sedition. The first
appellant was thereafter taken (via Cullinan Police Station) to Mamelodi
Police Station, where he was detained in a police cell. On 28 July 2003 he
appeared before a magistrate on a charge of contravening the provisions
of an administrator’s notice in respect of the unauthorised display of
placards or flags next to a public street.
[8] The arrests and detention of the appellants are not in dispute. What
is disputed is the lawfulness or otherwise of these arrests and detention.
In argument, counsel for the first respondent contended that, in relation to
the arrest of 18 July 2003 and subsequent detention, an offence was
committed in the presence of one Captain Bekker. A similar argument
was advanced in respect of the arrest and detention of the first appellant
by Captain Ngobeni on 26 July 2003.
[9] As to the claim for damages arising out of the alleged malicious
prosecution of the appellants, the sole issue is whether the appellants
proved that members of SAPS acted with ‘malice’.
[10] Captain Bekker gave evidence for the first respondent in relation to
the events of 18 July 2003. She testified that, after receiving a report, she
went to the Low Water Bridge in Capital Park where she found eight
persons: four adults and four children. The first and second appellants,
the first appellant’s wife and Mr M A van der Walt (nominally the third
appellant, who did not pursue his appeal before us) formed the adult
component of the group and the rest were children. Upon arrival she
informed them that their assembly was an unlawful gathering as they did
not have the requisite permission to hold it. The first appellant enquired
who she was and, after she had identified herself, he gave her his full
names, his ID number and the name of the political organisation of which
he formed part. Captain Bekker then asked if they had permission to hold
the gathering and when, none was produced, she asked them to disperse.
The first respondent refused and maintained that they were in law entitled
to be there.
[11] Captain Bekker then gave the group 15 minutes to disperse. The
deadline came and went and Captain Bekker was compelled to extend it
by a further 10 minutes. The extended time did not have the desired effect
and, an hour or so after the deadline, the first appellant and his group
were still on the scene.
[12] After consulting with a Captain Sithole and a SAPS legal adviser,
one Mr Nel, Captain Bekker arrested the first appellant for contravening
the provisions of the Regulation of Gatherings Act 205 of 1993 (‘the
Gatherings Act’). As already indicated, the second appellant was also told
to accompany the police to the police station, but it would appear that he
was not actually arrested. He testified that he had not been arrested, but
had accompanied the police voluntarily. Captain Bekker also said that she
only arrested the first appellant.
[13] The court below accepted that the appellants had held an unlawful
gathering in contravention of the provisions of the Gatherings Act in that
they did not have the required permission. The trial judge appears to have
accepted also that the arrest without a warrant was effected in terms of
s 40(1)(a) of the Criminal Procedure Act 51 of 1977.1 In addition, the
learned judge held that Captain Bekker was ‘not unreasonable in
entertaining a suspicion that a crime listed in Schedule 1 of the Criminal
Procedure Act was being committed’. This apparent reliance on
s 40(1)(b) of the Criminal Procedure Act2 was clearly incorrect, in that a
contravention of the Gathering Act is not one of the offences listed in
Schedule 1.
[14] The onus of justifying the arrests and detention of the appellants
lies upon the first respondent. See Zealand v Minister of Justice and
1 Section 40(1)(a) reads as follows:
‘(1) A peace officer may without warrant arrest any person ─
(a) who commits or attempts to commit any offence in his presence’.
2 Section 40(1)(b) reads as follows:
‘(1) A peace officer may without warrant arrest any person ─
. . .
(b) whom he reasonably suspects of having committed an offence referred to in Schedule1’.
Constitutional Development.3 In concluding that the appellants had
committed an offence, the court below clearly erred. The first appellant
and his group were only eight in number and the Gatherings Act
proscribes an assembly of more than 15 persons in a public place without
permission. The first appellant and his small group did not constitute a
‘gathering’ within the meaning of that Act. In section 1, a ‘gathering’ is
defined as follows:
‘“gathering” means any assembly, concourse or procession of more than 15 persons
in or on any public road as defined in the Road Traffic Act, 1989 (Act 29 of 1989), or
any other public place or premises wholly or partly open to the air . . .’.
There was therefore no evidence of a ‘gathering’, no offence had been
committed in the presence of Captain Bekker, and the first respondent
accordingly failed to discharge the onus of proving that the arrest of the
first appellant on 18 July 2003 without a warrant and the subsequent
detention of both appellants in a police cell at the Pretoria Moot Police
Station were justified.
[15] As regards the detention of the appellants at the Pretoria Central
Prison between the time of their arrival there in the late afternoon of
Monday 21 July (at which time bail was tendered and should have been
accepted by the prison authorities), and the release of the appellants on
bail the following day at about midday, counsel for the respondents did
not seriously contend that this period of detention could be justified. In
our view, therefore, the second respondent must be held liable for this
period of unlawful detention. Counsel for the appellants submitted that,
should this appeal succeed, both respondents should be held liable for the
damages in respect of claim 1, but that the first respondent should be
ordered to pay all the costs. This submission was not disputed by counsel
3 2008 (2) SACR 1 (CC) paras 24 and 25.
for the respondents and appears to be a practical one.
[16] We will now deal with the appellants’ claim for damages for
malicious prosecution (claim 2). The requirements for successful claims
for malicious prosecution have most recently been discussed in Minister
of Justice & Constitutional Development v Moleko4 as follows:
‘In order to succeed (on the merits) with a claim for malicious prosecution, a claimant
must allege and prove ─
(a)
that the defendants set the law in motion (instigated or instituted the
proceedings);
(b)
that the defendants acted without reasonable and probable cause;
(c)
that the defendants acted with “malice” (or animo injuriandi); and
(d)
that the prosecution has failed.’
As already indicated, in so far as this claim is concerned, requirements (a)
(b) and (d) above are not disputed by the respondents.
[17] Counsel for the respondent was content to pin his colours to the
mast solely in respect of requirement (c), arguing in this regard that it had
not been established that Captain Bekker had acted with malice. It was
submitted that, because Captain Bekker had sought legal advice before
effecting an arrest, malicious prosecution had not been established.
[18] The requirement of ‘malice’ has been the subject of discussion in a
number of cases in this court. The approach now adopted by this court is
that, although the expression ‘malice’ is used, the claimant’s remedy in a
claim for malicious prosecution lies under the actio injuriarum and that
what has to be proved in this regard is animus injuriandi. See Moaki v
Reckitt & Colman (Africa) Ltd & another5 and Prinsloo & another v
4 [2008] 3 All SA 47 (SCA) para 8.
5 1968 (3) SA 98 (A) at 103G-104E.
Newman.6 By way of further elaboration in Moleko it was said:
‘The defendant must thus not only have been aware of what he or she was doing in
instituting or initiating the prosecution, but must at least have foreseen the possibility
that he or she was acting wrongfully, but nevertheless continued to act, reckless as to
the consequences of his or her conduct (dolus eventualis). Negligence on the part of
the defendant (or, I would say, even gross negligence) will not suffice.’ (Para 64).
[19] The respondent’s argument as set out in para 14 above is
misconceived. The ‘malice’ must be that of the person responsible for
initiating the prosecution against the appellants. In this case, the
appellants were formally charged ─ with contravening the Gatherings Act
─ on Saturday 19 July 2003 by members of the SAPS at the Pretoria
Moot Police Station. It would appear that this is the stage at which the
proceedings were initiated. Although Captain Bekker’s police statement
was made only on 18 August 2003, it is safe to assume that the member
of SAPS who charged the appellants did so on the basis of the
information furnished to him or her by the arresting officer, viz that there
were only eight persons (four adults and four children) gathered at the
scene of the supposed ‘illegal gathering’. By no stretch of the imagination
could this ‘demonstration’ be regarded as a ‘gathering’ within the
meaning of the Gatherings Act.
[20] In this case, there can be no question that the person who charged
the appellants was aware of the fact that, by so doing, the appellants
would in all probability be ‘injured’ and their dignity (‘comprehending
also . . . [their] good name and privacy’)7 in all probability negatively
affected.8 Knowing that the ‘gathering’ in question comprised only eight
6 1975 (1) SA 481 (A) at 492A-B.
7 Relyant Trading (Pty) Ltd v Shongwe & another (2007) 1 All SA 375 (SCA) para 5.
8 See also the Moleko case para 65.
persons, the police member concerned must at the very least have
foreseen the possibility that no offence in terms of the Gatherings Act had
been committed and that, in charging the appellants with a contravention
of that Act, he or she was acting wrongfully. He or she nevertheless
continued so to act, reckless as to the possible consequences of his or her
conduct. In our view, he or she thus acted animo injuriandi.9 This being
so, the appellants proved the requirements of malicious prosecution and
their claim in this regard should have succeeded.
[21] We turn to the third claim based on the unlawful arrest of the first
appellant by Captain Ngobeni on 26 July 2003 and his subsequent
unlawful detention. It is not disputed that the first appellant was arrested
for sedition on 26 July 2003. There was, however, simply no evidence
that the first appellant had committed this offence.
[22] Captain Ngobeni’s evidence was that, upon his arrival at the scene,
he found more than 100 people. They were carrying banners with the
words ‘Vryheid vir die Boerevolk’, ‘May 1902 women and children
killed’, ‘Stem vir die doodstraf’, ‘Mbeki flies high while hungry children
die’ and ‘Democratic right to Freedom of speech, no to police state’. The
sentiments displayed on the banners do not by themselves suggest that the
first appellant was advocating unlawful insurrection. Captain Ngobeni’s
explanation as to what the banners meant showed a complete lack of
insight and can hardly be accepted as having founded a reasonable belief
that the offence of sedition was being committed.
[23] Another shortcoming in Captain Ngobeni’s evidence is the extent
to which it is contradicted by his police statement. In that statement he
9 See the passage from the Moleko case para 64, quoted in para 17 above.
did not mention that upon his arrival he found 100 persons on the scene.
On the contrary, he said that he noticed ‘two males standing next to the
banners and flags’ and that, when he told them to ‘stop and pack their
belongings’, they ‘refused by sitting down on their chairs while some
other members of the public [came] and signed some documents on their
tables’. This version tied up with the evidence given by the first appellant
and is at variance with Captain Ngobeni’s testimony during the trial.
[24] Captain Ngobeni’s evidence was that the purpose of the gathering
was to overthrow the government. On the contrary, the established facts
indicate that what the appellant was involved in was no more than a
peaceful protest. He stood there collecting donations from persons who
were supportive of his beliefs and policies. The petition that he was
asking people to sign stated that the person signing supported ‘die Orde
Boerevolk se poging om deur middel van onderhandeling ons vryheid te
verkry’ and further that, ‘in die proses van onderhandeling, ook in
gesprek getree sal word met ander organisasies waarvan die huidige Suid-
Afrikaanse regering deel is of deel kan uitmaak’ (emphasis added in both
instances). There was nothing seditious about his conduct or utterances. It
is probable that Captain Ngobeni was annoyed by his conduct or by the
tone of the placards, but such is the democratic society in which we find
ourselves. It behoves us to be tolerant even of views which may seem
unpalatable.
[25] The court below found that Captain Ngobeni was justified in
effecting the arrest without a warrant. It bears noting that the offence of
sedition is indeed one of the offences listed in Schedule 1 to the Criminal
Procedure Act. It is not, however, at all clear whether the trial court
applied s 40(1)(a) or s 40(1)(b) of the Act (or both) in coming to the
conclusion that the arrest was lawful. As no offence of sedition was
committed, s 40(1)(a) is clearly not applicable. Moreover, as it can hardly
be said that Captain Ngobeni reasonably suspected the first appellant of
committing sedition, the arrest also cannot be justified under s 40(1)(b). It
follows that the arrest was unlawful and that the trial court was wrong in
concluding otherwise.
[26] As regards the quantum of damages, the first and second appellants
claimed payment of R100 000 each in respect of claim 1 and R50 000
each in respect of claim 2. The first appellant also claimed R100 000 in
respect of claim 3. Counsel for the respondent did not contend that the
damages claimed were excessive. It needs to be pointed out at the outset
that the award of damages is by no means an easy task. The ever-
changing value of money makes reference to previous decisions not
altogether helpful. As was stated in Minister of Safety and Security v
Seymour,10 in the assessment of general damages the facts of the
particular case must be looked at as a whole. There the court dealt with
the case of a 63-year-old man who had been unlawfully arrested and
detained for five days. He was awarded damages in the amount of R500
000 by the trial court, but the award was reduced to R90 000 on appeal.
This court considered that the plaintiff had had free access to his family
and doctor throughout his detention at the police station and that he had
suffered no degradation beyond that inherent in being arrested and
detained. It also considered that, after the first 24 hours, the plaintiff had
spent the remainder of his detention in a hospital bed at a clinic and that,
although the experience had been traumatic and distressing, it warranted
no further medical attention after his release.
10 2006 (6) SA 320 (SCA) para 17.
[27] Although the imprisonment of the appellants in the present matter
was somewhat shorter that that in the Seymour case (viz for four nights
and three days), the humiliating conditions to which they were subjected
makes their case more serious than that of the plaintiff in Seymour. The
appellants were arrested and detained under extremely unhygienic
conditions in the Pretoria Moot police station. The cell in which they
were held was not cleaned for the duration of their detention. The
blankets they were given were dirty and insect-ridden and their cell was
infested with cockroaches. The shower was broken and they were unable
to wash. They had no access to drinking water. Throughout their
detention the first appellant, who suffers from diabetes, was without his
medication. They were not allowe to receive any visitors, not even family
members. The first appellant later wrote a letter to the Commissioner of
Police complaining about the conditions of their detention. As regards the
last night of their detention, viz the night spent in the Pretoria Central
Prison, there is no evidence regarding the conditions under which they
were detained. Both appellants testified, however, that their reputations
had been negatively affected by the detention ─ as the first appellant put
it, ‘in our country a jail bird is a jail bird’ ─ and the first appellant also
stated that his illness had been aggravated by his period of detention.
[28] After his arrest on 26 July by Captain Ngobeni, the first appellant
was taken to Mamelodi police station and detained there for two nights
and one full day (from about 18h00 on Saturday 26 July 2003 to about
08h00 on Monday 28 July 2003). The conditions were little better than at
the Pretoria Moot Police Station. He was made to sleep on a small coarse
mattress in a freezing cell and was not even provided with a blanket on
the first night. It was only on the Sunday that his wife was allowed to
visit him and bring him his medication and a sleeping bag.
[29] Counsel for the respondent advanced no argument in respect of the
amounts of damages claimed. However, in our view, there can be no
doubt that the indignity to which the appellants were subjected merits
substantial damages. For the arrest and detention of the appellants in
respect of the first claim, we consider that an award of R100 000 each (as
claimed) would be appropriate. Similarly, in respect of claim 2 (malicious
prosecution), the amount of R50 000 damages claimed by each appellant
is appropriate. As regards claim 3 (the second unlawful arrest and
detention of the first appellant), although the conditions of detention were
most unsatisfactory, it would appear that they were not as bad as in
respect of the first claim. Moreover, the period of detention was
considerably shorter. An appropriate award in respect of the third claim is
R50 000.
[30] In the result the appeal succeeds with costs, the costs to be paid by
the first respondent. The order of the court below is set aside and replaced
with the following order:
‘1.
Judgment is granted in favour of the first plaintiff as follows:
(a)
(i)
against the first and second defendants jointly and
severally, the one paying the other to be absolved, for
payment of damages in the sum of R100 000 in respect of
claim 1;
(ii)
against the first defendant for payment of damages in
the sum of R50 000 in respect of claim 2;
(iii)
against the first defendant for payment of damages in
the sum of R50 000 in respect of claim 3.
(b)
Interest on each of the above amounts will run at the
prescribed rate a tempore morae (from 5 April 2007) to date
of payment.
(c)
The first defendant is ordered to pay the costs of suit.
2.
Judgment is granted in favour of the second plaintiff as follows:
(a)
(i)
against the first and second defendants jointly and
severally, the one paying the other to be absolved, for
payment of damages in the sum of R100 000 in respect of
claim 1;
(ii)
against the first defendant for payment of damages in
the sum of R50 000 in respect of claim 2.
(b)
Interest on each of the above amounts will run at the
prescribed `rate a tempore morae (from 5 April 2007) to date of
payment.
(c)
The first defendant is ordered to pay the costs of suit.’
____________________________
KK MTHIYANE
JUDGE OF APPEAL
____________________________
BJ VAN HEERDEN
JUDGE OF APPEAL
Appearances:
For Appellant:
G C Muller
M B Matlejoane
Instructed by:
Coetzer Attorneys Pretoria
Azar & Havenga Bloemfontein
For Respondent:
B R Tokota SC
K Mokotedi
Instructed by:
The State Attorney Pretoria
The State Attorney Bloemfontein
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
31 March 2009
STATUS:
Immediate
Rudolph v Minister of Safety and Security (380/2008)[2009] ZASCA 39 (31
March 2009)
Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal
The SCA today upheld an appeal by Mr Petrus Johannes Rudolph and Mr Wentzel
Laubscher against the dismissal of their claims by the Pretoria High Court for
damages against the Minister of Safety and Security and The Minister of Correctional
Services.
Mr Rudolph and Laubscher had claimed for damages for alleged unlawful arrests,
detention and malicious prosecution arising out of their arrest and detention on 18
July 2003.
Mr Rudolph also claimed for the unlawful arrest and detention on 26 July 2004.
The SCA found that the High Court erred in rejecting their claims and awarded each
substantial damages amounting to more than R100 000.
|
1542
|
non-electoral
|
2008
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 143/08
In the matter between:
LEGATOR McKENNA INC
FIRST APPELLANT
M H G McKENNA
SECOND APPELLANT
And
CLARE VERONICA SHEA
FIRST RESPONDENT
JAMIE ERSKINE
SECOND RESPONDENT
THE MASTER OF THE HIGH COURT
(NATAL PROVINCIAL DIVISION)
THIRD RESPONDENT
THE REGISTRAR OF DEEDS
(PIETERMARITZBURG)
FOURTH RESPONDENT
ABSA BANK LIMITED
FIFTH RESPONDENT
Neutral citation:
Legator McKenna Inc v Shea (143/2008) [2008] ZASCA
144 (27 November 2008)
CORAM:
HARMS ADP, BRAND, CLOETE, PONNAN JJA et
LEACH AJA
HEARD:
17 NOVEMBER 2008
DELIVERED:
27 NOVEMBER 2008
CORRECTED:
SUMMARY:
Act 66 of 1965 – sale of estate property by curator bonis
prior to issue of letters of curatorship under s 72 of the
Act – subsequent transfer of property pursuant to sale –
abstract theory of transfer – validity of real agreement
notwithstanding invalidity of sale – non-availability of
enrichment claim.
ORDER
On appeal from:
High Court, Durban (Motala AJ)
sitting as court of first instance
1.
The appeal is upheld with costs, including the costs of two counsel
where employed.
2.
The order of the court a quo is set aside and substituted with the
following:
'The plaintiff's claim 1 is dismissed with costs.'
JUDGMENT
BRAND JA (Harms ADP, Cloete, Ponnan JJA et Leach AJ A concurring)
[1] The first appellant, Legator McKenna Inc, is an incorporated firm of
attorneys in Durban. The second appellant, Mr Michael McKenna
('McKenna'), is an attorney in that firm. On 8 March 2002 McKenna was
appointed as curator bonis to the estate of the first respondent, Ms Clare
Shea ('Shea'), by order of the Durban High Court. The reason for his
appointment was that Shea had been found incapable of managing her own
affairs as a result of brain injuries she sustained in a motor vehicle accident
on 5 February 2002. At the time, Shea was the registered owner of a house in
Berea, Durban. On 22 April 2002 McKenna, in his capacity as curator bonis,
purported to sell the house to a married couple, Mr and Mrs Erskine ('the
Erskines') – who are the joint second respondents in these proceedings – for
R540 000. The reason why I refer to the transaction as 'a purported sale' will
soon appear. In the interest of brevity and without prejudicing any issues,
however, I will henceforth refer to the transaction simply as 'a sale'. Pursuant
to the sale, the house was subsequently transferred to the Erskines by
registration in the Pietermaritzburg Deeds Office.
[2] Contrary to medical expectations, so it seems, Shea then recovered
from the consequences of her brain injuries, to the extent that the Durban
High Court declared her capable of managing her own affairs. This happened
on 10 March 2003. Slightly more than a year later she instituted an action in
the same court for the return of her house, which eventually led to the present
proceedings. The first three defendants in the action were the two appellants
and the Erskines. Other defendants, who abided the decision of the court,
were the Master of the High Court, the Registrar of Deeds and the bondholder
over the house who advanced the purchase price to the Erskines. Litigation
thus proceeded between Shea, the two appellants and the Erskines.
[3] Shea's main claim in the action, referred to as claim 1, was essentially,
as I have indicated, that the transfer of her house to the Erskines be declared
invalid and that the house be returned to her against repayment of the
purchase price. I shall return later in more detail to the cause of action
advanced in support of this claim. Broadly stated, however, she contended
that the contract of sale between McKenna and the Erskines, which gave rise
to the transfer, was invalid in that it was concluded by McKenna before the
Master had issued him with letters of curatorship in terms of s 72(1)(d) of the
Administration of Estates Act 66 of 1965 ('the Act').
[4] Shea also formulated two claims for damages, claims 2 and 3, against
the two appellants; one in addition, and the other in the alternative, to her
main claim. These claims are not material to the appeal. Of some
consequence, however, albeit indirectly, is a conditional third party claim by
the Erskines against the two appellants. It is formulated on the supposition
that Shea would be successful in her claim for return of the house. In this
event, the Erskines claimed damages from the appellants in the amount of
about R1,7 million, for the loss they would allegedly suffer through McKenna's
breach of an implied warranty that he was authorised to sell Shea's house.
[5] At the commencement of the trial the parties asked the court a quo
(Motala AJ) to order a separation of issues. In terms of the separation order
the issues relating to Shea's main claim for return of the house were to be
decided first. The remaining issues concerning Shea's two claims for
damages, as well as the Erskine's conditional third party claim, stood over for
later determination. The parties also agreed that the issues surrounding the
main claim were to be decided on the factual basis set out in a document
entitled 'Admitted Facts' and the supporting documents attached thereto.
Despite an additional term of the agreement that any party would be free to
lead further evidence, no-one elected to do so at the trial.
[6] In the event, the preliminary issues were decided in favour of Shea.
Hence the court a quo declared the contract of sale concluded between
McKenna and the Erskines both illegal and void, and directed the Registrar of
Deeds to cancel the registration of transfer of the house to the Erskines,
against repayment of the purchase price by Shea. In addition, the two
appellants and the Erskines were ordered, jointly and severally, to pay the
costs of the preliminary proceedings. The two appellants then sought and
obtained the court a quo's leave to appeal to this court. The Erskines, on the
other hand, sought no such leave. That is why they were joined as joint
second respondents on appeal. On the face of it, the court a quo's order
seems to have an immediate impact on the Erskines only. But in the light of
the outstanding issues, and particularly the Erskine's conditional third party
claim for damages against the appellants, it is apparent that the appellants
have a very real interest in the outcome of the appeal.
[7] Central to an appreciation of the issues on appeal is the sequence of
material events. Resulting from the way in which the facts were presented at
the trial, these events were not in dispute. A convenient date to start the
sequence is 8 March 2002. That, as we know, was the date upon which
McKenna was appointed as curator bonis to Shea's estate. On 27 March
2002, he instructed Wakefields Estate Agents, who had valued Shea's house
at R525 000, to find a purchaser for R550 000. On 19 April 2002, Wakefields
presented him with an offer, signed by the Erskines, for R520 000 which they
increased at McKenna's request to R540 000. On 22 April 2002 McKenna
signed the amended offer as seller. Alongside his signature he wrote the word
'curator' and below all that he added, again in his own handwriting and in
parenthesis '(subject to approval of Master of High Court)'.
[8] On 3 June 2002 the Master issued McKenna with letters of curatorship
in terms of s 72(1)(d) of the Act. At first sight the sale of the house by
McKenna before he obtained his letters of curatorship appears to have
occurred with unseemly haste. One's instinctive reaction is that, as an
attorney, he should have known better than to do so. But his reasons for
doing so appear from the documents attached to the 'Admitted Facts'.
Essentially they amounted to this: while the house was Shea's only asset
worthy of note, she had a number of pressing debts. Some of these debts,
such as the insurance premiums and rates and taxes on the house, could be
avoided by the sale. Others, like the premiums on her life policies and her
children's school fees, were in need of urgent settlement from the proceeds of
the sale. In the circumstances, McKenna obviously thought that it was in
Shea's best interests to sell the house as soon as possible. What McKenna
also knew was that Shea had herself attempted to sell the house for the
greater part of the previous year for R500 000, but that she had been
unsuccessful in obtaining a buyer at that price. He therefore considered
R540 000 a good price.
[9] To complete the chronological picture: on 17 July 2002 the Master
granted his consent for the sale of Shea's house. Transfer to the Erskines was
registered in the Deeds Office on 27 July 2002. In both the power of attorney
authorising the transfer, signed by McKenna, as well as the transfer deed
itself, the causa for the transfer is described as a sale which was concluded
between McKenna and the Erskines on 22 April 2002.
[10] The court a quo's reasons as to why, on these facts, Shea was entitled
to the return of the house can be summarised thus:
•
The agreement between McKenna and the Erskines was illegal and
invalid because it was concluded at a time when McKenna had not yet
received his letters of curatorship. In consequence, so the court held, the sale
constituted a contravention of s 71(1) of the Administration of Estates Act and
indeed rendered McKenna guilty of a criminal offence under s 102(1)(g) of the
Act.
•
Because the agreement of sale, which formed the causa of the transfer to
the Erskines, was invalid, Shea was entitled to the return of her property.
•
The jurisprudential basis for the return of the property to her is dependent
upon whether or not ownership passed notwithstanding the void underlying
causa for transfer.
•
If ownership did not pass, Shea had a real right to vindicate the property
as owner.
•
If, on the other hand, ownership did pass to the Erskines, Shea had a
personal right to claim the return of the property from them – as immediate
parties to the transaction – on the basis of the condictio ob turpem vel
iniustam causam.
[11] The appellants' answers to the court a quo's line of reasoning were
manifold. First among these was the contention that the court a quo erred in
finding that the sale agreement, which led to the transfer, constituted a
contravention of s 71(1) of the Act. In considering this contention, it seems
appropriate to start with the wording of s 71(1). In so far as relevant, the
section provides:
'(1) No person who has been . . . appointed . . . as provided in section seventy two
shall take care of or administer any property belonging to the minor or other person
concerned, or carry on any business or undertaking of the minor or other person,
unless he is authorized to do so under letters of tutorship or curatorship as the case
may be, granted . . . under this Act . . ..'
[12] Section 72, to which reference is made in s 71(1), covers a wide range
of tutors and curators for minors and other persons. The position of a curator
bonis, like McKenna, who was appointed by order of court, is governed by
s 72(1)(d). It provides as follows:
'(1) The Master shall . . . on the written application of any person-
(d)
who has been appointed by the Court or a judge to administer the property of
any minor or other person as tutor or curator . . .
grant letters of tutorship or curatorship, as the case may be, to such person.'
To complete the legislative matrix, there is s 102(1)(g) of the Act. It provides
inter alia that:
'Any person who . . . contravenes or fails to comply with the provisions of section . . .
71 . . . shall be guilty of an offence and liable on conviction . . . to a fine or to
imprisonment for a period not exceeding twelve months.'
[13] The appellants' contention that the agreement of sale between
McKenna and the Erskines did not contravene s 71(1) was based on the
premise that it was not a final agreement, but conditional upon the Master's
approval of the transaction. As the factual basis for this premise they relied, of
course, on the words 'subject to approval of Master of High Court' which
McKenna inserted below his signature on the Deed of Sale when he
purported to accept the Erskines' offer on 22 April 2002. Because of this
condition, so the argument went, the sale would only become final and
binding if and when the Master's approval to the transaction had been
obtained. And, so the argument proceeded, because the Master would never
give his approval to a transaction unless and until he had issued letters of
curatorship to the curator bonis, the agreement would, as a matter of course,
only become final and binding after the requirement of s 71(1) had been
fulfilled. This, so the appellants argued, is exactly what eventually happened.
The Master only gave his approval to the sale on 17 July 2002. Then and only
then did the sale become binding. But by then McKenna's letters of a
curatorship had been issued. Thus, the appellants' argument concluded,
nothing was done by McKenna which could in any way impact on the property
of Shea before his letters of curatorship had been issued.
[14] The court a quo considered this line of argument and found it wanting.
The flaw in the argument, so the court held, was that the sale was entered
into by McKenna was not conditional, but from the outset final and
enforceable. The court's reasoning behind this conclusion went as follows:
The Master's consent to the transaction was required by s 80(1) of the Act.
The 'condition' imposed by McKenna was therefore already implied by law.
Since it was not an additional requirement, it could not in itself render the
agreement conditional.
[15] I do not agree with the court a quo's reasoning. First, I am not aware of
any rule that a contract cannot be rendered subject to compliance with a
condition imposed by statute. In fact, I can think of many examples which
would support a contention to the contrary. But be that as it may, as I see it,
the Master's consent was not directly required by s 80(1). According to this
section: 'no curator shall alienate or mortgage any immovable property which
he has been appointed to administer, unless he is authorised thereto by the
[High] Court or by the Master'. In terms of s 80(2) the Master's jurisdiction to
grant permission under s 80(1) is, however, limited to immovable property of
which the value does not exceed the amount determined by the Minister of
Justice in the Government Gazette. At all relevant times that amount was
fixed at R100 000 (see GN 2333 in GG 15 308 of 1 December 1993).
Because the value of Shea's house exceeded that amount, the Master had no
authority to authorise the sale under s 80(1). McKenna required the
permission of the High Court. That permission had, however, been granted
beforehand in terms of para 2(g) of the order appointing McKenna as curator
bonis to the estate of Shea, but subject to the following proviso in para 6 of
the order:
'The powers conferred upon the curator bonis in terms of paragraphs (a) to (j) of
paragraph 2 hereof shall be exercised subject to the approval of the Master of the
High Court.'
[16] McKenna was therefore obliged to acquire the Master's consent to the
transaction, not because of s 80(1) of the Act, but because of the provisions of
the court order. Thus understood, no reason has been suggested – and I can
think of none – why McKenna could not competently make his acceptance of
the Erskine's offer subject to the condition that there be compliance with a
requirement imposed by the order from which he derived his authority to sell
the property. On the contrary, because the offerors could not be expected to
have been aware of the terms of the court order, it was necessary for
McKenna to add this condition. Absent such condition, he ran the risk of
personal liability on the basis of an implied warranty of authority if the Master's
consent could ultimately not be obtained.
[17] The words inserted by McKenna would therefore render any
agreement between him and the Erskines subject to the suspensive condition
of the Master's approval. The question that immediately arises is whether in
these circumstances a conditional agreement of sale had been concluded
between McKenna and the Erskines, or whether there was no agreement at
all. What gives rise to the question is of course the trite principle that a binding
contract can only be brought about by an acceptance which corresponds with
the offer in all material aspects. 'Yes, but' does not signify agreement. At best
it is a counter-offer (see eg Jones v Reynolds 1913 AD 366 at 370-371;
Pretoria East Builders CC v Basson 2004 (6) SA 15 (SCA) para 9; R H
Christie The Law of Contract in South Africa 5 ed at 62-3 and the cases there
cited). Since the Erskines offered an unconditional agreement while McKenna
agreed to a conditional one, I think the difference between offer and
acceptance is clear. It follows that in my view McKenna did not accept the
offer by the Erskines, even though they may all have thought that he did. As a
matter of law, this purported acceptance constituted no more than a counter-
offer.
[18] An inevitable consequence of these conclusions is that a valid
agreement of sale could only come into existence if the Erskines
subsequently accepted McKenna's counter-offer. It was contended in
argument that the Erskines did so when they executed the conveyancing
documents. Apart from the fact that it does not appear from the agreed facts
what conveyancing documents, if any, the Erskines had executed, I have a
more fundamental difficulty with this contention. It arises from the requirement
in s 2(1) of the Alienation of Land Act 68 of 1981, namely that a sale of land
can only be valid if contained in a written deed of alienation, signed by both
parties or their agents acting on their authority. Although the execution of
conveyancing documents could conceivably constitute an implied acceptance
by conduct, such acceptance would not satisfy the requirements of this Act.
That much was expressly held in Jackson v Weilbach's Executrix 1907 TS
212. In that case there was no written agreement of sale. Nonetheless it was
argued that the declarations signed by both the purchaser and the seller for
transfer duty purposes constituted a written agreement within the meaning of
s 30 of Proc 8 of 1902, which was the predecessor to s 2(1). To this argument
Innes CJ gave the following answer (at 216):
'But do these declarations of purchaser and seller constitute such a contract? In form
they certainly do not; the declaration of the seller is not an offer, and the declaration
of the purchaser is not an acceptance. Nor is there anything to show that the parties,
when they signed these declarations, intended to enter into any contract. The
declarations were signed for revenue purposes, and they purport not to embody a
contract constituted in terms of the documents themselves, but to record that a prior
contract had been entered into at a date therein mentioned.'
(See also eg Van Zyl v Potgieter 1944 TPD 294 at 296; Meyer v Kirner 1974
(4) SA 90 (N) at 102D-H.)
[19] The finding that the purported sale between McKenna and the Erskines
was never properly concluded, renders it unnecessary to decide whether a
conditional agreement of sale, subject to the approval of the Master, would
constitute a contravention of s 71(1) of the Administration of Estates Act. The
appellants' argument that it did not rested on the proposition that such
agreement was in fact aimed at compliance, as opposed to a contravention, of
the section. Moreover, so the argument went, an agreement subject to such
condition would never put the estate of the ward at risk of an alienation
without the sanction of the Master. On a proper construction of s 71(1), so it
was argued, the acts of administration and taking care of the ward's property
that are prohibited by the section must be confined to transactions involving a
risk of prejudice to the estate of the ward. If it were otherwise, so it was
argued, appointed curators would commit a crime if, prior to the issue of their
letters of curatorship, they performed an act in the interest of their wards in
circumstances where everybody else would qualify as a negotiorum gestor.
(As to these circumstances, see eg Standard Bank Financial Services Ltd v
Taylam (Pty) Ltd 1979 (2) SA 383 (C); Daniel Visser Unjustified Enrichment
136.) Even though these arguments may have merit, they relate to an issue
which, for the reasons I have given, requires no determination in this case and
I would therefore prefer not to commit myself either way.
[20] This brings me to the next enquiry. Should the transfer of the house to
the Erskines be regarded as valid despite the invalidity of the underlying sale
which was the causa for the transfer? The appellants' contention that it
should, was rooted in the assumption that the abstract theory – as opposed to
the causal theory – of transfer has been adopted as part of our law. According
to the abstract theory the validity of the transfer of ownership is not dependent
upon the validity of the underlying transaction such as, in this case, the
contract of sale. The causal theory, on the other hand, requires a valid
underlying legal transaction or iusta causa as a prerequisite for the valid
transfer of ownership (see eg Trust Bank van Afrika Bpk v Western Bank Bpk
en Andere NNO 1978 (4) SA 281 (A) 301H-302H, Van der Merwe, Sakereg, 2
ed at 305-306). With regard to the transfer of movables our courts, including
this court, have long ago opted for the abstract theory in preference to the
causal theory (see eg Commissioner of Customs and Excise v Randles
Brothers and Hudson Ltd 1941 AD 369 at 398-9; Dreyer and Another NNO v
AXZS Industries (Pty) Ltd 2006 (5) SA 548 (SCA) para 17).
[21] Some uncertainty remained, however, with regard to the transfer of
immovable property. In the High Courts that uncertainty has been eliminated
in a number of recent decisions where it was accepted that the abstract
system applies to movables and immovables alike (see eg Brits v Eaton NO
1984 (4) SA 728 (T) at 735E; Klerck NO v Van Zyl and Maritz NNO and
Related Cases 1989 (4) SA 263 (SE) 273D-274C; Kriel v Terblanche NO
2002 (6) SA 132 (NC) paras 28-49). These decisions are supported by
academic authors advancing well-reasoned arguments (see eg D L Carey-
Miller The Acquisition and Protection of Ownership 128-130 and 168; C G van
der Merwe Sakereg op cit at 305-310; C G van der Merwe and J M Pienaar
2002 Annual Survey 466 at 481; Silberberg and Schoeman's The Law of
Property, 5 ed (by Badenhorst, Pienaar and Mostert, 76). In view of this body
of authority I believe that the time has come for this court to add its stamp of
approval to the viewpoint that the abstract theory of transfer applies to
immovable property as well.
[22] In accordance with the abstract theory the requirements for the passing
of ownership are twofold, namely delivery – which in the case of immovable
property, is effected by registration of transfer in the Deeds Office – coupled
with a so-called real agreement or 'saaklike ooreenkoms'. The essential
elements of the real agreement are an intention on the part of the transferor to
transfer ownership and the intention of the transferee to become the owner of
the property (see eg Air-Kel (Edms) Bpk h/a Merkel Motors v Bodenstein 1980
(3) SA 917 (A) at 922E-F; Dreyer and Another NNO v AXZS Industries (Pty)
Ltd (supra) para 17). Broadly stated, the principles applicable to agreements
in general also apply to real agreements. Although the abstract theory does
not require a valid underlying contract, eg sale, ownership will not pass –
despite registration of transfer – if there is a defect in the real agreement (see
eg Preller v Jordaan 1956 (1) SA 483 (A) 496; Klerck NO v Van Zyl and Maritz
NNO (supra) 274A-B; Silberberg and Schoeman op cit, 79-80).
[23] The court a quo found that in this case ownership did not pass because
of two defects in the real agreement. The first defect, so the court held, was
that McKenna's intention to transfer ownership had been motivated by the
mistaken belief that he had entered into a valid agreement of sale. In support
of this finding the court referred to the power of attorney to pass transfer
signed by McKenna, as well as the deed of transfer itself where the sale
agreement of 22 April 2002 was cited as the causa for McKenna's intention to
transfer the property. In this light, so the court held, it cannot be inferred that
McKenna intended to transfer the property even if the sale agreement turned
out to be null and void. In the same way as the court a quo, I also believe that
McKenna – as well as the Erskines, for that matter – probably thought that the
sale agreement of 22 April 2002 was valid and enforceable. And, albeit for
different reasons, I also share the court a quo's view that the parties were
mistaken in that belief. But I do not agree that a mistake of that kind could in
itself render the real agreement void. If that were the position, we would
effectively revert to the causal theory of transfer which we have jettisoned in
favour of the abstract theory. I say that because I believe that very few parties
(if any) to real agreements would deliberately give and receive transfer
pursuant to an underlying transaction which, to their knowledge, is void. If a
mistaken belief of this kind – whether unilateral or common – were therefore
to render the real agreement invalid, there would not be much left of the
abstract theory of transfer.
[24] In any event, a mistaken assumption about the validity of the
underlying causa constitutes a mistake in motive. With regard to mistakes of
this kind, it was said in Van Reenen Steel (Pty) Ltd v Smith NO 2002 (4) SA
264 (SCA) para 9:
'A party cannot vitiate a contract based upon a mistaken motive relating to an
existing fact, even if the motive is common, unless the contract is made dependent
upon the motive, or if the requirements for a misrepresentation are present.'
And in African Realty Trust Ltd v Holmes 1922 AD 389 at 403 it was said:
'But, as a Court, we are after all not concerned with the motives which actuated the
parties in entering into the contract, except insofar as they were expressly made part
and parcel of the contract or are part of the contract by clear implication.'
In consequence, I find that McKenna's mistake about the validity of the sale
had no effect on the effectiveness of the real agreement.
[25] The second defect in the real agreement found by the court a quo
essentially resulted from the following reasoning: The legislature's intention,
so the court held, was to visit a sale agreement in contravention of s 71(1)
with invalidity. Since that intention cannot be circumvented by application of
the abstract theory of transfer, the original non-compliance with s 71(1) could
not be cured by a real agreement. I do not agree with this line of reasoning.
For purposes of the argument, I assume, without deciding, that the legislature
intended any transaction in contravention of s 71(1) to be void. On this
assumption a sale concluded by a curator without letters of curatorship would
be invalid; so would a real agreement; and transfer by a curator without letters
of curatorship would therefore not pass ownership to the transferee (cf
Mngadi NO v Ntuli 1981 (3) SA 478 (D); D L Carey- Miller op cit at 164). But in
this case McKenna had received his letters of curatorship before he
concluded the real agreement. This means that he was properly authorised to
enter into that agreement when he did so. The real agreement therefore did
not contravene s 71(1). The fact that McKenna lacked authority when he
purported to enter into the prior agreement of sale, is of no consequence. In
view of the abstract theory, it did not affect the validity of the real agreement
(se eg Kriel v Terblanche NO 2002 (6) SA 132 (NC) para 46). To transpose
McKenna's lack of authority when he concluded the sale to the real
agreement is to ignore the implications of the abstract theory. I therefore hold
the view that the house was validly transferred to the Erskines. In
consequence I conclude that the court a quo erred in upholding Shea's claim
for the restoration of her property on the basis of the rei vindicatio.
[26] As I have said earlier, the court a quo further held that even if
ownership had duly passed to the Erskines, Shea was entitled to reclaim the
house from them on the basis of the condictio ob turpem vel iniustam causam.
Because of that finding, the court held that a defence based on what has
become known as the 'rule in Wilken v Kohler', was not available to the
appellants. Succinctly stated, the rule provides that, if both parties to an
invalid agreement had performed in full, neither party can recover his or her
performance purely on the basis that the agreement was invalid. The 'rule'
has its origin in an obiter dictum by Innes JA in Wilken v Kohler 1913 AD 135.
In context, Innes JA was dealing with performance under sales of land that
were invalid for want of compliance with a statute requiring the contract to be
in writing. In the course of his judgment he then stated (at 144) obiter, as it
turned out, that:
‘It by no means follows that because a court cannot enforce a contract which the law
says shall have no force, it would therefore be bound to upset the result of such a
contract which the parties had carried through in accordance with its terms. Suppose,
for example, an . . . [oral] agreement of sale of fixed property . . ., a payment of the
purchase price and due transfer of the land. Neither party would be able to upset the
concluded transaction on the mere ground that . . . it was in reality an agreement to
sell, invalid and unenforceable in law, but which both seller and purchaser proposed
to carry out.’
[27] This obiter statement has been criticised in CD Development Co (East
Rand)(Pty) Ltd v Novick 1979 (2) SA 546 (C) at 550F-553G and by academic
authors as a departure from the accepted approach to enrichment liability
(see eg De Vos Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg 3 ed
189; De Wet & Van Wyk Die Suid-Afrikaanse Kontraktereg en Handelsreg
5 ed Vol 1 326). Nonetheless it was referred to with apparent approval by this
court in Wilkens NO v Bester 1997 (3) SA 347 (SCA) at 362F and endorsed
by the legislature, specifically with reference to contracts of the sale of land,
invalid for non-compliance with formalities, in s 28(2) of the Alienation of Land
Act 68 of 1981. I shall return to this section. But, outside the sphere of cases
concerning the sale of land, the debate whether the rule in Wilken v Kohler
represents good law, continues (see eg Visser op cit 468; Eiselen en Pienaar
Unjustified Enrichment – A Casebook 2ed at 157; Wille's Principles of South
African Law 9 ed (General editor Francois du Bois) sv 'Unjustified Enrichment'
1068).
[28] Those who support the rule in Wilken v Kohler find justification for its
existence in the consideration that where both parties have performed in
accordance with the provisions of an agreement, albeit unenforceable, the
purpose of the transaction has been achieved and that there is therefore no
reason to interfere with the existing state of affairs. The underlying
consideration of policy seems to be that those who received exactly what they
bargained for should not be allowed to escape the consequences of a bad
bargain by means of an enrichment action which is intended to be an
equitable remedy (see eg Helen Scott Unjust Enrichment by Transfer in South
African Law: Unjust Factors or Absence of Legal Ground? Doctoral thesis
Oxford 2005 296 et seq; J C Sonnekus ‘Is die Ongegronde van Afgesproke
Prestasie Steeds Verryking?’ 2008 TSAR 605 at 610-612; Daniel Visser op cit
469-470). In the light of this explanation, which I find persuasive, I believe the
time has come for this court to express its unequivocal approval of the Wilken
v Kohler rule. Moreover, although on the facts of Wilken v Kohler Innes JA
was dealing with an agreement which he described as void (at 142) for non-
compliance with statutory formalities, I can see no reason why the rule should
not apply in a case where, despite the non-existence of any agreement, the
parties' intention has been achieved. In both cases the condictio indebiti
would normally be available because the transfer was motivated by a
mistaken belief relating to the validity or the existence of the underlying
agreement. And in both cases Wilken v Kohler would constitute an exception
to the condictio indebiti for the same reason, ie that the purpose of the
transaction had been achieved.
[29] From the 'achieved purpose' analysis it is clear, however, that the
Wilken v Kohler rule cannot apply where the purpose of the transaction is
prohibited by law. The law cannot preserve a transaction which it has
prohibited. It follows that a defence based on that rule is not available against
a claim brought under the condictio ob turpem vel in iustam causam. That
much was expressly held by this court in Afrisure CC v Watson NO [2008]
ZASCA 89 para 49 (see also M C C Bazaar v Harris & Jones (Pty) Ltd 1954
(3) SA 158 (T) at 162F; Daniel Visser op cit 415 note 1 and 470).
[30] The court a quo therefore rightly departed from the premise that if Shea
could rely on the condictio ob turpem vel in iustam causam, the Wilken v
Kohler defence would not be available to the appellants. The question is thus
whether Shea could rely on that condictio. I think not. Illegality of the
underlying transaction is an essential element of the condictio ob turpem vel
in iustam causam. That much is trite (see eg Afrisure (supra) para 5). On the
facts I have found, McKenna did not enter into any illegal agreement. He
either entered into an agreement which was invalid for lack of compliance with
the formalities prescribed by s 2(1) of the Alienation of Land Act 68 of 1981 –
because the Erskines accepted his counter-offer by implication, but not in
writing – or – in the absence of an implied acceptance – he entered into no
agreement at all. In the event of the former, the situation is governed by
s 28(2) of that Act which provides:
'Any alienation which does not comply with the provisions of section 2(1) shall in all
respects be valid ab initio if the alienee had performed in full terms of the deed of
alienation or contract and the land in question had been transferred to the alienee.'
[31] If, on the other hand, no agreement of sale came into existence
because there was not even an implied acceptance of McKenna's counter-
offer, the principle, in accordance with Wilken v Kohler, is that if both parties
to an invalid or purported agreement have performed in full, neither party can
recover where the lawful purpose of their transaction, common to them both,
has been achieved. In either event, Shea could not succeed with an
enrichment claim. It follows that, in my view, the court a quo erred in finding
that Shea was entitled to return of the house.
[32] In consequence it is ordered that:
(1)
The appeal is upheld with costs, including the costs of two counsel
where employed.
(2)
The order of the court a quo is set aside and substituted with the
following:
'The plaintiff's claim 1 is dismissed with costs.'
……………….
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
D J SHAW QC
N SINGH SC
INSTRUCTED BY:
WOODHEAD, BIGBY & IRVING INC
DURBAN
CORRESPONDENTS:
CLAUDE REID
BLOEMFONTEIN
FOR RESPONDENT:
M PILLEMER SC
INSTRUCTED BY:
BERCOWITZ COHEN, WARTSKI ATTORNEYS
DURBAN
CORRESPONDENTS:
LOVIUS BLOCK
BLOEMFONTEIN
|
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
30 November 2005
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal
LEGATOR McKENNA INC
FIRST APPELLANT
M H G McKENNA
SECOND APPELLANT
And
CLARE VERONICA SHEA
FIRST RESPONDENT
JAMIE ERSKINE
SECOND RESPONDENT
THE MASTER OF THE HIGH COURT
(NATAL PROVINCIAL DIVISION)
THIRD RESPONDENT
THE REGISTRAR OF DEEDS
(PIETERMARITZBURG)
FOURTH RESPONDENT
ABSA BANK LIMITED
FIFTH RESPONDENT
Today the SCA upheld the appellants' appeal against an order by the
Durban High Court in favour of the first respondent. The appellants were,
Legator McKenna Inc, an incorporated firm of attorneys and Mr Michael McKenna
('McKenna'), an attorney in that firm. On 8 March 2002 McKenna was appointed as
curator bonis to the estate of the first respondent, Ms Clare Shea ('Shea'), by order
of the Durban High Court. The reason for his appointment was that Shea had been
found incapable of managing her own affairs as a result of brain injuries she
sustained in a motor vehicle accident on. At the time, Shea was the registered owner
of a house in Berea, Durban. On 22 April 2002 McKenna, in his capacity as curator
bonis, sold the house to a married couple, Mr and Mrs Erskine ('the Erskines') for
R540 000. . Pursuant to the sale, the house was subsequently transferred to the
Erskines by registration in the Pietermaritzburg Deeds Office.
Shea then, contrary to medical expectations, recovered from the consequences of
her brain injuries to the extent that she was declared capable of managing her own
affairs. Subsequently she successfully instituted an action in the same court for the
return of her house which led to the present appeal.
Broadly stated, her cause of action for the return of her house which was upheld by
the Durban High Court, was that the contract of sale between McKenna and the
Erskines, which gave rise to the transfer, was invalid in that it was concluded by
McKenna before the Master had issued him with letters of curatorship in terms of
s 72(1)(b) of the Administration of Estates Act 66 of 1965.
The Supreme Court of Appeal held, however, that an agreement of sale never came
into existence in that on a proper construction of McKenna's purported acceptance
of the offer to purchase by Erskines it was in fact not an acceptance but a counter-
offer. Since this counter-offer had not been accepted by the Erskines, so the SCA
held, the requirements of a valid agreement of sale had not been satisfied.
Despite the invalidity of the underlying agreement of sale, so the SCA further held,
the transfer of Shea's house was, however, valid because McKenna had received
his letters of curatorship in terms of s 72(1)(d) of the Act before he caused Shea's
house to be transferred to the Erskines. The SCA furthermore confirmed a rule of
our law, that where both parties to a purported or invalid agreement had performed
in full, neither party can recover his or her performance where the legitimate and
lawful purpose of their transaction, common to them both, has been achieved.
That, in short, is why the SCA did not agree with the High Court's finding that Ms
Shea was entitled to claim the return of her house.
|
1804
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 338/10
CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY Appellant
and
BLUE MOONLIGHT PROPERTIES 39 (PTY) LTD
First Respondent
THE OCCUPIERS OF SARATOGA AVENUE Second Respondent
______________________________________________________________
Neutral citation:
City of Johannesburg Metropolitan Municipality v Blue
Moonlight (338/10) [2011] ZASCA 47 (30 March 2011)
CORAM:
Navsa, Tshiqi, Theron JJA and Plasket and Petse AJJA
HEARD:
18 February 2011
DELIVERED:
30 March 2011
SUMMARY: Eviction of desperately poor from privately owned building ─
constitutional duty of municipality to provide emergency temporary shelter ─
municipality held to have resources to provide emergency temporary shelter ─
fulfils important role in the progressive realisation of right of access to
adequate housing ─ no bar to using ratepayer contributions to provide
emergency temporary shelter to longstanding residents who otherwise would
be forced onto public spaces.
______________________________________________________________
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
South Gauteng High Court (Johannesburg) (Spilg J sitting
as court of first instance).
1.
The application by the appellant to have new evidence admitted on
appeal succeeds and the appellant is to pay the costs of the application on
the unopposed scale.
2.
Save as is reflected in the substituted order set out hereunder the
appeal is dismissed and the appellant is ordered to pay the second
respondents’ costs, including the costs of two counsel.
3.
No order is made in respect of the cross-appeal by the second
respondent.
4.
In respect of the abandoned cross-appeal by the first respondent, no
costs order is made in relation thereto.
5.
The order of the court below is set aside and substituted as follows:
‘1.
The first respondent and all persons occupying through them
(collectively “the occupiers”) are evicted from the immovable property situate
at Saratoga Avenue, Johannesburg and described as Portion 1 of Erf 1308
Berea Township, Registration Division IR, Gauteng (“the property”);
2.
The first respondent and all persons occupying through them are
ordered to vacate by no later than 1 June 2011, failing which the Sheriff of the
Court is authorised to carry out the eviction order;
3.
The second respondent’s housing policy to the effect that it only
provides temporary emergency accommodation to those evicted from unsafe
buildings by the City itself or at its instance, in terms of the National Building
Regulations and Building Standards Act 103 of 1977 is declared
unconstitutional to the extent that it excludes the occupiers from consideration
for such accommodation;
4.
The second respondent shall provide those occupiers whose names
appear in the document entitled “Survey of Occupiers of 7 Saratoga Avenue,
Johannesburg” filed on 30 April 2008, and those occupying through them, with
temporary emergency accommodation as decant in a location as near as
feasibly possible to the area where the property is situated, provided that they
are still resident at the property and have not voluntarily vacated it;
5.
The second respondent is ordered to pay the applicant’s costs and the
costs of the first respondent, including the costs of two counsel.’
______________________________________________________________
JUDGMENT
______________________________________________________________
NAVSA JA and PLASKET AJA (Tshiqi, Theron JJA and Petse AJA
concurring)
[1] Courts are increasingly being called upon to adjudicate disputes
involving homeless persons, owners of land or buildings and local authorities.
It was firmly established more than 15 years ago that the socio-economic
rights enumerated in our Constitution are justiciable.1 The adjudication of the
right of access to adequate housing more often than not presents intractable
problems. The challenge is to forge a coherent jurisprudence.
[2] The right of access to adequate housing cannot be seen in isolation. It
has to be seen in the light of its close relationship with other socio-economic
rights, all read together in the setting of the Constitution as a whole.2 It is
irrefutable that the State is obliged to take positive action to meet the needs of
those living in extreme conditions of poverty, homelessness or intolerably
inadequate housing. What is in dispute in the present case, as is frequently
the case in disputes concerning housing, is the extent of the State’s obligation
in this regard. This usually telescopes into an enquiry concerning the State’s
resources to meet its constitutional obligations. That issue, amongst others,
has come sharply into focus in this case. As stated in Government of the
Republic of South Africa & others v Grootboom & others,3 the precise form of
1 See Ex parte Chairperson of the Constitutional Assembly: In re Certification of the
Constitution of the Republic of South Africa, 1996 1996 (4) SA 744 (CC) para 78.
2 Government of the Republic of South Africa & others v Grootboom & others 2001 (1) SA 46
(CC) paras 23-24.
3 Government of the Republic of South Africa & others v Grootboom & others 2001 (1) SA 46
(CC).
the State’s obligation to provide housing depends on the context within which
the right is asserted by an aggrieved citizen.4
Orders issued by the court below
[3] On 4 February 2010 the South Gauteng High Court (Spilg J), ordered
the eviction of the second respondents, the occupiers of buildings situated at
Saratoga Avenue in Berea in Johannesburg (the occupiers), by no later than
31 March 2010. In addition, the court ordered the appellant, the City of
Johannesburg Metropolitan Municipality (the City), to pay the first respondent,
Blue Moonlight Properties 39 (Pty) Ltd (Blue Moonlight), the company that
owns the buildings occupied by the occupiers, an amount equivalent to the
fair and reasonable monthly rental of the premises from 1 July 2009 until
31 March 2010. The court directed that the amount either be agreed or
determined by a sworn valuator appointed by the President of the South
African Council for Property Valuers Profession. We shall for convenience
refer to the buildings as the property.
[4] Furthermore, the court declared the application of part of the City’s
housing policy unconstitutional. In terms of its housing policy, the City
provides emergency shelter to persons evicted by it from unsafe or ‘bad’
buildings owned by private landowners but not to persons evicted by private
landlords for other reasons. Spilg J held, erroneously, that the City’s housing
policy discriminated unfairly because persons evicted from state-owned
properties were provided with temporary shelter but persons, such as the
occupiers in this case, evicted by private landowners from their properties
were not. In fact the City’s policy is that only where it acts in terms of s 12(6)
of the National Building Regulations and Building Standards Act 103 of 1977
to evict persons from unsafe buildings, whether privately-owned or state-
owned, will temporary accommodation be afforded.
4 Paras 35-37.
[5] The court below went further and issued a structural interdict in terms
of which the City was ordered to remedy the defect in its housing policy and to
report to the court on what steps it had taken to do so and what steps it
intended to take in the future. The City was required to deliver the report by
12 March 2010. It was also ordered to report on the details of all state-owned
office buildings that are unoccupied and to report on when the buildings might
be occupied.
[6] Spilg J did not stop there. He went on and made the following orders
against the City:
‘6. a.
the Second Respondent shall provide each of the occupiers who are entitled to claim
as the First Respondent with at least temporary accommodation as decant in a location as
near as feasibly possible to the area where the property is situated and if rental is expected
then, unless there is agreement with the individual occupier or household head (as the case
may be), such rental may only be imposed pursuant to a court order, which application may
be dealt with at the same hearing to consider the report referred to in paragraph 5 above;
b.
ALTERNATIVELY and until such time as such accommodation is provided the
Second Respondent shall pay per month in advance, on the 25th of each month preceding the
due date of rental and commencing on the 25 March, to each occupier or household head (as
the case may be) entitled to claim as the First Respondent the amount of R850 per month
until the final determination of the relief referred to in paragraph 5(e) above that might be
sought;
PROVIDED THAT:
i.
The amount payable in the first month to each occupier or household head shall
include an additional sum of R850 should a deposit be required from a landlord, which shall
be refunded in full to the Second Respondent upon expiry of the lease or upon
accommodation being provided as aforesaid by the Second Respondent.
ii.
Where a monthly amount is paid to one of the First Respondents in lieu of
accommodation as provided for in paragraph 6(b) then such amount will be reviewed by the
parties every six months without prejudice to any party’s right to approach a court to increase
or decrease the amount;
7.
For the purposes of paragraphs 5 and 6 the persons entitled to claim as the First
Respondent are those whose names appear in the Survey of Occupiers of 7 Saratoga
Avenue, Johannesburg under filing notice of 30 April 2008 at pages 784 to 790 of the record
provided they are still resident at the property and have not voluntarily vacated.’
[7] The order set out in the preceding paragraph in terms of which the City
was required to pay a stipend of sorts is, to say the least, somewhat unusual.
Finally, the City was ordered to pay Blue Moonlight’s costs as well as the
costs of the occupiers, including the costs of two counsel.
[8] Lest the impression be created that the occupied buildings were of the
kind usually let for residential use it is necessary to have regard to the
description provided by Blue Moonlight:
‘The property comprises old commercial premises with a factory building, a number of
garages and a double-storey office space. The double storey office space and the garages
are occupied for residential purposes as are two or three shacks which have been erected in
the factory space. There are illegal electricity connections in the factory space, to the extent
that the electricity box therein glows red hot. Although water was previously disconnected, it
has been illegally reconnected.’
The facts
[9] It is necessary to describe the history of the occupation and to set out
the events leading to the orders being granted. It appears that a long time
before Blue Moonlight’s involvement a company known as Kernel Carpets
operated from the property. One of the occupiers, Mr David Goge, has lived
on the property since 1976, when he took up employment with Kernel
Carpets. Many of the occupiers were employed by Kernel Carpets and the
period of their occupation of the property varies. Kernel Carpets ceased
trading in 1999.
[10] After Kernel Carpets departed the scene the occupiers continued
paying rent to a caretaker who ostensibly collected it on behalf of the owner. A
property letting firm started collecting rentals during 2000. The property and
living conditions started to deteriorate. This led to a complaint being laid by
the occupiers with a housing tribunal. Nothing came of the complaint.
[11] During 2002 another management company began collecting rent from
the occupiers. That company was supplanted by two individuals who collected
rent from the occupiers. A complaint concerning their authority to collect
rentals was referred to a housing tribunal without any result. Living conditions
got worse and maintenance of the buildings was non-existent. In 2004 Blue
Moonlight purchased the building. The occupiers alleged that in 2005 an
individual named Eddie, purporting to speak on behalf of Blue Moonlight,
engaged them and promised that the building would be renovated. According
to the occupiers, someone called Nkomo started collecting rent, ostensibly on
behalf of Blue Moonlight. The occupiers stated that they had paid rentals into
two bank accounts. Blue Moonlight’s response to these allegations is that they
had never received rentals from any of the occupiers and they put the
occupiers to the proof of the aforesaid assertions.
[12] It is clear that a stand-off developed between Blue Moonlight and the
occupiers. There are disputes concerning the termination of the water supply
to the building during certain periods and about whether it was safe for Blue
Moonlight’s representatives to enter the premises it owned. For present
purposes it is not necessary to explore this any further.
[13] On 28 June 2005 Blue Moonlight posted a notice to vacate at the
buildings. The occupiers were called upon to vacate the property by 21 July
2005. The notice purported to cancel any lease agreements that may have
been in existence.
[14] On 12 October 2005 the City served a notice on Blue Moonlight in
terms of the Fire Brigade Services Act 99 of 1987 calling upon it to do the
following:
‘Remove illegal combustible shacks
Provide fire fighting equipment
Remove unsafe electrical connections which are illegal
Remove combustible partitions
Submit plans for change of occupancy
Provide adequate escapes.’
[15] On 11 November 2005 the City’s environmental health practitioner sent
the following notice to Blue Moonlight in relation to the building:
‘TAKE NOTICE that the City Council of Johannesburg is satisfied that the above premises,
where the business of an Accommodation Establishment is conducted, do not comply with the
abovementioned By-Laws of the City of Johannesburg.
In order to make the premises comply with the said By-Laws, you are hereby required to do
the work or things herein specified forthwith namely:
1.
Take effective measures to prevent the harbouring or breeding and for the destruction
of flies, cockroaches and other insects, rodents and other vermin.
2.
Provide and maintain artificial lighting at every entrance, passage and staircase, of
which persons have the use in common. The level of illuminance of such lighting shall not be
less than 160 LUX at any point or in such entrance, passage or staircase.
3.
Every such entrance, passage or staircase shall be kept in a clean state and in good
repair.
4.
Eliminate the cause of dampness in the wall(s) / ceiling(s) of the premises and repaint
with a light coloured washable paint.
5.
Reglaze all broken windowpanes.
6.
Provide an adequate and constant supply of hot and cold running water to every bath,
wash hand basin, shower and wash up sink.
7.
Provide an adequate and constant supply of cold running water to the cistern(s),
urinal(s).
8.
Repair / replace the defective cistern(s).
9.
Replace the broken / missing toilet seat(s) and cover(s).
10.
Replace the broken / leaking water supply pipe(s).
11.
Replace the broken / leaking soil pipe(s) / waste pipe(s).
12.
Remove the accumulation(s) of domestic refuse; builder’s rubble from the courtyard
area.
13.
Repair / replace all broken suspended wooden floors.
14.
Repair / replace all broken wooden doors throughout the premises.
15.
Ensure adequate ventilation throughout the premises by installing windows where
there are no windows.
16.
Provide ablution facilities for use by separate sexes.
17.
Take effective measures to prevent wastewater / sewerage from running down into
the street.
18.
Maintain the premises in a clean and sanitary condition and in good repair at all
times.’
[16] This led to Blue Moonlight posting a further notice to the occupiers to
vacate on 6 January 2006. This was followed by an application to court for
substituted service. The application was subsequently served and was
opposed. When the main application was brought in May 2006 the buildings
were occupied by 62 adults and nine children. One of the children was 12
years old at the time and is disabled. Two of the occupiers are pensioners.
Ten of the households are headed by women. All of the occupiers have lived
on the property for more than six months. The majority have lived there for
more than two years. The occupiers are all desperately poor and most of
them have no formal employment. Many have no income at all. The average
household income at the time the application was brought was R790 per
month.
[17] In opposing the application for their eviction the occupiers stated that if
evicted they would be rendered homeless and in the short term would have
no shelter at all. In the medium term they were unaware of alternative
accommodation which any of them could afford. They contended that the City
was obliged to take reasonable measures to ensure the progressive
realisation of their constitutional right of access to adequate housing and that
this included an obligation to provide shelter should they be rendered
homeless as a result of their eviction. Importantly, they accepted that they
were unlawful occupiers and contended that for that very reason they were
entitled to assistance from the City.
[18] This led to an application by the occupiers for the City to be joined as a
respondent. Furthermore, they sought an order declaring that the City had a
constitutional obligation to make temporary emergency shelter available to
them on the basis that in the event of their eviction they would have no
alternative accommodation available and that they would be in a crisis or
intolerable situation.
[19] The City was duly joined as a respondent and entered the fray.
Numerous delays occurred in the prosecution of the case due, amongst other
reasons, to a pending decision in the Constitutional Court involving the City
and dealing with the City’s obligations to occupiers of privately owned
buildings whom the City had applied to evict on the basis that the buildings
they had occupied were unsafe and unhealthy. The case in question is
Occupiers of 51 Olivia Road, Berea Township and 197 Main Street,
Johannesburg v City of Johannesburg & others.5
[20] Before us, the City submitted that the court below had not properly
taken into account that there had been a full judicial process by Blue
Moonlight, in compliance with the Prevention of Illegal Eviction from and
Unlawful Occupation of Land Act 19 of 1998 (PIE) and that the position of the
occupiers was not comparable to persons evicted due to fire, flood or unsafe
buildings. Thus, it was argued, the City was not obliged to make emergency
provision for them. Put simply, the City adopted the position that it bore no
constitutional obligation to provide shelter when an eviction is prompted by a
private landlord asserting its superior right to property against occupiers. The
City pointed out that, in any event, it has limited housing stock to deal with life
threatening emergencies.
[21] The City contended that its housing policy that prioritises life
threatening situations was not random, arbitrary or discriminatory but was
carefully developed, within its budgetary constraints, giving priority to the most
pressing demands. The City was adamant that this policy was in line with the
policy of the national government in terms of a national legislative framework
and that it was unable to make policy that does not conform to that policy and
framework. It was emphatic that the duty to approve and fund emergency
relief in terms of prevailing legislation rests on the provincial government
through its housing department. The City was aggrieved that the court below
had refused its application to join the provincial government, which the City
had argued was a necessary party to the proceedings. The City argued that
the occupiers were seeking to obtain an unfair advantage over others who
were in the queue for State subsidised housing. In this regard it pointed to the
sequence of steps in its housing policy directed at the progressive realisation
of housing rights, namely, from emergency housing to temporary
accommodation and then finally to permanent accommodation.
5 Occupiers of 51 Olivia Road, Berea Township and 197 Main Street, Johannesburg v City of
Johannesburg and others 2008 (3) SA 208 (CC).
[22] The City was adamant in its submission that it had no original power to
initiate housing schemes or provide accommodation on its own. It contended
that it could not use ratepayer contributions or any of its own income to that
end. The corollary is that it had no obligation to house persons other than in
terms of national housing policy and only to the extent that it was funded by
national or provincial government. The contention that the City was precluded
from using ratepayer contributions to meet housing needs was mentioned for
the first time in argument before us. It was submitted that if any of the housing
schemes referred to by the City in its affidavit had in fact used ratepayer
contributions the City might have acted ulta vires. In a report it had filed
pursuant to an order by the high court to do so, it stated, however, that while it
was not obliged to do so, it focused on the ‘provision of shelter to occupants
of dangerous buildings, who qualify as being desperately poor and who find
themselves in a true crisis situation’ and that this assistance was funded ‘from
its own resources and within its financial constraints’.
[23] The City was particularly aggrieved at the ‘constitutional damages’ that
the court below appeared to have granted against it. It labelled the order
imposing direct financial obligations on it by payment to the landlord, and the
provision of a stipend of sorts to the occupiers, as extraordinary and
unwarranted.
[24] Blue Moonlight, on the other hand, contended that its rights to the
property owned by it could not indefinitely be thwarted by the occupants and
that it should not be obliged to carry the burden of continuing to house
persons who were in unlawful occupation, particularly since it received no
income and was under threat from the City about meeting safety and health
regulations. It was submitted that the occupiers stood in the path of its right to
develop the property in question. Significantly, before us, Blue Moonlight
refrained from asserting any entitlement to the monetary orders granted in its
favour by the court below. It expressly abandoned any reliance on those
orders and limited itself to contending that the eviction order by the court
below was justified.
[25] In order to begin to appreciate the issues raised in this appeal it is
necessary to start with the constitutional and legislative framework against
which they fall to be decided.
The legal framework
[26] In order to determine if the City owes the occupiers any obligations
concerning their accommodation on eviction from the property and, if so, the
nature of those obligations, it is necessary to start with s 26 of the
Constitution. It provides:
'(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.'
[27] The Constitutional Court held, in Government of the Republic of South
Africa & others v Grootboom & others6 that subsecs (1) and (2) of s 26, being
related, need to be read together: the first defines the scope of the right,7
while the second 'speaks to the positive obligation imposed upon the State'.8
The court proceeded to say:9
'It requires the State to devise a comprehensive and workable plan to meet its obligations in
terms of the subsection. However subsec (2) also makes it clear that the obligation imposed
upon the State is not an absolute or unqualified one. The extent of the State's obligation is
defined by three key elements that are considered separately: (a) the obligation to "take
reasonable legislative and other measures"; (b) "to achieve the progressive realisation" of the
right; and (c) "within available resources".'
[28] In order to give effect to the fundamental right of access to adequate
housing, the state has developed a legislative and policy framework. In its
preamble, the Housing Act 107 of 1997 recognises, in express terms, that it
6 Footnote 2.
7 Para 34.
8 Para 38.
9 Para 38.
forms part of the legislative measures required to give effect to s 26. Its long
title states that its purpose is:
'To provide for the facilitation of a sustainable housing development process; for this purpose
to lay down general principles applicable to housing development in all spheres of
government, to define the functions of national, provincial and local governments in respect of
housing development and to provide for the establishment of a South African Housing
Development Board, the continued existence of provincial boards under the name of
provincial housing development boards and the financing of national housing programmes; to
repeal certain laws; and to provide for matters connected therewith.' (Our emphasis.)
[29] The Act deals specifically with the functions of the national, provincial
and local spheres of government in respect of housing. The national sphere of
government has the function, in essence, of establishing and facilitating a
'sustainable national housing development process' 10 and for that purpose
the Minister is required, inter alia, to determine national policy and set national
norms and standards,11 set national housing delivery goals and facilitate the
setting of provincial and local government housing delivery goals12 and
monitor performance, in all three spheres of government, against 'delivery
goals and budgetary goals'.13 In order to perform the functions allocated to
him or her the Minister is, inter alia, vested with the power to 'allocate funds
for national housing programmes to provincial governments, including funds
for national housing programmes administered by municipalities in terms of
section 10'.14 In terms of s 3(7), all provincial governments and municipalities
are obliged to furnish any 'reports, returns and other information' that the
Minister may require. Finally, the Minister is required to publish a National
Housing Code15 which must contain national housing policy and may contain
administrative
or
procedural
guidelines
concerning
the
‘effective
implementation and application of national housing policy’ and 'any other
matter that is reasonably incidental to national housing policy'.16
10 Section 1.
11 Section 3(2)(a).
12 Section 3(2)(b).
13 Section 3(2)(c).
14 Section 3(4)(d).
15 Section 4(2)(a)
16 Section 4(2)(b).
[30] Section 7 of the Act defines the role of provincial government. Section
7(1) provides that every provincial government must, after consultation with
organised local government, 'do everything in its power to promote and
facilitate the provision of adequate housing in its province within the
framework of national housing policy'. Section 7(2) spells out what this
obligation (which is to be undertaken by the respective MEC's for Housing)
entails. It includes the determination of provincial housing policy,17 the
promotion of the adoption of provincial legislation to ‘ensure effective housing
delivery';18 the taking of 'all reasonable and necessary steps to support and
strengthen the capacities of municipalities, to effectively exercise their powers
and perform their duties in respect of housing development',19 the
coordination of housing development provincially,20 and the taking of 'all
reasonable and necessary steps to support municipalities in the exercise of
their powers and the performance of their duties in respect of housing
development'.21
[31] The functions of local government in respect of housing are set out in
s 9. Section 9(1) provides:
'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 ─
(i)
the inhabitants of its area of jurisdiction have access to adequate housing on
a progressive basis;
(ii)
conditions not conducive to the health and safety of the inhabitants of its area
of jurisdiction are prevented or removed;
(iii)
services in respect of water, sanitation, electricity, roads, stormwater
drainage and transport are provided in a manner which is economically efficient;
(b)
set housing delivery goals in respect of its area of jurisdiction;
(c)
identify and designate land for housing development;
(d)
create and maintain a public environment conducive to housing development which is
financially and socially viable;
(e)
. . . ;
17 Section 7(2(a).
18 Section 792)(b).
19 Section 7(2)(c).
20 Section 7(2)(d).
21 Section 7(2)(e).
(f)
initiate, plan, co-ordinate, facilitate, promote and enable appropriate housing
development in its area of jurisdiction;
(g)
. . . ;
(h)
. . . .'
[32] These functions must be viewed in the wider context of what are
described as the 'rights and duties’ of municipalities in s 4 of the Local
Government: Municipal Systems Act 32 of 2000.22 Section 4(1) empowers
municipal councils to govern, on their own initiative, 'the local government
affairs of the local community', to exercise their executive and legislative
authority without 'improper interference' and to finance their 'affairs' by
charging fees for services and imposing rates and other forms of taxation.
[33] Section 4(2) prescribes a set of duties that municipalities are required
to comply with, subject to ‘financial and administrative capacity and having
regard to practical considerations'. For present purposes, only one of these
duties needs be mentioned. It is the duty to 'contribute, together with other
organs of state, to the progressive realisation of the fundamental rights
contained in sections 24, 25, 26, 27 and 29 of the Constitution'.23 Section 8(2)
provides that a City may do ‘anything reasonably necessary for, or incidental
to, the effective performance of its functions and the exercise of its powers'.
[34] Section 11(3) vests legislative or executive authority in municipalities to
perform a number of functions, including 'developing and adopting policies,
plans, strategies and programmes including setting targets for delivery';24 the
'promoting and undertaking of delivery';25 the implementation of 'applicable
national and provincial legislation' as well as by-laws;26 the preparation,
approval and implementation of budgets;27 the imposition and recovery of
rates, taxes, levies, duties, service fees and surcharges on fees . . .';28 and
22 A more correct description would be powers and duties.
23 Section 4(2)(j).
24 Section 11(3)(a).
25 Section 11(3)(b).
26 Section 11(3)(e).
27 Section 11(3)(h).
28 Section 11(3)(i).
the doing of 'anything else within its legislative and executive competence'.29
Finally, s 23(1) places an obligation on municipalities to undertake
'developmentally-oriented planning' aimed at ensuring that they achieve their
constitutional objects, give effect to their constitutionally enshrined
developmental duties and 'contribute to the progressive realization of the
fundamental rights contained in sections 24, 25, 26, 27 and 29 of the
Constitution'.30
[35] The third part of the legislative scheme is the National Housing Code
contemplated by s 4 of the Housing Act. Chapter 12 of the Code is headed
'Housing Assistance in Emergency Housing Circumstances'. As its heading
suggests, chapter 12 records policy in respect of 'assistance to people who,
for reasons beyond their control, find themselves in an emergency housing
situation such as the fact that their existing shelter has been destroyed or
damaged, their prevailing situation poses an immediate threat to their life,
health and safety, or they have been evicted, or, face the threat of imminent
eviction'.31
[36] The process created by chapter 12 is that when a municipality
considers that a housing emergency that falls within the terms of chapter 12
has arisen within its area of jurisdiction, it is required to apply to the provincial
government for 'project approval' for its plan to deal with the emergency. If the
provincial government approves the project, it provides funding to the
municipality to enable it provide temporary shelter for the victims of the
emergency. In this case, the City belatedly applied for funding to provide
temporary shelter for the occupiers and others who were similarly situated but
the provincial government, pleading a lack of funds, refused to assist.
[37] The final part of the legislative scheme is the City's own housing
programme. In dealing with the provision of alternative accommodation in the
29 Section 11(3)(n).
30 See generally Residents of Joe Slovo Community, Western Cape v Thubelisha Homes &
others (Centre on Housing Rights and Evictions and another, Amici Curiae) 2010 (3) SA 454
(CC) paras 348-351.
31 Introductory paragraph to chapter 12.
inner city, the City draws a distinction between the following forms of
emergency accommodation: (a) accommodation kept in reserve for possible
disasters; (b) temporary accommodation as decant, which is accommodation
'custom built to receive people who need to be removed from informal
settlements or bad buildings that are unsafe to occupy’; (c) transitional
accommodation, which is similar in nature to temporary accommodation but
'refers to accommodation established under the transitional housing
programme of government'; and (d) shelters, which are ‘social development
interventions' in terms of which private bodies such as churches provide
shelter, with limited support from the City, for vulnerable groups of people
such as street children.
[38] As far as the provision of any form of accommodation to people in the
position of the occupiers is concerned, the City's policy has been set out as
follows in its first report in terms of s 4(2) of PIE:
'The City itself has a programme that seeks to address the dangerous conditions presented
by bad buildings in the Inner City and elsewhere. These buildings present a danger to the
lives of those occupying them and the buildings surrounding them. There are hundreds of
problem buildings, and safety concerns make it inevitable that the City will have to evict the
occupiers of many of these bad buildings. The City is in fact obliged to do so in terms of the
National Building Regulations and Building Standards Act. The City will probably have to
accommodate many of the occupants of these buildings for various periods of time. Because
these occupants will be evicted for safety reasons, the City will obviously have to utilise any
accommodation available to it to accommodate those evicted from bad buildings. The
temporary accommodation as decant is just beginning to come on stream at the time this
Report is made. Because of the scale of the task facing the City, the City cannot for the time
being make any of its emergency shelters available for any persons evicted from private
property by way of PIE.’
[39] In Grootboom, the Constitutional Court considered it to be essential to
a reasonable housing programme that responsibilities be allocated not only to
the national and provincial spheres of government but also to the local sphere
of government, principally because of its important role in ensuring that
‘services are provided in a sustainable manner to the communities they
govern’.32 The court continued to say:33
‘Thus, a co-ordinated State housing program must be a comprehensive one determined by all
three spheres of government in consultation with each other as contemplated by chap 3 of the
Constitution. It may also require framework legislation at national level, a matter we need not
consider further in this case as there is national framework legislation in place. Each sphere
of government must accept responsibility for the implementation of particular parts of the
program but the national sphere of government must assume responsibility for ensuring that
laws, policies, programs and strategies are adequate to meet the State's s 26 obligations. In
particular, the national framework, if there is one, must be designed so that these obligations
can be met. It should be emphasised that national government bears an important
responsibility in relation to the allocation of national revenue to the provinces and local
government on an equitable basis. Furthermore, national and provincial government must
ensure that executive obligations imposed by the housing legislation are met.’
[40] The legislative framework that has been described above appears in
large measure to be designed to give effect to the obligations referred to in
Grootboom in a co-ordinated manner. It is clear from that framework that each
sphere of government has obligations imposed on it in respect of the right of
access to adequate housing; that they are required to work together ─ as one
would expect in a system predicated on principles of co-operative
government34 ─ to ‘achieve the progressive realisation of this right’; and that
each sphere is an independent bearer of the obligation. From this, and the
legislative scheme as a whole, we conclude that the City’s obligations to the
occupiers is not derivative, as was argued on its behalf, but direct and that the
City has the authority to fund its own housing programme and administer its
own housing policy from its own resources as well as from the national and
provincial spheres of government, within the parameters of the national
housing policy.
32 Footnote 2 para 39.
33 Para 40.
34 Constitution s 40.
Conclusions
[41] The City appeals against the order in terms of which it was required to
accommodate the occupiers and the associated monetary orders. It also
appeals against the order declaring its housing policy to be unconstitutional.
The City is also aggrieved that the court below refused its application to join
the provincial government as a party to the proceedings.
[42] We consider it convenient to deal first with the contention on behalf of
the City set out in para 22 above, namely, that it has no power to act other
than in accordance with national legislation and policy and only in
circumstances where it receives funding from national or provincial
government to that end. The City is obviously constrained to act within the
applicable legislative and policy framework. It is clear, however, from what is
set out in paras 32-38 above, that the City is not only empowered to act in
circumstances such as those under consideration, but is obliged to.
[43] We begin with the Constitution. Section 26(2), which is set out in para
26 above, obliges the State in all its guises to take reasonable legislative and
other measures ‘within its available resources’, to achieve the progressive
realisation of the right of access to adequate housing. Whatever the precise
parameters of the term ‘the State’ may be, there can be no doubt that for
purposes of the Bill of Rights and s 26 of the Constitution, in particular, it
includes the local sphere of government.35 Furthermore, the Constitutional
Court has made it clear, in Olivia Road, that the City owes those who live
within its precincts certain obligations. The court stated:36
‘The city has constitutional obligations towards the occupants of Johannesburg. It must
provide services to communities in a sustainable manner, promote social and economic
development, and encourage the involvement of communities and community organisations
in matters of local government. It also has the obligation to fulfil the objectives mentioned in
the preamble to the Constitution to “[i]mprove the quality of life of all citizens and free the
35 See too, s 40, although in this section, the term ‘government’ is used. Section 40(1)
provides: ‘In the Republic, government is constituted as national, provincial and local spheres
of government which are distinctive, interdependent and interrelated.’
36 Footnote 4 para 16.
potential of each person”. Most importantly it must respect, protect, promote and fulfil the
rights in the Bill of Rights.’
Later in the judgment the court stated, in the context of the interplay between
ensuring safe buildings and preventing homelessness, that ‘the city has a duty
to ensure safe and healthy buildings on the one hand and to take reasonable
measures within its available resources to make the right of access to
adequate housing more accessible as time progresses on the other’.37
[44] In Port Elizabeth Municipality v Various Occupiers38 the Constitutional
Court made the point that, generally speaking, courts should be reluctant to
grant eviction orders against persons who are ‘relatively settled’ in the
absence of reasonable alternative accommodation for them ‘even if only as an
interim measure pending ultimate access to housing in the formal housing
programme’. The court proceeded to state:39
‘The availability of suitable alternative accommodation will vary from municipality to
municipality and be affected by the number of people facing eviction in each case. The
problem will always be to find something suitable for the unlawful occupiers without
prejudicing the claims of lawful occupiers and those in line for formal housing. In this respect,
it is important that the actual situation of the persons concerned be taken account of. It is not
enough to have a programme that works in theory. The Constitution requires that everyone
must be treated with care and concern; if the measures, though statistically successful, fail to
respond to the needs of those most desperate, they may not pass the test. In a society
founded on human dignity, equality and freedom, it cannot be presupposed that the greatest
good for the many can be achieved at the cost of intolerable hardship for the few, particularly
if, by a reasonable application of judicial and administrative statecraft, such human distress
could be avoided.’
[45] The provisions of the Housing Act, referred to earlier in this judgment,
envisages an interactive approach between local and other spheres of
government to facilitate the provision of housing. In Port Elizabeth Municipality
the Constitutional Court said that ‘municipalities have a major function to
perform with regard to the fulfilment of the rights of all to have access to
37 Para 44.
38 Port Elizabeth Municipality v Various Occupiers 2005 (1) SA 217 (CC) para 28.
39 Para 29.
adequate housing’. It went on to say that municipalities have a ‘duty
systematically to improve access to housing to all within their area’.40
[46] Section 9 of the Housing Act, set out in para 31 above, obliges every
municipality, within the framework of national and provincial housing
legislation and policy, to ensure that inhabitants within its area of jurisdiction
have access to adequate housing on a progressive basis and to provide
conditions conducive to the health and safety of such persons. In terms of
s 9(1)(f) every municipality must initiate, plan, coordinate, facilitate, promote
and enable appropriate housing development in its area of jurisdiction.
Section 4(2) of the Local Government: Municipal Systems Act, referred to in
para 33 above, imposes a duty on municipalities to contribute ‘together with
other organs of State’, inter alia, to the progressive realisation of the right of
access to adequate housing. Section 8(2) of the same Act empowers
municipalities to take such steps as are reasonably necessary for or incidental
to the effective performance of their functions and powers.
[47] It is clear from the City’s own affidavits and reports that it has an
extensive and impressive housing programme, signifying that it is indeed
taking steps to comply with its constitutional and statutory obligations. The
question before us is whether it is doing so in respect of the occupiers.
[48] In our view, for all the stated reasons, there is no merit in the
submission that the City is not empowered or obliged to act other than as an
agent of national or provincial government with funding from those sources.
As we have shown, it uses its own resources to fund the housing needs of
certain persons who find themselves in dire circumstances of homelessness.
It would appear that the City has done so without any concern, before the
issue was raised in argument before us, that it may have been acting beyond
its powers. We conclude that the City is, indeed, empowered to provide for the
progressive realisation of the right of access to adequate housing within its
area of jurisdiction and to utilise its own resources to do so, if needs be, as
40 Para 56.
long as its actions in this regard are not inconsistent with the Housing Act or
the National Housing Code.
[49] The next question that falls to be addressed is whether the City is able,
within its available resources, to meet the needs of the occupiers. Whilst the
City has explained that operating within a budget surplus, which it
acknowledges, for at least one financial year, does not mean that it can
employ such monies at will, it does not anywhere state that it is unable to re-
allocate funds or that it is unable financially to meet the temporary housing
needs of the occupiers. All that is being sought at the moment, by the
occupiers, is temporary accommodation as an entrée to the progressive
scheme which envisages permanent accommodation in the future in the
sequence referred to earlier in this judgment. While we appreciate that the
City faces immense challenges as a result of the influx of persons into
Johannesburg, the papers do not attempt to grapple with, and inform us, as to
what is possible.
[50] In dealing with its financial constraints the City speaks in the vaguest
terms about the affordability of meeting demands for housing. Much of the
affidavits deposed to on behalf of the City is devoted to the cost of providing
permanent accommodation. It states that for the 2008/2009 financial year its
projections indicate a movement towards a budget deficit. It does not say in
terms that it has no funds to provide temporary emergency housing as decant
for the occupiers.
[51] The City has for a long time been faced with emergency housing
situations of all kinds. It appears to have adopted an entrenched position that
excludes persons such as the occupiers from assistance. It is abundantly
clear that but for this approach it could have adopted a long-term strategy,
which ought to have included financial planning, to deal with such exigencies.
It did not do so and that is what caused it to apply belatedly to the provincial
government for funding to deal with the occupiers’ needs. The City’s
application to provincial government for last-minute funding was misdirected
as it must have been clear to the City that the former’s budgetary and financial
resources had already been committed. The written response by the
provincial government to that effect could hardly have been surprising.
[52] To a great extent the City is to blame for its present unpreparedness to
deal with the plight of the occupiers. It knew of their situation from the time
that the litigation started, through its many delays extending over three
financial years. It did not, in all that time, make any provision, financial or
otherwise, to deal with a potentially adverse court order or take steps to re-
allocate resources or re-work priorities so that the occupiers could be
accommodated. As a result, the City has, through its general reports, vague
responses to its budget surplus and denial of any obligations towards the
occupiers, failed to make out a case that it does not have the resources to
provide temporary accommodation for the occupiers if they are to be evicted.
[53] The use of ratepayer contributions or any of the City’s own funds to
prevent the City being exposed to long standing residents, who in their
humble way contributed to the economic life-blood of Johannesburg, squatting
in public places accompanied by the attendant environmental impact can
hardly be objectionable. The City’s recent disavowal of its power and
entitlement to engage in accommodation projects on its own, without funding
from national or provincial government, is contradicted by its own
accommodation report in which it indicated that of its capital budget of R170
million for housing for the 2007/2008 financial year for R55 million is derived
from the City’s own funds. As indicated above, the City has an indispensible
role to play in the progressive realisation of the right of access to adequate
housing. It has a constitutional obligation in the circumstances of this case to
provide temporary emergency housing to the occupiers. We were not referred
by counsel on behalf of the City to any statutory prohibition against the use by
the City of its own funds to provide temporary emergency accommodation.
[54] Proportionality is a constitutional watchword. In dealing with the
interrelated issues of the limits of judicial intrusion and the reality of available
resources, balanced against the assertion of socio-economic rights, a court’s
role can rightly be described as ‘the art of the possible’.
[55] It is necessary at this stage to deal with the submission on behalf of the
City, that if it were compelled to accommodate the occupiers, it would be
enabling them to jump the queue of persons waiting their turn in the various
stages that lead ultimately to permanent accommodation. We fail to see how
they would be jumping the queue. They would be the last in the line and
would have to wait their turn like everyone else. Counsel for the occupiers
accepted, correctly, that this was the position and that, at this stage, they
were entitled to nothing more than temporary emergency accommodation.
[56] The court below found that the City’s housing policy was unfairly
discriminatory and hence unconstitutional because it drew an illegitimate
distinction between persons evicted from state-owned property and those
evicted from privately-owned property, rendering assistance to the former
category only. The court below erred in two respects.
[57] First, it categorised the differentiation in treatment incorrectly. It did not
involve a difference in treatment between those evicted from state-owned
properties and those evicted from privately-owned properties. Rather the
difference was one between persons evicted from privately-owned unsafe
buildings by the City itself, acting in terms of s 12(6) of the National Building
Regulations and Building Standards Act, and those evicted from privately-
owned buildings (which are not necessarily, but could be, dangerous
buildings) by private landowners.
[58] Secondly, the court below erred in categorising the differentiation in
treatment as unfair discrimination as contemplated by s 9(3) of the
Constitution. In Harksen v Lane NO & others41 the Constitutional Court held
that the right to be protected from unfair discrimination sought to ‘prevent the
unequal treatment of people based on such criteria which may, amongst other
things, result in the construction of patterns of disadvantage such as has
41 Harksen v Lane NO & others 1998 (1) SA 300 (CC).
occurred only too visibly in our history’42 and that discrimination on
unspecified grounds (ie on grounds other than the grounds listed in s 8(2) of
the interim Constitution and s 9(3) of the final Constitution) is established if a
differentiation of treatment ‘is based on attributes or characteristics which
have the potential to impair the fundamental dignity of persons as human
beings, or to affect them adversely in a comparably serious manner’.43 That
does not apply in respect of the differentiation in treatment in this matter: the
constitutionality of the differentiation must be considered against s 9(1) which
provides that ‘[e]veryone is equal before the law and has the right to equal
protection and benefit of the law’.
[59] We turn now to a consideration of the City’s policy against s 9(1) of the
Constitution. The policy is inflexible because it does not allow at all for the
provision of temporary accommodation for persons evicted from privately-
owned land, even if they are desperately poor and find themselves in a crisis,
while it provides temporary accommodation to those whom it evicts from
privately-owned dangerous buildings, if they are desperately poor and find
themselves in a crisis. It excludes one category of evictees from consideration
completely and includes another category completely without concerning itself
with any other personal circumstances of those to be evicted.
[60] The inflexibility of the policy, which effectively precludes a proper
consideration of the merits of the claims of evictees to be housed by the City,
is in itself a basis for setting it aside. In the pre-constitutional era, in dealing
with a fixed policy applied to the granting of housing permits by a township
housing authority, the court in Mahlaela v De Beer NO,44 said the following:
‘[I]f the permit is refused or the grant of a permit is not considered on the ground of a fixed
policy, there can be no proper exercise of a discretion or a performance of a duty and the
decision of the superintendent falls to be set aside on this ground. This is also trite.’
42 Para 50.
43 Para 47. See too National Coalition for Gay & Lesbian Equality and another v Minister of
Justice & another 1999 (1) SA 6 (CC) paras 16-17.
44 Mahlaela v De Beer NO 1986 (4) 782 (T) at p 791I.
[61] The policy is, as a result of its inflexibility, also irrational and can on
that basis alone be impugned. In Pharmaceutical Manufacturers Association
of SA & another: In Re Ex Parte President of the Republic of South Africa &
others,45 Chaskalson P held:
‘It is a requirement of the rule of law that the exercise of public power by the Executive and
other functionaries should not be arbitrary. Decisions must be rationally related to the purpose
for which the power was given, otherwise they are in effect arbitrary and inconsistent with this
requirement. It follows that in order to pass constitutional scrutiny the exercise of public power
by the Executive and other functionaries must, at least, comply with this requirement. If it
does not, it falls short of the standards demanded by our Constitution for such action.’
In Grootboom the Constitutional Court, in the context of the right of access to
adequate housing, held that ‘the real question in terms of our Constitution is
whether the measures taken by the State to realise the right afforded by s 26
are reasonable’.46
[62] It is, furthermore, arbitrary and unequal in its operation and effect. The
connection between arbitrariness and inequality was drawn by Ackermann J
in S v Makwanyane & others47 as follows:
‘Arbitrariness, by its very nature, is dissonant with these core concepts of our new
constitutional order. Neither arbitrary action nor laws or rules which are inherently arbitrary or
must lead to arbitrary application can, in any real sense, be tested against the precepts or
principles of the Constitution. Arbitrariness must also inevitably, by its very nature, lead to the
unequal treatment of persons. Arbitrary action or decision-making is incapable of providing a
rational explanation as to why similarly placed persons are treated in a substantially different
way. Without such a rational justifying mechanism, unequal treatment must follow.'
[63] Arbitrariness thus offends against equality which is a founding value of
our Constitution. Equal protection under the law is central to the rule of law,
another founding value of the Constitution.48
[64] In Harksen v Lane NO & others,49 the Constitutional Court set out the
method for analysing allegations of unequal treatment in the following terms:
45 Pharmaceutical Manufacturers Association of SA & another: In Re Ex Parte President of
the Republic of South Africa & others 2000 (2) SA 674 (CC) para 85.
46 Para 33.
47 S v Makwanyane & others 1995 (3) SA 391 (CC) para 156.
48 Van der Walt v Metcash Trading Ltd 2002 (4) SA 317 (CC) para 36.
‘Where s 8 [of the interim Constitution] is invoked to attack a legislative provision or executive
conduct on the ground that it differentiates between people or categories of people in a
manner that amounts to unequal treatment or unfair discrimination, the first enquiry must be
directed to the question as to whether the impugned provision does differentiate between
people or categories of people. If it does so differentiate, then in order not to fall foul of s 8(1)
of the interim Constitution there must be a rational connection between the differentiation in
question and the legitimate governmental purpose it is designed to further or achieve. If it is
justified in that way, then it does not amount to a breach of s 8(1).’
[65] In the application of its policy the City effectively ties its own hands and
renders itself blind to the real plight and homelessness of persons who find
themselves in the circumstances of the occupiers. It precludes itself from
considering the duties placed on it by the Constitution. As stated above, by
drawing the irrational and arbitrary distinction referred to, it is effectively
putting potentially vast numbers of persons beyond State assistance in the
face of an obligation to take positive steps to assist those who, because of
their poverty and because of circumstances beyond their control, find
themselves in dire need.
[66] The differentiation between persons who have been evicted by the City
from privately-owned dangerous buildings and by private landowners bears
no rational connection to the City’s legitimate purpose of providing temporary
accommodation to those who are vulnerable and most in need. Its policy does
not factor in the degree of need of evictees in either situation because the
personal circumstances and needs of all are irrelevant: while the unsafe
condition of buildings is a sufficient basis for the City providing
accommodation, as long as that the eviction is at its instance, the same does
not apply when persons are evicted from unsafe buildings by private landlords
even though the danger in the latter instance might in some cases be greater.
The City’s policy does not take this into account. Even though the City’s
notices to Blue Moonlight, referred to in paras 13 and 14 above, were not in
terms of the National Building Regulations and Buildings Standards Act, in
substance they addressed health and safety concerns. The distinction drawn
49 Footnote 39 para 42.
by the City between the occupiers and those evicted by virtue of a notice in
terms of the Act is also irrational.
[67] Having regard to the above, a further foundational value is implicated,
namely, the right to dignity entrenched in s 10 of the Constitution. This section
provides that ‘everyone has inherent dignity and the right to have their dignity
respected and protected’. The importance of dignity ─ particularly in the light
of our history ─ was emphasised by O’Regan J in S v Makwanyane &
another50 when she stated that recognition of the right to dignity ‘is an
acknowledgment of the intrinsic worth of human beings: human beings are
entitled to be treated as worthy of respect and concern’. And in Grootboom,
within the specific context of the right of access to adequate housing, the
Constitutional Court made the point that the ‘Constitution would be worth
infinitely less than its paper if the reasonableness of State action concerned
with housing is determined without regard to the fundamental constitutional
value of human dignity’.51 The inflexible application of the City’s policy
subjects the occupiers to continued violation of their dignity because its effect
is that they are rendered homeless on eviction and vulnerable to eviction
wherever they go because they are, on the uncontested evidence, unable to
afford other accommodation. We conclude, therefore, that to the extent that
the City’s policy treats the occupiers differently to those who are evicted from
privately-owned unsafe buildings by the City, it is unconstitutional. (There is
no need to enquire whether it is nonetheless a reasonable and justifiable
infringement of the right to equality in terms of s 36(1) of the Constitution
because the City’s policy is not a ‘law of general application’.)
[68] We turn to the question of non-joinder of the provincial government.
Generally speaking, the provincial government has an important role to play in
the progressive realisation of the constitutional right of access to adequate
housing. However, in these proceedings it is not clear to us that it has any role
at all. First, it was called upon at the eleventh hour by the City to provide
funds to deal with the crisis situation in which the occupiers (and others) found
50 Footnote 46 para 328.
51 Footnote 2 para 83.
themselves, a crisis which it could not on its own have foreseen or planned
for. It refused to assist because, it said, it lacked the resources in that financial
year, and that decision is not being challenged in these proceedings. The
provincial government fell out of the picture at that point. Secondly, no relief is
sought against the provincial government by either the owner, the occupiers
or the City. Thirdly, the joinder of the provincial government was sought by the
City on the basis of its own incorrect view that it had no primary obligation
towards the occupiers to provide accommodation. Last, it appears to us that
there is no impediment to the City’s fulfilment of its own constitutional
obligation to provide temporary emergency housing, by placing the occupiers
on the lowest rung of their climb towards ultimate permanent accommodation,
which sequence it should be borne in mind the City laudably established on its
own. Joinder of the provincial government would only be necessary if it had a
direct and substantial interest in any order that might be made or if that order
could not be carried into effect without prejudicing the provincial
government.52 This case, apart from the eviction order that is sought by Blue
Moonlight, concerns the City’s obligations and the obligations of no-one else:
no relief is claimed against the provincial, it cannot be said to have a real and
substantial interest in any order that may be made and any order that is made
can be carried out without any prejudice to the provincial government.
Consequently, its joinder was not necessary.
[69] It is necessary to deal briefly with two further aspects of the order made
by the court below. We begin with the structural interdict which the occupiers
persisted in before us. Counsel for the occupiers conceded that the setting
aside of the unconstitutional aspect of the policy coupled with an order that
obliged the City to house the occupiers in temporary emergency
accommodation en route to the ultimate realisation of permanent
accommodation would mean that they had succeeded in their primary
objective. Questioned by the court about the need for the structural interdict
counsel was unable to persuade us that it was necessary. In our view, the
52 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A). See too
Occupiers of Erf 101,102, 104 and 112 Shorts Retreat, Pietermaritzburg v Daisy Dear
Investments (Pty) Ltd and others 2010 (4) BCLR 354 (SCA) paras 11-14.
structural interdict would serve no purpose and, that being so, it cannot be
said to be relief which is appropriate.
[70] The other aspect concerns the compensation order ─ the so-called
constitutional damages awarded to the owner. Allied to this was the stipend
referred to above. The compensation order, an order that is, to say the least,
far-reaching, was ostensibly modelled on the decision of this court in
Modderfontein Squatters, Greater Benoni City Council v Modderklip Boerdery
(Pty) Ltd (Agri SA and Legal Resources Centre, Amici Curiae); President of
the Republic of South Africa and others v Modderklip Boerdery (Pty) Ltd (Agri
SA and Legal Resources Centre, Amici Curiae).53 In our view, the peculiar
facts of Modderklip render it distinguishable and it certainly is not authority for
the proposition that constitutional damages is always available, or ordinarily
appropriate, as a remedy whenever a fundamental right has been breached.
[71] In Modderklip Harms JA found that compensation was the only remedy
that was appropriate in the circumstances in order to remedy the violation of
the owner’s rights by the State.54 The Constitutional Court agreed with this
finding.55 It is, in any event distinguishable. First, in Modderklip the
compensation order was made not, as in this case, as an ancillary to an
eviction order but after an eviction order had been granted and ignored by the
40 000 unlawful occupiers of Modderklip Boerdery’s land. Secondly,
compensation was ordered because the State had violated the fundamental
rights of Modderklip Boedery by failing to assist it to execute the eviction order
which, in view of the large number of occupiers who had invaded the land,
Modderklip Boerdery was unable to do on its own. There is no question that,
in this case, Blue Moonlight will be able to execute an eviction order if it has
to. Thirdly, because of the large number of persons on the land, their eviction
53 Modderfontein Squatters, Greater Benoni City Council v Modderklip Boerdery (Pty) Ltd (Agri
SA and Legal Resources Centre, Amici Curiae); President of the Republic of South Africa and
others v Modderklip Boerdery (Pty) Ltd (Agri SA and Legal Resources Centre, Amici Curiae)
2004 (6) SA 40 (SCA).
54 Para 43.
55 President of the Republic of South Africa & another v Modderklip Boerdery (Pty) Ltd (Agri
SA & others, Amici Curiae) 2005 (5) SA 3 (CC) para 66. Note that Langa ACJ categorised the
relief ordered by this court as being ‘the most appropriate in the circumstances’. The only
other remedy suggested as being appropriate was a declarator.
was, for all practical purposes, impossible to achieve and that left Modderklip
Boerdery without the use and enjoyment of its land and, as stated above, with
compensation as the only viable and hence appropriate remedy. Once again,
the facts of this case are very different and there is no suggestion that Blue
Moonlight cannot evict the occupiers if it has to. Finally, Modderklip Boerdery
was the innocent victim of a land invasion and it took all reasonable steps –
and did so expeditiously – to safeguard its interests. In this case, Blue
Moonlight bought the property in the full knowledge that it was occupied by a
number of persons. For these reasons we consider that Modderklip is no
authority for the granting of the compensation order in the circumstances of
this case and that compensation cannot be said to be appropriate relief.
Wisely, Blue Moonlight eschewed any reliance on the compensation granted
to them.
[72] The granting of the stipend to the occupiers, albeit in the alternative, is
in itself extraordinary. It has no basis in law that we can discern and, if
allowed to stand, would have had the potential to serve as a precedent for
abuse by unscrupulous landlords who might see the State as a default source
of rental income. It, like the compensation order, is relief which is not
appropriate.
[73] In arriving at our conclusions we have been mindful of the doctrine of
the separation of powers and the limits of judicial intrusion into the domains of
other branches of government. We are, however, compelled to give effect to
the rights being asserted before us and to the extent that this may take us into
the City’s administrative system, we are of the view that it is an intrusion that
is mandated by the Constitution. In Minister of Health & others v Treatment
Action Campaign & others (No 2)56 the Constitutional Court held:
‘The primary duty of Courts is to the Constitution and the law, “which they must apply
impartially and without fear, favour or prejudice”. The Constitution requires the State to
“respect, protect, promote, and fulfil the rights in the Bill of Rights”. Where State policy is
challenged as inconsistent with the Constitution, Courts have to consider whether in
formulating and implementing such policy the State has given effect to its constitutional
56 Minister of Health & others v Treatment Action Campaign & others (No 2) 2002 (5) SA 721
(CC) para 99.
obligations. If it should hold in any given case that the State has failed to do so, it is obliged
by the Constitution to say so. Insofar as that constitutes an intrusion into the domain of the
Executive, that is an intrusion mandated by the Constitution itself.’
[74] It is not in dispute that Blue Moonlight has complied with the
requirements of PIE and that it is entitled to an eviction order. All that remains
is for us to determine the timing of the eviction. This is necessary in order to
allow the City to make the necessary arrangements for the temporary
accommodation of the occupiers and for the occupiers to make their
preparations for moving from a building that has, for many of them, been
home for many years. Taking all of the circumstances into account and the
suggestions of the parties, we consider a period of two months from the date
of this judgment to be just and equitable.
[75] For the reasons set out above, a number of orders issued by the court
below fall to be set aside. The eviction order has to be amended in
accordance with what is set out in the preceding paragraph. The declaration
of invalidity has to be in line with our reasoning. Even though the order of the
court below is being changed to a significant degree, the City has
nevertheless failed in its resistance to the order imposing an obligation on it to
accommodate the occupiers. Consequently, the appeal must fail in respect of
their primary point. The cross-appeal by the occupiers on the basis that the
court below ought to have made the eviction order conditional upon the
provision of suitable alternative accommodation to them became academic for
the reason set out in para 69 above and there is no need to make any order in
relation thereto. Blue Moonlight’s cross-appeal for the compensation order to
be varied was abandoned during the hearing. That cross-appeal therefore
should also fail.
[76] The City applied to have new evidence admitted on appeal, namely, an
updated housing report dated 21 December 2010. The application was
opposed by the occupiers. We inclined to admit the report and considered it in
arriving at our conclusions.
[77] The following order is made:
1.
The application by the appellant to have new evidence admitted on
appeal succeeds and the appellant is to pay the costs of the application on
the unopposed scale.
2.
Save as is reflected in the substituted order set out hereunder the
appeal is dismissed and the appellant is ordered to pay the second
respondents’ costs, including the costs of two counsel.
3.
No order is made in respect of the cross-appeal by the second
respondent.
4.
In respect of the abandoned cross-appeal by the first respondent, no
costs order is made in relation thereto.
5.
The order of the court below is set aside and substituted as follows:
‘1.
The first respondent and all persons occupying through them
(collectively “the occupiers”) are evicted from the immovable property situate
at Saratoga Avenue, Johannesburg and described as Portion 1 of Erf 1308
Berea Township, Registration Division IR, Gauteng (“the property”);
2.
The first respondent and all persons occupying through them are
ordered to vacate by no later than 1 June 2011, failing which the Sheriff of the
Court is authorised to carry out the eviction order;
3.
The second respondent’s housing policy to the effect that it only
provides temporary emergency accommodation to those evicted from unsafe
buildings by the City itself or at its instance, in terms of the National Building
Regulations and Building Standards Act 103 of 1977 is declared
unconstitutional to the extent that it excludes the occupiers from consideration
for such accommodation;
4.
The second respondent shall provide those occupiers whose names
appear in the document entitled “Survey of Occupiers of 7 Saratoga Avenue,
Johannesburg” filed on 30 April 2008, and those occupying through them, with
temporary emergency accommodation as decant in a location as near as
feasibly possible to the area where the property is situated, provided that they
are still resident at the property and have not voluntarily vacated it;
5.
The second respondent is ordered to pay the applicant’s costs and the
costs of the first respondent, including the costs of two counsel.’
_________________
M S NAVSA
JUDGE OF APPEAL
________________________
C PLASKET
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellant:
J J Gauntlett SC
J Both SC
A W Pullinger
Instructed by
Moodie & Robertson Johannesburg
Claude Reid Bloemfontein
For 1st Respondent:
M S M Brassey SC
G A Fourie
Instructed by
Schindlers Attorneys
Webbers Bloemfontein
For 2nd Respondent:
P Kennedy SC
H Barnes
S Wilson
Instructed by
The Wits Law Clinic Braamfontein
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 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.
City of Johannesburg Metropolitan Municipality v Blue Moonlight
(338/10) [2011] ZASCA 47 (30 March 2011)
Media Statement
Today the Supreme Court of Appeal (SCA) found that the housing policy of the City of
Johannesburg was unconstitutional to the extent that it excluded the respondent occupiers
from consideration for temporary emergency accommodation. The SCA confirmed an order in
terms of which the City was obliged to provide those occupiers whose names appeared on a
list and those occupying through them with temporary emergency accommodation in a
location as near as feasibly possible to the area where the property is situated provided that
they are still resident at the property and have not voluntarily vacated it.
The South Gauteng High Court (Spilg J) at the instance of the owners of a building in Berea
had ordered the eviction of the occupiers and had ordered the City of Johannesburg to
provide temporary accommodation to the occupiers. It also made several allied orders
including a compensation order in favour of the owners and provided for a stipend of sorts
towards accommodation costs. The City’s housing policy in terms of which it had excluded
persons from being provided with temporary emergency accommodation who had not been
evicted by it on the basis of unsafe conditions in terms of the National Building Regulations
and Building Standards Act 103 of 1977. The occupiers had been evicted on the basis of
health and safety concerns expressed by the counsel through two of its departments. The
provisions of the aforesaid legislation were not relied upon.
The City was joined as a party to the proceedings in the court below after the owners had
served its application for conviction on the occupiers. Before the SCA the City disavowed any
obligation to house persons who fell into the category of the occupiers and who had been
evicted at the instance of a private landlord. Before the SCA the City for the first time raised
the defence that it had no original power to accommodate homeless persons and that it could
only act in conjunction with national and provincial government. It submitted that it was unable
to use its own funds, including ratepayer contributions to fund accommodation for desperately
poor and homeless persons who fell into the category of the occupiers.
The SCA held that municipalities had a significant role to play in the progressive realisation of
the right to adequate housing to poor persons such as the occupiers who were asserting their
rights in terms of s 26 of the Constitution.
The SCA, whilst recognising the doctrine of the separation of powers and the limits of judicial
intrusion and considering the facts of the case, held that the Municipality was obliged to
provide temporary emergency housing to the occupiers as decant. It arrived at this conclusion
after considering s 26 of the Constitution and a whole network of related legislation. The
provision of temporary emergency accommodation to the occupiers, who were long-standing
residents of Johannesburg and who were desperately poor, would put them in line in the right
sequence towards the ultimate realisation of permanent accommodation. The SCA held that
the City was not precluded from using its own funds to provide temporary emergency
accommodation. Indeed, it had on its own version of events expended tens of millions of its
own funds in the past towards providing housing to the indigent.
The SCA found that the City’s housing policy in terms of which it excluded from consideration
for temporary emergency housing persons such as the occupiers was unconstitutional. It held
the policy to be inflexible and irrational. It effectively precluded the City from a proper
consideration of the merits of the situation of desperately poor evictees. Furthermore, the
SCA found the policy to be arbitrary and unequal in effect. The SCA said the following:
‘In the application of its policy the City effectively ties its own hands and renders itself blind to
the real plight and homelessness of persons who find themselves in the circumstances of the
occupiers. It precludes itself from considering the duties placed on it by the Constitution. As
stated above, by drawing the irrational and arbitrary distinction referred to, it is effectively
putting potentially vast numbers of persons beyond State assistance in the face of an
obligation to take positive steps to assist those who, because of their poverty and because of
circumstances beyond their control, find themselves in dire need.’
The court went on to say the following:
‘The differentiation between persons who have been evicted by the City from privately-owned
dangerous buildings and by private landowners bears no rational connection to the City’s
legitimate purpose of providing temporary accommodation to those who are vulnerable and
most in need. Its policy does not factor in the degree of need of evictees in either situation
because the personal circumstances and needs of all are irrelevant: while the unsafe
condition of buildings is a sufficient basis for the City providing accommodation, as long as
that the eviction is at its instance, the same does not apply when persons are evicted from
unsafe buildings by private landlords even though the danger in the latter instance might in
some cases be greater. The City’s policy does not take this into account. Even though the
City’s notices to Blue Moonlight, referred to in paras 13 and 14 above, were not in terms of
the National Building Regulations and Buildings Standards Act, in substance they addressed
health and safety concerns. The distinction drawn by the City between the occupiers and
those evicted by virtue of a notice in terms of the Act is also irrational.’
Before the SCA, the owners disavowed reliance on the monetary orders made by the court
below in its favour. The SCA held that they were in any event not entitled to those orders. In
respect of the stipend, the SCA could find no basis for the order and held that it was
extraordinary to say the least. The appeal by the City against the order obliging it to house the
occupiers and against the declaration of constitutional invalidity failed. It was held by the SCA
that there was no need for the structural interdict crafted by the court below and that order
was accordingly not upheld. The City was ordered to pay the occupiers’ costs, including the
costs of two counsel.
--- ends ---
|
3979
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 295/2021
In the matter between:
BRANNON JONATHAN PETERSEN
APPELLANT
and
THE STATE
RESPONDENT
Neutral Citation: Petersen v The State (Case no 295/2021) [2023]
ZASCA 26 (16 March 2023)
Coram:
NICHOLLS,
MBATHA
and
GOOSEN
JJA
and
NHLANGULELA and SIWENDU AJJA
Heard:
21 February 2023
Delivered: 16 March 2023
Summary:
Criminal law and procedure ─ indeterminate sentence ─
section 286A of Criminal Procedure Act 51 of 1977 ─ procedure for
reconsideration of sentence in terms of s 286B.
___________________________________________________________
ORDER
___________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town
(Hlophe JP, sitting as court of first instance):
The appeal is upheld, with no order as to costs.
The high court order dated 29 August 2019 is set aside and the matter
is remitted to the high court for a reconsideration of the indeterminate
sentence imposed upon Brannon Jonathan Petersen, in terms of s 286B of
the Criminal Procedure Act, 51 of 1977 (the CPA).
The reconsideration should be heard by a different judge no later
than 15 May 2023.
A parole board report as contemplated by s 286B(4) shall be filed on
or before 1 May 2023.
Any expert reports, to be relied upon by the parties shall be filed on
or before 1 May 2023.
This judgment and order are to be brought to the attention of the
Registrar of the Western Cape Division of the High Court.
__________________________________________________________
JUDGMENT
___________________________________________________________
Nicholls JA and Siwendu AJA (Mbatha and Goosen JJA and
Nhlangulela AJA concurring)
[1] This is an appeal against sentence, specifically a reconsideration of
an indeterminate sentence imposed in terms of s 286B of the Criminal
Procedure Act 51 of 1977 (the Act).
[2] The appellant was convicted by the Western Cape Division of the
High Court (the trial court) on 11 August 1998, for crimes committed when
he was 18 and 19 years old, respectively. He was declared a dangerous
criminal in terms of s 286A of the Act and given an indeterminate period
of imprisonment in terms of s 286B(1)(a). The time period after which the
appellant was to be brought back to court for reconsideration of his
indeterminate sentence, in terms of s 286B(1)(b), was set at 17 years.
[3] The appellant, at his trial, pleaded guilty to the rape of an eight year
old girl (count one), and the rape and murder of a nine year old girl
(count two and three respectively). Since his plea explanation on the first
count of rape was an admission of attempted rape, a plea of not guilty was
entered by the trial judge and the trial proceeded on that basis. The first
count concerned the rape of a family member – his sister’s granddaughter.
The appellant coerced and strangled her, albeit not to death. His version
that he was interrupted before penetration took place, was found to be
reasonably possibly true. The trial court therefore convicted him of
attempted rape. On counts two and three, the rape and murder of the nine
year old child, the appellant was convicted as charged. The child was found
to have been violently and brutally raped. After raping her, the appellant
had cut the child’s throat with a piece of glass. She had, however, already
died as result of asphyxiation due to strangulation by the appellant. The
second and third counts of rape and murder were committed while he was
out on bail for the first offence.
[4] The trial court took the view that s 286A, which allows for an
indeterminate sentence of imprisonment of a person who is found to be a
dangerous criminal, was relevant. It therefore called for specialist
psychiatric evaluations of the appellant. Three expert reports, two of
specialist psychiatrists and one of a clinical psychologist, were placed
before court, as required by s 286A of the Act. The reports indicated that
there was a significant risk of recidivism. Having considered the reports
and the appellant’s anti-social behaviour, the trial court found that the
appellant was a dangerous criminal who posed a risk to the community. It
took into consideration the gruesome murder and the fact that the appellant
related his story coldly with an alarming lack of remorse. The court
imposed an indeterminate sentence in terms of s 286B(1) and determined
that this sentence not be reconsidered in terms of s 286B(4) until he had
served 17 years of imprisonment.
[5] The period of 17 years expired in 2015. When the appellant was
brought before court, the reconsideration proceedings were conducted
before another judge, Hlophe JP, as provided by s 286B(2). The
proceedings commenced on 7 December 2015. The record of those
proceedings is not before this Court. All that we have is the order granted
by Hlophe JP, which provided that imprisonment for an indeterminate
period be confirmed and that the appellant be brought before the court on
or before 1 December 2018. The order also provided for the appellant to be
afforded an opportunity to consult with a psychiatrist and have intensive
psychotherapy with a psychologist.
[6] On 6 December 2018, just before the expiry of the three year period,
the appellant was duly brought to court for the second reconsideration of
his sentence. Again, Hlophe JP presided over the matter. On this occasion,
after various postponements, on 29 August 2019 Hlophe JP ordered further
detention, in terms of s 286B of the Act, for a period of five years. Leave
to appeal against this further period of imprisonment was sought by the
appellant, and refused by the court a quo. On 4 February 2021, this Court
granted leave to appeal against the sentence imposed on 29 August 2019.
It is this order that is the subject of this appeal.
[7] Indeterminate sentences, as provided by ss 286A and 286B, have
seldom been imposed since the sections were promulgated on 1 November
1993.1 They were enacted to protect the public against extremely
dangerous criminals.2 The Booysen Commission was established to inquire
into the ‘Continued Inclusion of Psychopathy as a Certifiable Mental
Illness and the Handling of Psychopathic and other Violent Offenders’. It
made recommendations regarding the handling and release of dangerous
and violent offenders, including sex offenders. As a result of the
Commission’s recommendations, ss 286A and 286B were enacted.3
[8] These sections allow a court to impose an indeterminate sentence
which, as the phrase suggests, means a sentence of indeterminate duration.
In effect, the person so sentenced will be incarcerated for as long as the
jurisdictional basis for the sentence exists. The jurisdictional basis is a
finding, made by the sentencing court, that the person is a ‘dangerous
criminal’.
[9] In terms of s 286A, a ‘dangerous criminal’ is one who ‘represents a
danger to the physical or mental well-being of other persons’ and from
whom ‘the community should be protected’.4 In terms of s 286A(2), if it
appears to the court or it is alleged that the accused is a danger to the
1 Criminal Matters Amendment Act 116 of 1993.
2 A Haman, C Albertus and W Nortjie ‘Deciphering Dangerous: A critical analysis of section 286A and
B of the Criminal Procedure Act 51 of 1977’ (2019) 22 PER at 3-4. The paper pinpoints the case of H van
der Merwe in 1989, who raped and brutally murdered two female hitchhikers while out on bail for sex
crimes against nine other women, as being the catalyst for the search for alternative sentencing options.
3 S v Bull & Another; S v Chavula 2001 (2) SACR 681; 2002 (1) SA 535 (SCA) para 5.
4 Section 286A(1) of the Act.
physical or mental well-being of others, the court is required to conduct an
enquiry to determine whether the accused is indeed dangerous. For this
purpose, a report by a psychiatrist appointed by the court as well as a
psychiatrist appointed by the accused, if he so wishes, are placed before
court. The court may also commit the accused to a psychiatric hospital for
observation for certain specified periods.
[10] Section 286B deals with the sentence to be imposed once an accused
has been declared a dangerous criminal in terms of s 286A. It provides that
a court may sentence the accused for an indefinite period subject to certain
safeguards:
‘(1) The court which declares a person a dangerous criminal shall-
(a) sentence such person to undergo imprisonment for an indefinite period; and
(b) direct that such person be brought before the court on the expiration of a period
determined by it, which shall not exceed the jurisdiction of the court.
(2) A person sentenced under subsection (1) to undergo imprisonment for an
indefinite period shall, notwithstanding the provisions of subsection (1)(b) but subject
to the provisions of subsection (3), within seven days after the expiration of the period
contemplated in subsection (1)(b) be brought before the court which sentenced him in
order to enable such court to reconsider the said sentence: Provided that in the absence
of the judicial officer who sentenced the person any other judicial officer of that court
may, after consideration of the evidence recorded and in the presence of the person,
make such order as the judicial officer who is absent could lawfully have made in the
proceedings in question if he had not been absent.
(3) . . .
(4) (a) Whenever a court reconsiders a sentence in terms of this section, it shall have
the same powers as it would have had 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 the court shall make no finding before it has
considered a report of a parole board as contemplated in section 5C of the Correctional
services Act, 1959 (Act 8 of 1959).
(b)
After a court has considered a sentence in terms of this section, it may-
(i) confirm the sentence of imprisonment for an indefinite period, in which case
the court shall direct that such person be brought before the court on the expiration
of a further period determined by it, which shall not exceed the jurisdiction of the
court;
(ii) convert the sentence to correctional supervision on conditions it deems fit; or
(iii) release the person unconditionally or on such conditions as it deems fit.
(5) A court which has converted a sentence of a person under subsection (4)(b)(ii)
may, whether differently constituted or not –
(a) at any time, if it is found from a motivated recommendation by the
Commissioner that that person is not fit to be subject to correctional supervision; or
(b) after such person has been brought before the court in terms of section 84B of
the Correctional Services Act, 1959 (Act 8 of 1959) reconsider that sentence and–
(i) confirm the sentence of imprisonment for an indefinite period, in which case
the court shall direct that such person be brought before the court on the expiration
of a further period determined by it, which shall not exceed the jurisdiction of the
court;
(ii) release the person unconditionally or on such conditions as it deems fit; or
(iii) where the person is brought before the court in terms of paragraph (b), again
place the person under correctional supervision on the conditions it deems fit and
for a period which shall not exceed the unexpired portion of the period of
correctional supervision as converted in terms of subsection (4)(b)(ii).
(6) For the purposes of subsection (4)(b)(i) or (5)(i), it shall not be regarded as
exceeding the jurisdiction of the regional court if the further period contemplated in
those subsections and the period contemplated in subsection (1)(b), together exceed
such court's jurisdiction.
(7) At the expiration of the further period contemplated in subsection (4)(b)(i) or
(5)(i), the provisions of subsections (2) up to and including (6), as well as of this
subsection, shall mutatis mutandis apply.’
[11] In S v Bull & Another; S v Chavulla5 this Court dealt with the
constitutionality of ss 286A and B and whether an indeterminate sentence
5 S v Bull & Another; S v Chavula 2001 (2) SACR 681; 2002 (1) SA 535 (SCA).
amounted to cruel, inhuman and degrading punishment.6 The Court found
the fact that the section is not limited to offences of any particular severity,
means that it does not violate the constitutional principle against gross
disproportionality. The Court also held that preventative detention, as
provided by the section, is lawful as it serves a legitimate purpose – the
protection of society. Further, because the trial court is afforded a
discretion with regard to the initial minimum period of imprisonment, the
section is saved from unconstitutionality.7 The stringent requirements laid
down by the statute before a declaration that an offender presents ‘a danger
to the physical or mental well-being of other persons’, are safeguards that
a declaration of dangerousness will not be lightly made.8
[12] The nature of the offence and the conduct of the accused must justify
a finding of continued dangerousness which ‘requires a pattern of
persistent or repetitively aggressive and violent behaviour’. The court is
assisted by expert evidence in this determination.9 In the same manner that
the possibility of parole saves a life sentence from being cruel, inhuman
and degrading punishment, so too does the requirement that there is a
reconsideration within a specified period, with the possibility that the
indefinite sentence may, in the future, be revisited. Similarly, in Canada it
was found that the review of the sentence at the expiration of three years
from the date of its imposition, and every two years thereafter, saved the
legislation from being successfully challenged.10
6 Section 12(1)(e) of the Constitution provides that ‘. . . [e]veryone has the right to freedom and security
of person which includes the right . . . not to be treated or punished in a cruel, inhuman or degrading
way.’
7 Ibid fn 5 paras 6 and 16.
8 Ibid para 19.
9 Ibid para 19.
10 Lyons v The Queen 44 DLR (4th) 193 at 221. Referred to in S v Bull & Another; S v Chavula 2001 (2)
SACR 681; 2002 (1) SA 535 (SCA) para 6.
[13] It is precisely because s 286B provides for an opportunity for a
proper reconsideration of the sentence that indeterminate sentences pass
constitutional muster. Section 286B(4)(a) provides that the court
reconsidering the sentence has the same powers as if it were considering
the sentence de novo. The same procedure is applicable and the court
reconsiders the prisoner’s continued dangerousness in the light of new
evidence using the same powers as the sentencing court.11 The important
difference is the requirement of a report of a Parole Board as contemplated
in s 5C of the Correctional Services Act 8 of 1959 (the Correctional
Services Act). Integral to an accused’s constitutional fair-trial rights,12 is
that the procedural requirements set out in s 286B must be strictly
observed.13 A court’s failure to obtain and consider the report of a parole
board, as required in terms of s 286B(4)(a), is a fatal irregularity
in the proceedings.14
[14] The court has three options, in terms of s 286B(4), when a prisoner
is brought before it for reconsideration. It can confirm the sentence for an
indeterminate period and fix a future date within which the prisoner must
again be brought to court for reconsideration of sentence. It can convert the
sentence into one of correctional supervision or release the prisoner
unconditionally, or upon conditions it deems fit. These options are all
subject to the proviso that the court shall make no finding before it has
considered a report of a Parole Board.
[15] Section 286B(2) makes provision for a prisoner to be brought to
court within seven days of the date set for reconsideration. The seven day
11 S v Bull & Another; S v Chavula 2001 (2) SACR 681; 2002 (1) SA 535 (SCA) para 27.
12 Section 35(3) of the Constitution.
13 Moetjie v The State and Another 2009 (1) SACR 95 (T) para 8.
14 Ibid para 10.
requirement is intended as another safeguard to ameliorate any prejudice
arising from the imposition of an indeterminate sentence. In this matter, the
seven day period was complied with, but thereafter the matter was
postponed on no less than eight occasions, to the prejudice of the appellant.
[16] The appellant was brought before court on 2 November 2018, one
month shy of the obligatory three year period. On that date, the court did
not reconsider the sentence but postponed the hearing until 16 November
2018 to enable the appellant to apply for legal aid. It further ordered that
reports be obtained from the psychiatrist and the clinical psychologist who
treated the appellant which had to be filed with the Registrar no later than
15 November 2018. In addition, the Case Management Committee and the
Parole Board were to file their report in terms of s 5C of the Correctional
Services Act, on or before 30 November 2018.
[17] On 16 November 2018, the court did not hear the matter but ordered
that the psychiatrist who evaluated the appellant in December 2015,
Emeritius Professor Tuviah Zabow, consult and evaluate the appellant and
compile a report in terms of s 286B of the Act to be filed with the court by
no later than 7 December 2017 (sic).
[18] When the appellant appeared on 10 December 2018, the matter did
not proceed and the court ordered that he be evaluated by the Department
of Correctional Services for suitability as a candidate for correctional
supervision, in terms of s 276(1)(i) of the Act. The report from this
evaluation was to be delivered and filed on or before 31 January 2018.
[19] On 4 February 2019, the correctional supervision report was
unavailable and the matter was postponed until 25 March 2019.
[20] On 25 March 2019, the matter was postponed to 3 June 2019 to
afford the appellant an opportunity to start and complete the Restorative
Justice programme, and to consider the report by the Department of
Correctional Services.
[21] On 3 June 2019, by agreement, the matter was yet again postponed
to 1 August 2019 to ensure all the reports were at hand.
[22] On 1 August 2019, the court postponed the case to 29 August 2019
in order to obtain the Victim Dialogue and Restorative Justice Report
which had to be filed by no later than 27 August 2019. It further ordered
that a random multi-screening drug test be conducted.
[23] Finally on 29 August 2019, 22 years after the initial sentence, and
almost 10 months after the appellant had first appeared in court for a second
reconsideration of his sentence, the hearing commenced. Mr Lin Adriaan
Andries Hanekom (Mr Hanekom), a clinical psychologist, and Colonel
Anneke Myburgh (Ms Myburgh), a social work manager, both employed
by the Department of Correctional Services, testified for the State.
[24] Mr Hanekom’s evidence was that the appellant was not a suitable
candidate for correctional supervision at that point, because he was unable
to give up his daily use of cannabis. Traces of heroine had also been found
in his urine a month prior. A further concern was that the appellant was a
high-ranking member of the notorious 28 gang, a gang operating both
inside and outside prison. The fear was that he would inevitably be drawn
into the gang once he was out of prison as he had stated that if he wanted
to leave the gang on his release, he would be killed. Because he had not
acquired an accredited skill in prison, it would be difficult for the appellant
to find work once released.
[25] Ms Myburgh expressed similar concerns about the appellant’s gang
involvement. She stated that he was very influential and had told her that
it was in his power to either create chaos in the prison or ensure there was
peace and quiet. She also mentioned that the appellant’s sister had
withdrawn her offer to accommodate the appellant after his release from
prison. This was due to safety concerns for her nine year old deaf mute
granddaughter who lived on the property. The community was also
opposed to the appellant living there.
[26] After hearing the evidence for the State, the court ordered that the
appellant to be brought to court on or before 29 August 2024 for a third
reconsideration of his sentence.15 By that date the appellant would have
served a sentence of 27 years.
[27] Counsel for the appellant argued that he did not get a fair hearing.
She stated that she was not given an opportunity to place the Parole Board
report before court, even though she had same in her possession at the time.
Nor was she given an opportunity to call the appellant to testify, or any
other witnesses on his behalf.
15To add further confusion it appears that two different orders were granted on 29 August 2019. In the
first, a draft order apparently signed by Hlophe JP, after declaring that the appellant was a dangerous
criminal, it was ordered that at that hearing on 29 August 2019 (sic), further reports should be submitted:
the report of the Parole Board; a report from the clinical psychologist that proceeded with the treatment
from Mr Hanekom; and a correctional supervision report. In addition, the appellant had to undergo
random drug testing and drug counselling, as well as be afforded an opportunity to attend a training
programme with an accredited skill. A second order also dated 29 August 2019, issued by the Registrar,
accords with the order granted by Hlophe JP in open court. It merely states that ‘further detention is
ordered in terms of s 286 of CPA for 5 (five) years. That the accused is to appear before Hlophe JP on
29 August 2024’.
[28] A perusal of the court record reflects the following exchanges. At
the end of Ms Myburgh’s evidence, the court excused her and addressed
counsel: ‘You may argue. I’ll give you two minutes to argue’. At the end
of argument, Hlophe JP delivered an ex tempore judgment as follows:
‘You shall be detained further in terms of section 286 of the Criminal Procedure Act
for a further period of five years. You will come back to me. I will still be sitting in this
seat, I will not have retired by then. You will come back to me on 29 August 2024. It
will be a Thursday exactly as it is today.
Sir, I am warning you. Your future is in your hands. You have heard the evidence of
Mr Hanekom, as well as Ms Myburgh. You know exactly what is required of you when
you go back to prison. If you do not do that, I will have no hesitation in keeping you in
prison again.
Your future is in your hands. Cooperate with the prison authorities. You know exactly
what is expected of you. In short, keep away from drugs. Keep away from gangs in
prison, it is not going to help you, and be honest with the prison authorities. If you do
all those things, you are honest with yourself.
Most importantly, sir, upgrade your skills. So that when you come out of prison, you
are ready to integrate into society, you have skill, you can do something else. You can
be a plumber. You can be a welder. You can be a bricklayer. There are various skills
that are offered in prison. I am sure you can even be an electrician if those skills are
offered in prison. The future is in your hands. If you come back here, you have not done
that, we are going back to square one. And it is no excuse that everybody is doing it in
prison. I quoted Mandela earlier on, when he was in prison. He came out of prison and
led this country to democracy and we are all proud of him. So the future is in your
hands.
The court will adjourn. I am not going to engage you any further. That’s the order of
the court. The court will adjourn. See you on 29 August 2024.’
[29] There can be no doubt that immediately after the State witnesses had
testified, counsel was called upon to argue without calling for evidence
from the appellant. It was of course open to counsel for the appellant to
insist on these rights, but throughout the hearing she had been admonished
and berated for wasting the court’s time and made to believe that any
attempts to place a contrary view to that of the State was a futile exercise.
[30] In addition, there are several glaring irregularities with the procedure
followed by the high court. In the first place, the court was obliged to
consider whether the appellant was still ‘a dangerous criminal’ posing a
danger to society and to give reasons for its declaration. It failed to do so.
Secondly, no report of a Parole Board was placed before court. The high
court was therefore in no position to determine whether the indeterminate
sentence should be converted into a determinate one or whether the
appellant ought to be released. On these grounds alone the order falls to be
set aside.
[31] Apart from the procedural irregularities, the court a quo approached
the matter as though there was an onus on the appellant to prove that he
qualified for parole. Instead, it was the court’s duty to enquire into whether
the appellant remained a dangerous criminal. The matter was conducted in
an ad hoc and haphazard manner with no thought to the requirements of
the Act, procedural fairness and interests of the appellant. In the light of
these findings, the order made by the high court cannot stand. What
remains to be considered is what order should be made by this Court.
[32] Counsel for the appellant argued vigorously for this Court to
intervene to ‘balance the injustice’ suffered by the appellant and to
summarily release him. That option, however, is not available to this Court
having regard to the peremptory language employed in the statute. In the
first instance, a Parole Board report is not before Court as required by
s 286B(4). Such report has to deal with, inter alia, the conduct of the
prisoner, adaptation, training, mental state and the possibility of relapsing
into crime. Where the reconsideration court decides not to confirm the
sentence, it must have a basis for making the decision and its election to
convert the sentence into one of correctional supervision sentence or to
release the person unconditionally or on any conditions it deems fit.
Correctional supervision can only be implemented if supervised.
[33] The ability of this Court to substitute the sentence of the high court
with its own sentence is constrained by the absence of that report.
Furthermore, the primary task of a reconsideration court is to consider
whether an indeterminate sentence is still appropriate. That requires
consideration of whether the prisoner concerned is still to be treated as a
‘dangerous criminal’. In this instance that enquiry was not done. There is
no evidence upon which this Court may make such determination.
[34] The many postponements before the hearing for reconsideration
finally commenced, amounted to a manifest injustice. Section 286B
requires that the reconsideration occur as expeditiously as possible, as is
evidenced by the requirement that the matter be heard within seven days of
the date ordered. These considerations ought to inform the procedure for
reconsideration of an indeterminate sentence.
[35] An order remitting the matter to the high court so that a proper
inquiry may be carried out in terms of s 286B, carries with it the risk of
still further delay to the obvious prejudice of the appellant. It is incumbent
upon the prosecuting authority, which is aware of the date set for
reconsideration of such a sentence, to ensure that the reconsideration
hearing can proceed upon the reconsideration date. To this end the process
of gathering the requisite reports, particularly the s 5C Parole Board, ought
to commence well ahead of the date of the reconsideration hearing.
Timeous and appropriate arrangements must be made with the court seized
with reconsideration to ensure that the matter is not beset by unnecessary
and prejudicial postponements.
[36] In order to ensure that justice is delayed no further, it is this Court’s
intention to place strict time limits as to when the appellant should be
brought before court again for a proper determination of whether he is a
dangerous criminal at present and what sentence to impose, if any.
[37] In the result the following order is made:
The appeal is upheld, with no order as to costs.
The high court order dated 29 August 2019 is set aside and the matter
is remitted to the high court for a reconsideration of the indeterminate
sentence imposed upon Brannon Jonathan Petersen, in terms of s 286B of
the Criminal Procedure Act, 51 of 1977 (the CPA).
The reconsideration should be heard by a different judge no later
than 15 May 2023.
A parole board report as contemplated by s 286B(4) shall be filed on
or before 1 May 2023.
Any expert reports, to be relied upon by the parties shall be filed on
or before 1 May 2023.
This judgment and order are to be brought to the attention of the
Registrar of the Western Cape Division of the High Court.
_________________
C H NICHOLLS
JUDGE OF APPEAL
_________________________
NTY SIWENDU
ACTING JUDGE OF APPEAL
APPEARANCES:
For appellant:
C J Teunissen
Instructed by:
Legal Aid South Africa, Cape Town
Legal Aid South Africa, Bloemfontein
For respondent:
S Kuun
Instructed by:
The Director of Public Prosecutions, Cape Town
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:
16 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
Petersen v The State (295/2021) [2023] ZASCA 26 (16 March 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).
This was an appeal against a reconsideration of an indeterminate sentence imposed in terms of s 286B
of the Criminal Procedure Act 51 of 1977 (the Act). The appellant was convicted by the high court on
11 August 1998. He was declared a dangerous criminal in terms of s 286A of the Act and given an
indeterminate period of imprisonment in terms of s 286B(1)(a). The time period after which the appellant
was to be brought back to court for reconsideration of his indeterminate sentence, in terms of
s 286B(1)(b), was set at 17 years.
The period of 17 years expired in 2015. The proceedings commenced before a different judge
(i.e. Hlope JP), in terms of s 286B(2), on 7 December 2015. The judge then ordered that imprisonment
for an indeterminate period must be confirmed and that the appellant should be brought before court
on or before 1 December 2018. The order also provided for the appellant to be afforded an opportunity
to consult with a psychiatrist and undergo intensive psychotherapy with a psychologist. On 6 December
2018, just before the expiry of the three year period, the appellant was duly brought before court for the
second reconsideration of his sentence. Again, the same judge presided over the matter. After various
postponements, on 29 August 2019 the judge ordered further detention, in terms of s 286B of the Act,
for a period of five years.
Leave to appeal against the further period of imprisonment was sought by the appellant, and refused
by the high court. On 4 February 2021, the SCA granted leave to appeal against the sentence imposed
on 29 August 2019.
The SCA found that there were several glaring irregularities with the procedure followed by the
high court. In the first place, the court was obliged to consider whether the appellant was still
‘a dangerous criminal’ posing a danger to society and to give reasons for its declaration. It failed to do
so. Secondly, no report of a Parole Board was placed before court. The high court, said the SCA, was
in no position to determine whether the indeterminate sentence should be converted into a determinate
one or whether the appellant ought to be released. The SCA held that on these grounds alone, the high
court order fell to be set aside. The SCA found that the high court had approached the matter as though
the appellant had an onus to prove that he qualified for parole and held that it was the high court’s duty,
instead, to enquire into whether the appellant remained a dangerous criminal.
Counsel for the appellant argued vigorously for the SCA to intervene to ‘balance the injustice’ suffered
by the appellant and to summarily release him. The SCA found that that option was not available to it
having regard to the peremptory language employed in the Act. The SCA held that in the absence of a
Parole Board report, its ability to substitute the sentence of the high court with its own sentence was
constrained. The SCA held further that the primary task of a reconsideration court was to consider
whether an indeterminate sentence was still appropriate. That required consideration of whether the
prisoner concerned was still to be treated as a ‘dangerous criminal’. However, there was no evidence
upon which the SCA could make such determination. An order remitting the matter to the high court so
that a proper inquiry may be carried out in accordance with s 286B, carried with it the risk of further
delays to the obvious prejudice of the appellant. In order to ensure that justice was delayed no further,
the SCA placed strict time limits as to when the appellant should be brought before court again for a
proper determination of whether he was a dangerous criminal and what sentence, if any, should be
imposed.
The SCA upheld the appeal and ordered that the matter be remitted to the high court for reconsideration.
~~~~ends~~~~
|
470
|
non-electoral
|
2016
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 99/2015
In the matter between:
DAVID WILLOUGHBY ABBOTT
APPELLANT
and
OVERSTRAND MUNICIPALITY
FIRST RESPONDENT
THE MINISTER, DEPARTMENT OF
SECOND RESPONDENT
ENVIRONMENTAL AFFAIRS AND TOURISM
THE MINISTER, DEPARTMENT OF
THIRD RESPONDENT
ENVIRONMENTAL AFFAIRS AND DEVELOPMENT
PLANNING, WESTERN CAPE
THE KLEIN RIVER ESTUARY FORUM
FOURTH RESPONDENT
Neutral citation: Abbott v Overstrand Municipality (99/2015) [2016] ZASCA 68 (20
May 2016)
Coram:
Lewis, Cachalia and Tshiqi JJA and Fourie and Baartman AJJA
Heard:
6 May 2016
Delivered:
20 May 2016
Summary: Application for the review and setting aside of a municipality’s decision to
refuse to take steps to prevent damage being caused to immovable property by flooding
– failure to prove that the municipality had the legal authority or obligation to take such
steps – requirements for reliance on the doctrine of legitimate expectation also not met.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town (Blommaert
AJ sitting as court of first instance):
The appeal is dismissed with costs including the costs consequent upon the
employment of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Fourie AJA (Lewis, Cachalia and Tshiqi JJA and Baartman AJA concurring):
[1] During 1982, the appellant, Mr David Willoughby Abbott, acquired immovable
property (the property) bordering on the Klein River, in the district of Hermanus,
Western Cape Province. In 1989 he erected buildings on the property, including a
house on the bank of the Klein River. According to the appellant his house had
subsequently been damaged by the flooding of the Klein River, and this led to
litigation between him and the first respondent, Overstrand Municipality (the
municipality), culminating in the present appeal.
[2] The Klein River forms part of the Klein River estuary (the estuary) which is an
estuarine lake that seasonally opens and closes on normal river flow regimes. The
estuary stretches from the sea (or mouth of the estuary, when closed) at Hermanus,
to just beyond the hamlet of Stanford some 17.5 kilometres upstream. The estuary,
and the property, are situated within the area of jurisdiction of the municipality.
[3] The estuary can be divided into three sections. The lower reaches, stretching
from zero to three kilometres from the mouth comprise the mouth area and the inlet
channels. When the mouth is closed it is separated from the sea by a sand-berm
(the berm). To establish connectivity with the sea, the berm needs to be eroded by
water from the estuary itself or by the sea, or to be artificially breached.
[4] The second part of the estuary is known as the ‘vlei’. It comprises a large
unconstrained main water body upstream of the mouth and tidal channels to where
the estuary becomes a narrow confined channel. This stretches from approximately
three to eight and a half kilometres from the mouth.
[5] The remainder of the estuary comprises the Klein River which is the area from
eight and a half to 17.5 kilometres upstream from the mouth and stretches to a few
hundred metres past the bridge at Stanford. This is where the property is situated,
approximately 16 kilometres upstream from the mouth of the estuary.
[6] In July 2014 the appellant approached the Western Cape Division of the High
Court, Cape Town, on application alleging that his dwelling had been damaged by
the flooding of the Klein River in circumstances where the municipality was obliged,
but failed, to take steps to prevent such damage. The main relief sought by the
appellant was the review and setting aside, in terms of the Promotion of
Administrative Justice Act 3 of 2000 (PAJA), alternatively in terms of the common
law, of the municipality’s decision to refuse to take any steps to prevent damage
being caused to his house by the flooding of the Klein River. The appellant further
sought the remittal of the matter to the municipality for reconsideration, ‘which shall
include consideration of steps to be taken to protect the house against any flooding
of the house, which might be caused by the failure to artificially breach the berm of
the mouth of the Klein River or to only breach such berm when the mean water level
in the Klein River estuary exceeds 2.1 metres’.
[7] The appellant sought the following relief in the alternative:
(a) an order declaring that an established practice exists in respect of the breaching
of the berm at the mouth of the estuary whenever low-lying properties were
threatened with damage;
(b) an order declaring that the practice can only be lawfully departed from if the
municipality takes reasonable steps to protect the appellant’s house from damage
resulting from a departure from the established practice;
(c) an order directing the municipality to take reasonable steps to prevent the
flooding of the appellant’s house.
I should add that no relief was sought against the second to fourth respondents.
[8] The appellant’s notice of motion is certainly not a model of clarity, but when it
is read in conjunction with the founding affidavit and in particular the appellant’s
replying affidavit, it appears that the case put forward by the appellant was the
following:
(a) for many years it had been the established practice of the municipality and its
predecessors to artificially breach the berm at the mouth of the estuary when the
water level in the estuary exceeded 2.1 metres above mean sea level (amsl), so as
to prevent flood damage to low-lying riparian properties;
(b) during 2010 the municipality departed from this settled practice by deciding to
artificially breach the berm only at a much higher level, without taking steps to
protect the properties of those affected by such decision, including the property of
the appellant;
(c) the decision to artificially breach the berm at this higher level resulted in the
flooding of the appellant’s property by the Klein River causing structural damage to
his house;
(d)
on 12 August 2013 the municipality advised him in writing that it was not
legally bound to take any steps to prevent his house from being flooded by the Klein
River.
[9] It has to be emphasised that the relief sought by the appellant was not aimed
at addressing the artificial breaching of the berm. He did not seek an order
compelling artificial breaching of the berm; in fact, the relief sought by him was only
directed at the municipality taking measures to protect his property from flood
damage which, he alleged, it had done in the past.
[10] The municipality opposed the application and, in the event, it was heard by
Blommaert AJ who dismissed the application with costs, but granted the appellant
leave to appeal to this court.
[11] The court a quo approached the matter on the basis that, in order to ‘[get] out
of the starting blocks’, the appellant had to prove that the municipality’s conduct, of
which he complained, was the cause of the damage to the house. However, in view
of the disputes of fact on the papers as to the cause of the damage, Blommaert AJ
held that the matter had to be decided on the municipality’s version, and he
accordingly dismissed the application. Although I agree that the application fell to be
dismissed, I intend to follow a different route in reaching this conclusion.
[12] As stated in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs
and Tourism & others [2004] ZACC 15; 2004 (4) SA 490 (CC) para 22, there is now
only one system of law grounded in the Constitution which regulates administrative
action. The court’s power to review administrative action is founded in PAJA and the
Constitution itself. In s 1 of PAJA ‘administrative action’ in relation to an organ of
state (such as the municipality in this instance) is defined as the taking of a decision,
or the failure to take a decision by the 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. Section 6 of PAJA codifies
the grounds for judicial review of administrative action, while s 8 prescribes the
remedies a court may grant in proceedings for judicial review.
[13] In his notice of motion the appellant relied on s 6(1) of PAJA to review and set
aside the municipality’s decision to refuse to take any steps to prevent flood damage
to his house. However, all that s 6(1) provides is that any person may institute
proceedings for review of an administrative action. As I see it, the application was in
effect one in terms of s 6(2)(g) of PAJA, for the review of the municipality’s failure to
take a decision to prevent damage being caused to the appellant’s house by the
flooding of the Klein River. Therefore, to succeed with the application he had to show
that the municipality was under a legal obligation to take steps to prevent damage
from being occasioned to his house by the flooding of the Klein River. See
Commissioner, South African Revenue Service v Trend Finance (Pty) Ltd & another
[2007] ZASCA 59; 2007 (6) SA 117 (SCA) para 27; Offit Enterprises (Pty) Ltd &
another v Coega Development Corporation & others [2010] ZASCA 1; 2010 (4) SA
242 (SCA) para 43 and Thusi v Minister of Home Affairs & others [2010] ZAKZPHC
87; 2011 (2) SA 561 (KZP) para 42.
[14] The logical starting point in determining whether the municipality had the legal
obligation (and the necessary power) to take steps to protect the appellant’s house
from flooding, is the Constitution. Section 156(1) of the Constitution confers on
municipalities executive authority and the right to administer the local government
matters listed in Part B of Schedules 4 and 5 of the Constitution, and any other
matter assigned to it by national or provincial legislation.
[15] The local government matters listed in Part B of Schedules 4 and 5 do not
confer any authority on the municipality relative to the breaching of the berm in the
estuary and the protection of riparian property owners against flooding. By contrast,
Part A of Schedule 4 of the Constitution lists the areas of ‘Environment’ and ‘Nature
conservation’ as concurrent national and provincial functions.
[16] It follows that any powers which the municipality may wish to exercise with
regard to the estuary have to be assigned to it by national or provincial legislation. By
virtue of the amalgamation of municipalities the estuary has since 5 December 2000
fallen within the areas of jurisdiction of the municipality and the Overberg District
Municipality (the latter’s area of jurisdiction also encompassing several other local
municipalities). However, no power or duty to manage or control the estuary and to
take measures to protect riparian properties, has been assigned to the municipality
by national or provincial legislation.
[17] The National Environmental Management Act 107 of 1998 (NEMA) which
commenced on 29 January 1999, provides in s 24(2)(a) that the national minister
responsible for environmental affairs may identify activities which may not
commence without an environmental authorisation from the ‘competent authority’.
Various activities have subsequently been listed under s 24(2)(a) of NEMA, thereby
empowering the third respondent (the MEC) to, inter alia, authorise an activity such
as the artificial breaching of the berm at the mouth of the estuary. The delegate of
the MEC duly authorised the artificial breaching of the berm when approving the
mouth management plan and its revision submitted by the fourth respondent (KREF)
in 2010 and 2013, as recorded in more detail in para 30 infra.
[18] The Nature Conservation Ordinance 19 of 1974 (Cape) also contains
provisions dealing with the management and control of ‘inland waters’, ie all waters
which do not permanently or at any time during the year form part of the sea. This
would include a body of water such as the estuary. Section 16(1)(c)(ii), read with
s 16(1)(e), of the ordinance, confers the power on CapeNature (the Western Cape
Nature Conservation Board) to take such steps as may be necessary or desirable for
the achievement of the objects and purposes of the ordinance, including the power
to take such measures as may be necessary or desirable for the control of fish and
aquatic growths in the estuary. These powers conferred on CapeNature are
sufficiently wide to encompass the power to manage the estuary, including the
management of the breaching of the berm between the estuary and the sea. I should
add that, as explained by Ms Lara van Niekerk, an estuarine specialist, employed by
the CSIR and an advisor to the municipality, artificial breachings of the berm at lower
than natural breaching levels, reduces the volume and duration of water-flow out to
sea with resultant increased sedimentation in the lower vlei. This has had an adverse
effect on the ecology of the vlei. Therefore, the breaching of the berm at higher and,
if possible, natural levels, will have (and has had) positive results. In short, breaching
at higher levels is required to prevent the vlei from silting up to the detriment of the
estuarine ecology.
[19] It is possible that, in the future, the municipality may be authorised to
administer the estuary under the National Environmental Management: Integrated
Coastal Management Act 24 of 2008 (ICMA) which commenced on 1 December
2009. Chapter 4 of ICMA provides for estuarine management in order to address the
lack of effective management of estuaries. To that end a protocol has been
published under ICMA in May 2013, which provides for the management of estuaries
through the development and implementation of individual estuarine management
plans. However, the municipality will only be authorised to manage the estuary under
the provisions of ICMA if it agrees, and has the capacity, to do so, in accordance
with s 156(4) of the Constitution. This has not happened and therefore the
municipality does not have any authority under ICMA to manage the estuary,
including the breaching of the mouth of the estuary.
[20] The appellant contends that, notwithstanding the provisions of s 156 of the
Constitution and the other legislation referred to above, the municipality does have
the necessary authority to manage the estuary and to protect the riparian properties
against flood damage. For this submission the appellant relies on a pre-constitution
resolution, embodied in a council minute of the then Hermanus Municipality dated 9
September 1991, and the contents of a public newsletter distributed by the
Hermanus Municipality in November 1991. The council minute records that a letter
had been received from the Chief Director: Nature and Environmental Conservation
(CDNEC) (the predecessor to CapeNature) suggesting that the Hermanus
Municipality should take over control of the management of the estuary, including
‘die oopmaak van die mond’. The Hermanus Municipality resolved that it was
prepared to accept full control over the estuary, but requested the CDNEC to define
the council’s powers and responsibilities in this regard. There is no evidence of the
CDNEC defining these powers and responsibilities, but in the newsletter of
November 1991 the Hermanus Municipality reported as follows:
‘For the first time the responsibility of deciding whether or not to open the lagoon rested with
the municipality as complete control of the lagoon, rather than just the recreational aspects
thereof, has been handed over to us. This includes the controversial opening of the lagoon
each year, after prior consultation with the CSIR and in accordance with the guidelines laid
down by them.’
[21] This submission of the appellant, however, takes no account of the re-
allocation of public powers and responsibilities by and in terms of the Constitution in
1996. In addition, as I will in due course illustrate, the municipality did not, in fact,
assume control of the management of the estuary and the breaching of the berm,
but, at most, was represented on committees, consisting of various interested parties
which attended to these matters.
[22] I should add that, in his replying affidavit, the appellant also sought to rely on
certain regulations (Overberg Regional Services Council Regulations for the control
of the sea-shore and the sea situated within or adjoining the area of jurisdiction of
the Overberg Regional Services Council, GN R35, GG 15624, 15 April 1994) made
by the Overberg Regional Services Council (the Overberg RSC), promulgated in
1994 pursuant to s 10(1) of the Sea-Shore Act 21 of 1935. The appellant avers that
the control of the sea shore within its area of jurisdiction then vested in the Overberg
RSC and that the municipality as the successor of the Overberg RSC, is now clothed
with the powers conferred in terms of the 1994 regulations. Therefore the appellant
contends that the municipality has in terms of the 1994 regulations the power to
control the sea shore, including the estuary.
[23] As pointed out by the municipality, there is simply no merit in the appellant’s
reliance on the 1994 regulations. Firstly, the Overberg District Municipality, and not
the municipality, is the successor-in-law to the Overberg RSC with regard to the
management of the sea shore within the area of its jurisdiction. Furthermore, the
1994 regulations contain a prohibition on the opening of the mouth of a river where a
bar of sand has developed between the mouth of the river and the sea blocking tidal
interchange. It follows that the municipality has derived no powers from the 1994
regulations to exercise any authority or control over the estuary or to take steps to
protect riparian owners from flooding. For the sake of completeness I should add that
the municipality does exercise some authority over the estuary, but with regard to
certain constitutional functional areas only, namely the licensing and control of boats
in the lagoon and the recreational aspects of the lagoon.
[24] From this it follows that there is no legislation (whether national or provincial)
which has assigned to the municipality the power or the duty to manage the estuary
and to take measures to protect riparian properties. Therefore, the appellant has
failed to show that the municipality was under a legal obligation to take steps to
protect his house from flooding by the Klein River. It should also be borne in mind
that the municipality cannot lawfully assume powers it does not have, nor can it be
compelled to take steps it has no authority to take. See Fedsure Life Assurance Ltd
& others v Greater Johannesburg Transitional Metropolitan Council & others [1998]
ZACC 17; 1999 (1) SA 374 (CC) para 56; City of Tshwane Metropolitan Municipality
v RPM Bricks (Pty) Ltd [2007] ZASCA 28; 2008 (3) SA 1 (SCA) paras 11-13. The
application for review under PAJA accordingly had to fail.
[25] Although it is not necessary, I consider it appropriate to briefly deal with the
factual premise of the appellant’s case, to show that, at a factual level too, the
application for review was beset by insuperable difficulties. At the outset I should
refer to the appellant’s change of stance at the hearing of the appeal. His case on
the papers was that his house was damaged by the flooding of the Klein River.
However, during argument on appeal, counsel for the appellant attempted to pin his
colours to the mast of damage caused to the house by the gradual ingress of water
and not by flooding. This was not the case that the municipality was required to
meet. It is abundantly clear from the notice of motion and the affidavits deposed to
by the appellant that he relied on the actual flooding of his house as the cause of the
damage. Counsel for the appellant sought support in the affidavit of an engineer who
had inspected the house on behalf of the appellant, but, ironically, the affidavit
contained references to the ‘continuous flooding of the house’, ‘cracks [that] were
caused by the water flooding the area’ and that steps are to be taken ‘to protect the
house from further flooding’. The appellant is accordingly not entitled to stray from
the case made out on his papers.
[26] In his founding papers the appellant alleged that his house was subjected to
continuous or repeated flooding. In due course it became common cause that this
was a gross exaggeration. In his replying affidavit the appellant made it clear that
from 1989 to 2010 no flooding of his property had occurred. He stated that it was
‘only when the decision was taken that artificial breaching of the river mouth would
cease’, that the flooding of his property commenced. This decision was taken in
March 2010. However, the appellant mentioned only two specific flooding incidents
subsequent to March 2010, namely one in September 2011 and the other in
November 2013 (the latter, however, being a kind of flooding for which the
municipality was not responsible). This left only one incident of flooding (in
September 2011), which is a far cry from his allegations of continuous or repeated
flooding of his property. I should add that, during the flood of September 2011, as
depicted in photographs taken by the appellant, the water did not reach his house.
[27] Apart from this gross exaggeration, the appellant’s version that it was only
after the decision in March 2010, to artificially breach the berm at the higher water
level of 2.6m amsl, that rising water levels caused damage to his property, is
seriously undermined by the evidence of the municipality. This undisputed evidence
shows that in 1997, 1998, 1999, 2001, 2003, 2006 and 2007 the berm was breached
at levels between 2.63m and 2.8m amsl, all of which are years when the appellant
says he suffered no damage to his property. It is further significant that on 14 August
2012, when the berm breached naturally with the water level at 2.77m amsl, the
appellant experienced no flooding at his property. All of this tends to show that any
flooding of the appellant’s house (which on the appellant’s version had in any event
only taken place in September 2011) was probably not related to the breaching of
the berm.
[28] A repeated allegation in the appellant’s papers is that, during episodes of
flooding, the municipality had taken preventative measures to protect low-lying
riparian properties, including his property. The impression gained from the founding
affidavit is that there had been a long established practice by the municipality to
protect riparian properties against flooding, including properties along the Klein River
where the appellant had constructed his house. The municipality, however, denied
the existence of such a practice, stating that the only protective measures which
were taken were those to protect low-lying properties on the vlei against strong wind
and wave action. This was confirmed by Mr Martens who, at the relevant time, was
the officer at CapeNature who attended to the taking of such protective measures.
According to Mr Martens no protective measures were ever taken to protect the low-
lying properties along the banks of the Klein River, other than to communicate
telephonically with the appellant as to the water levels in the vlei. Mr Martens also
denied that he ever went to the appellant’s property, as suggested by the appellant.
It follows that there was a material dispute of fact as to the existence of the practice
contended for by the appellant. The version of the municipality can certainly not be
rejected out of hand as being far-fetched and untenable, particularly where it is
confirmed by Mr Martens of CapeNature.
[29] To this one should add that the evidence also does not bear out the existence
of a practice (particularly prior to 2010 as suggested by the appellant) of artificially
breaching the berm at the mouth of the estuary when the water level in the vlei
reached a level of 2.1m amsl. On the contrary, the available breaching evidence
shows that during the period 1990-2010 artificial breaching at a level of 2.1m amsl
took place on only three occasions, ie in 1990, 1994 and 1996. Thereafter artificial
breaching took place on seven occasions at water levels substantially in excess of
2.1m amsl.
[30] The appellant’s contention that the municipality was the party who managed
the estuary and attended to the breaching of the berm, is also incorrect. What the
evidence shows is that various role players, including the municipality, have through
the years been responsible for deciding whether or not the berm should be artificially
breached and, if so, at what level breaching should take place. To this end advisory
committees were formed, the present being KREF, consisting of representatives of
various government agencies and civil society organisations with an interest in the
proper management of the estuarine ecosystems, including representatives of the
municipality. Mouth management plans were devised by these bodies, which
included a plan approved under the auspices of KREF, following a ‘breaching
indaba’ on 4 March 2010. This mouth management plan was approved by the
Western Cape Department of Environmental Affairs and Development Planning and
is the plan presently in place for the management of the estuary, including the
artificial breaching of the berm when necessary. This plan provides that, in the
absence of crisis conditions, the minimum water level at which artificial breaching
could be considered is 2.6m amsl. During June 2013 KREF revised the mouth
management plan to allow breaching even if the water level in the vlei was lower
than the minimum preferred water level of 2.6m amsl. The revision was sought due
to the decreased mean annual runoff, which meant that there may be years in future
where the system does not reach the required level for breaching, which would be
ecologically damaging. On 22 August 2013 the revised mouth management plan was
approved by the Western Cape Department of Environmental Affairs and
Development Planning.
[31] Finally with regard to the factual difficulties faced by the appellant, the court a
quo correctly held that there was a material dispute on the papers as to the cause of
the damage to the appellant’s house. I do not intend traversing the respective
versions in any detail, save to allude to the municipality’s contention that flooding
which might occur at the appellant’s property is in all probability related to the
occurrence of major river floods, rather than to high water levels in the vlei. The
municipality’s version is based on expert opinion that flooding of the appellant’s
property would occur regardless of whether the mouth is open or closed. This
version can certainly not be rejected out of hand as being so far-fetched and clearly
untenable that it can confidently be said, on the papers alone, that it is demonstrably
and clearly unworthy of credence. It follows that, on this basis too, the review
application was doomed to failure.
[32] What remains, is the appellant’s alternative cause of action (see para 7 supra)
in which he invoked the doctrine of legitimate expectation. He submitted that, as the
municipality and its predecessors had for many years exercised various levels of
control over the estuary, in particular by following a policy of breaching the berm at
the lower level of 2.1m amsl to protect low-lying riparian properties, this has given
rise to a legitimate expectation on his part that the practice would only be departed
from if reasonable steps were taken by the municipality to protect his property from
flooding by the Klein River.
[33] It will be immediately apparent that the appellant attempted to invoke the
doctrine of legitimate expectation to substantiate his claim for substantive relief, ie an
order directing the municipality to take reasonable steps to prevent his house from
flooding. In Meyer v Iscor Pension Fund [2002] ZASCA 148; 2003 (2) SA 715 (SCA)
para 27, this court confirmed that the doctrine of substantive legitimate expectation
has not yet been adopted as part of our law. Our courts have applied the doctrine in
the narrow procedural sense only, ie as being confined to the right to a hearing
before the legitimate expectation is disappointed, and not in the wider sense of
conferring substantive benefits on the party having the expectation. See Meyer v
Iscor Pension Fund, supra, para 25; South African Veterinary Council & another v
Szymanski [2003] ZASCA 11; 2003 (4) SA 42 (SCA) para 15; Walele v City of Cape
Town & others [2008] ZACC 11; 2008 (6) SA 129 (CC) para 35 and MEC for
Education, Northern Cape Province & another v Bateleur Books (Pty) Ltd & others
[2009] ZASCA 33; 2009 (4) SA 639 (SCA) para 23.
[34] As emphasised in Walele, para 38, the inquiry for determining the existence of
a legitimate expectation is primarily factual, and the focus is on objective facts giving
rise to the expectation. In view of my findings above with regard to the factual
premise of the application, it follows that, even on the acceptance of the doctrine of
legitimate expectation of a substantive benefit as part of our law, the application was
doomed to failure. This is so as the appellant had in several respects failed to
establish the factual basis for his alleged legitimate expectation. In particular, he
failed to establish the existence of an established practice where the berm was
artificially breached at a maximum water level of 2.1m amsl. He also failed to show
that the decision to breach was taken by the municipality. Further, the appellant
failed to prove that the breaching of the berm was a protective measure taken for the
benefit of his property, as opposed to the low-lying properties adjacent to the vlei. In
fact, the evidence showed that he had never benefited from the protective measures
taken to protect low-lying properties along the vlei against wind and wave action.
[35] In the result the appeal is dismissed with costs including the costs consequent
upon the employment of two counsel.
________________________
P B FOURIE
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellant:
A C Oosthuizen SC (with him J H Loots)
Instructed by:
KSS Keller Snyman Schelhase, Cape Town
Phatsoane Henney Inc., Bloemfontein
For Respondent:
A Breitenbach SC (with him A Erasmus)
Instructed by:
Fairbridges Attorneys, Cape Town
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
20 May 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Abbott v Overstrand Municipality & others (99/2015) [2016] ZASCA 68 (20 May 2016)
The Supreme Court of Appeal (SCA) today dismissed the appeal of Mr
Abbott, the owner of a house built on the bank of the Klein River, Hermanus,
Western Cape, who sought to review and set aside the decision of the
Overstrand Municipality to refuse to take steps to prevent damage being
caused to his house by flooding of the Klein River. The SCA held that Abbott
had failed to prove that the municipality had the legal authority or obligation to
take such steps. Abbott’s contention that he had a legitimate expectation that
the municipality would take such steps and therefore that the municipality is
obliged to take steps to protect his house from flooding, was also rejected.
Abbott was ordered to pay the costs of the municipality including the costs of
two counsel.
|
2837
|
non-electoral
|
2012
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 703/2011
In the matter between:
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE
(PROPRIETARY) LIMITED
Appellant
and
THE COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE SERVICE
Respondent
Neutral citation:
Armgold/Harmony Freegold Joint Venture v CSARS (703/2011)
[2012] ZASCA 152 (1October 2012)
Coram:
Navsa, Cloete, Heher, Leach and Pillay JJA
Heard:
06 September 2012
Delivered:
01 October 2012
Summary: Income tax – deductions of mining capital expenditure under sub-
sections 36(7F) and 36(7E) of the Income Tax Act 58 of 1962 – method of
calculation to be adopted where a mine of a taxpayer operates at a loss.
___________________________________________________________________
O R D E R
___________________________________________________________________
On appeal from:
Tax Court, South Gauteng High Court, Johannesburg (Coppin P
sitting as court of first instance):
The appeal is dismissed with costs, such costs to include the costs of two counsel.
_________________________________________________________________
J U D G M E N T
__________________________________________________________________
LEACH JA (NAVSA, CLOETE, HEHER AND PILLAY JJA CONCURRING)
[1] At the heart of the debate in this appeal is the method by which deductions for
capital expenditure and assessed losses are to be applied in the calculation of the
taxable income of a mining company which owns and operates more than one mine,
not all of which operate profitably, and which also receives income from non-mining
activities. As its name implies, the appellant, Armgold/Harmony Freegold Joint
Venture (Pty) Limited, is a company with limited liability established as a joint
venture between the Armgold and Harmony groups of companies. The appellant's
mining income is derived from working its three gold mines, respectively known as
Freegold, Joel and St Helena. It acquired the Freegold and Joel mines from the
Anglo-American group with effect from 1 January 2002 and the St Helena mine the
following year.
[2] In September 2008, the respondent, the Commissioner for the South African
Revenue Service, (who for convenience I intend to refer to as ‘SARS’), issued
revised tax assessments for the appellant, adjusting its income tax liability for the
2002 to 2005 tax years. Although SARS did so on various grounds, only one is
relevant to this appeal and it relates solely to the 2003 and 2004 years of
assessment. For those tax years SARS set off the losses of the St Helena mine
against the taxable income of the Freegold and Joel mines before taking into
account the mining capital expenditure incurred in respect of those mines. The effect
of this, for reasons more fully explained below, was to reduce the amount of capital
expenditure that could be redeemed in respect of the Freegold and Joel mines.
[3] On 25 March 2009, the appellant objected to the revised assessment but, on 13
July 2009, its objection was disallowed. The appellant appealed to the Tax Court,
Johannesburg which, on 1 August 2011, dismissed the appeal. With leave of the Tax
Court, the appellant appeals now to this court.
[4] It is useful at the outset to consider the general scheme of assessing liability for
tax under the Income Tax Act 58 of 1962 (‘the Act’). As a starting point, a taxpayer's
‘gross income’ is defined as the ‘total amount, in cash or otherwise, received by or
accrued to or in favour of’ the taxpayer during the period of assessment. From such
gross income are deducted any amounts that are exempt from normal tax in order to
calculate the taxpayer’s ‘income’ (in the present case no such deductions are of any
relevance). Further deductions are permitted under both s 11(a) of the Act and any
further provisions in Part 1 of Chapter II of the Act. In that regard I should mention
that s 11(a) contains what is commonly referred to as ‘the general deduction formula’
which allows the deduction of expenditure and losses actually occurred in the
production of income ‘provided such expenditure and losses are not of a capital
nature’. This would include what are generally referred to as a mine’s operating
expenses. In any event, the taxpayer’s gross income, less these deductions, is the
amount of the taxpayer’s ‘taxable income’ to which the appropriate tax rate is applied
to determine the taxpayer’s tax liability for that year of assessment.
[5] Turning to the question of deductions other than those under s 11(a), I should
mention at the outset that the relevant part of s 20(1) of the Act, upon which the
appellant placed reliance as I shall indicate below, provides as follows:
‘For the purpose of determining the taxable income derived by any person from carrying on
any trade, there shall ... be set off against the income so derived by such person –
(a) any balance of assessed loss incurred by the taxpayer in any previous year which has
been carried forward from the preceding year of assessment ...
(b) any assessed loss incurred by the taxpayer during the same year of assessment in
carrying on any other trade ...’.
[6] Two important factors arise from this:
(a)
First, as I have mentioned, ‘income’ as defined in the Act is the amount after
the deduction from gross income of any amounts exempt from normal tax but before
further allowable deductions under Part I of Schedule II are made to arrive at the
taxpayer’s taxable income. However, it was held by this court in Conshu (Pty) Ltd v
Commissioner for Inland Revenue 1994 (4) SA 603 (A) at 613C that the word
‘income’ is used in the introductory part of s 20(1) not in its defined sense but, rather,
as the income of the taxpayer which would be taxable but for the set off; ie the
amount of the taxpayer's gross income less the deductions allowable under the Act
but before any set off of an assessed loss or balance of assessed loss.
(b)
Second, s 20(1) clearly distinguishes between a balance of assessed loss in
sub-section (a) and an assessed loss in sub-section (b), the latter being a loss
incurred by the taxpayer in the same period of assessment in the conduct of another
trade. A balance of assessed loss, however, is incurred before a current period
under assessment and ‘can only be set off when it is carried forward from the
preceding year of assessment’.1 In New Urban Properties Ltd v Secretary for Inland
Revenue 1966 (1) SA 217 (A) this court held that the section ‘envisages a continuity
in setting off an assessed loss in every year succeeding the year in which it was
originally incurred, so that in each succeeding year a balance can be struck . . .
which can then be carried forward from year to year until it is exhausted.’2
[7] While s 11(a) contains the general deduction formula, further deductions are
allowed under the remaining provisions of s 11. As this court observed in Western
Platinum Limited v Commissioner for the South African Revenue Service 67 (2005)
SATC 1 (SCA) para 1, the fiscus has historically favoured farmers and miners
(presumably due to their national and economic significance) and, despite the
limitation in the general formula, in the case of mines the legislature has permitted
the deduction of certain mining capital expenditure as a ‘class privilege’. This it
achieved by way of s 11(x) – which authorises the deduction of ‘any amounts which
. . . are allowed to be deducted from the income of the taxpayer’ – as read with
s 15(a) and s 36, which authorise the deduction of mining capital expenditure as
more fully set out below.
1 Per Centlivres CJ in SA Bazaars (Pty) Ltd v Commissioner for Inland Revenue 1952 (4) SA 505 (A)
at 510F.
2 At 224D-E.
[8] The operation of the scheme of the Act in relation to the deduction of mining
capital expenditure lies at the heart of this appeal. Section 15(a) authorises a
deduction from the income derived by a taxpayer from its mining operations of ‘an
amount to be ascertained under the provisions of section 36’ in lieu of certain other
allowances (those allowances are of no relevance in the present case). Section
36(7C) in turn prescribes that subject to sub-sections 36(7E), (7F) and (7G), the
amounts to be deducted under s 15(a) ‘from the working of any producing mine shall
be the amount of capital expenditure incurred’. In this somewhat tortuous way the
legislature has allowed for the deduction of capital expenditure incurred in respect of
any producing mine. As s 36(7G) is of relevance only to an alternative argument
advanced by the appellant, I intend for the moment only to deal with the other two
sub-sections, the interpretation and application of which are crucial to the outcome
of this appeal.
[9] It must be stressed that sub-sections 36(7E) and (7F) allow only a deduction of
mining capital expenditure. They do not impinge upon the ambit of s 11(a) which
allows the deduction of mining operating expenditure as an expense ‘not of a capital
nature’ incurred in the production of income: see Palabora Mining Company Ltd v
Secretary for Inland Revenue 35 (1973) SATC 159 (A) at 178.
[10] Section 36(7E), which was enacted in 1983 and amended in 1990, provides as
follows (as with so many sections in the Act, the reader would be well advised to
take a deep breath):
‘The aggregate of the amounts of capital expenditure determined under subsection (7C) in
respect of any year of assessment in relation to any mine or mines shall not exceed the
taxable income (as determined before the deduction of any amount allowable under section
15(a), but after the set-off of any balance of assessed loss incurred by the taxpayer in
relation to such mine or mines in any previous year which has been carried forward from the
preceding year of assessment) derived by the taxpayer from mining, and any amount by
which the said aggregate would, but for the provisions of this subsection, have exceeded
such taxable income as so determined, shall be carried forward and be deemed to be an
amount of capital expenditure incurred during the next succeeding year of assessment in
respect of the mine or mines to which such capital expenditure relates.’
As stated in Silke On South African Income Tax,3 s 36(7E) limits ‘the deduction of
the aggregate of capital expenditure determined under s 36(7C) in a particular year
of assessment in relation to any mine or mines to what is here referred to as the
“gross mining taxable income” derived by the taxpayer from mining [and] thus sets a
general cap on a taxpayer’s deductions of capital expenditure.’
[11] Section 36(7E) was in due course followed by the promulgation in 1985 of s
36(7F). The author of Mining Tax in South Africa, Marius van Blerck, explains the
rationale behind the introduction of s 36(7F) as follows:
‘Until 1984, where a company owned more than one mine, unredeemed capital expenditure
on one of the mines could be set off against mining income of another. . . . Although set-offs
of this nature had occurred in previous decades, some major mergers and takeovers in the
early ’80s (along with unexciting dollar gold prices) caused the authorities to express some
concern that vast new capital expenditures could substantially erode the mining tax base.’4
[12] In order to address this concern, the legislature clearly felt that s 36(7E) did not
go far enough and that further protection of the tax base was required in the event of
a mining company owning more than one mine. This led to the promulgation of s
36(7F), which was subsequently amended in 1990. It provides as follows (I again
advise the reader to take a deep breath):
‘The aggregate of the amounts of capital expenditure determined under subsection (7C) in
respect of any year of assessment in relation to any one mine shall, unless the Minister of
Finance, after consultation with the Minister of Mineral and Energy Affairs and having regard
to any relevant fiscal, financial or technical implications, otherwise directs, not exceed the
taxable income (as determined before the deduction of any amount allowable under section
15(a), but after the set-off of any balance of assessed loss incurred by the taxpayer in
relation to that mine in any previous year which has been carried forward from the preceding
year of assessment) derived by the taxpayer from mining on that mine, and any amount by
which the said aggregate would, but for the provisions of this subsection, have exceeded
such taxable income as so determined, shall be carried forward and be deemed to be an
amount of capital expenditure incurred during the next succeeding year of assessment in
respect of that mine: Provided that where the taxpayer was on 5 December 1984 carrying
3 Alwyn de Koker and R C Williams Silke on South African Income Tax vol 2 at 16-10 to 16-11.
4 Marius Cloete van Blerck Mining Tax in South Africa at 12-30.
on mining operations on two or more mines, the said mines shall for the purposes of this
subsection be deemed to be one mine.’ (My emphasis.)
[13] Thus s 36(7F) introduced what is commonly called a ‘capex per mine ring-
fence’ (a description which I intend to use where convenient), a restriction that
‘provides that deductible capital expenditure in relation to any one mine cannot
exceed the taxable income . . . derived by the taxpayer from mining on that mine.’5
In the explanatory memorandum issued at the time of the enactment of the section,
it is stated that the section ‘. . will have the effect that where more than one mine is
operated by the same person the capital expenses relating to any one mine may be
set off only against the income from that mine unless the Minister of Finance, in
consultation with the Minister of Mineral and Energy Affairs and having regard to the
relevant fiscal, financial and technical implications, otherwise decides.’ In Silke, the
operation of the section is described thus:6
‘It limits the deduction of the aggregate of capital expenditure determined under s 36(7C) in
a particular year of assessment in relation to any particular mine to what is again referred to
here as the “gross mining taxable income” derived by the taxpayer from mining on that mine.
The excess that is as a result not deductible in that year must again be carried forward, and
will again be deemed to be an amount of capital expenditure incurred during the next
succeeding year of assessment on the mine concerned. Section [36(7F)]7 thus sets a
particular cap on a taxpayer’s deductions of capital expenditure.’
[14] Despite this statutory matrix being somewhat complex, its operation appears to
be clear. Take for example a mining company operating two mines, A and B. Mine A
has a taxable income after the set-off of any balance of assessed loss, but before
the deduction of capex, of R10 million while the taxable income of mine B at that
stage is R3 million. During the course of the tax year, while capital expenditure of
R15 million was incurred in respect of mine A, no such expenditure was incurred in
respect of mine B. The total taxable income before capex of the two mines is thus
R13 million, ie R2 million less the total amount of the capital expenditure.
Accordingly, under s 36(7E), but prior to the promulgation of s 36(7F), R13 million
5Van Blerck Mining Law at 12-30 para 12.11.
6 At § 16.3 page 16-11.
7 Reference is made in Silke to s 36(7E) but that is clearly a typographical error.
would have been allowed as a capex deduction with a balance of R 2 million being
carried forward to the following year.
[15] However, that position changed after the promulgation of s 36(7F). Applying
the regime under that sub-section to the same facts, mines A and B are ‘ring-fenced’
for the purpose of the calculation of capex, the amount of capital expenditure in
respect of each mine being capped at no more than the taxable income derived from
each mine. In this scenario, as mine A’s taxable income is R10 million, its capex
deduction is capped at that amount notwithstanding an additional R5 million in fact
having been incurred on that mine. The R5 million of mine A’s unredeemed capital
expenditure would have to be carried forward and deemed to be an amount of
capital expenditure incurred in respect of that mine during the following year. As
there was no capital expenditure incurred in respect of mine B, ring-fenced as it is
from mine A, no capex deduction would be allowed to reduce its taxable income.
The effect of this is that by reason of s 36(7F), no more than R10 million (the
maximum cap in respect of mine A) would be deductible in respect of capital
expenditure whereas, before it was introduced, capex of R 13 million was deductible.
[16] This is all straightforward enough where a taxpayer’s mines earn a taxable
income. The problem in the present case is that one of the appellant’s three mines
operated at a loss, as appears from the set of agreed facts placed before the Tax
Court. The background facts relevant to the appellant's 2003 and 2004 years of
assessment may be briefly stated as follows:
(a) The appellant derived an income from carrying on gold mining operations
through its three mines: Freegold, Joel and St Helena.
(b) During both years of assessment, before any deduction for capital mining
expenditure was made but after the deduction of operating expenses, both the
Freegold and Joel mines produced a taxable income whereas the St Helena mine
operated at a loss.
(c) The capital expenditure incurred in respect of both the Freegold and Joel mines,
if deducted from the amount of their taxable incomes, was sufficient to reduce their
taxable incomes to nil.
(d) Neither the Freegold mine nor the Joel mine had a balance of assessed loss
carried forward from the preceding year of assessment.
(e) The appellant derived a taxable income from non-mining operations, the amount
of which exceeded the operating loss of the St Helena mine in each year.
[17] To place the arguments of the parties in their factual context, I intend to refer
for illustrative purposes Figure 1 below. Reproduced from the appellant’s heads of
argument, it summarises the income that accrued to the appellant from its mining
and non-mining activities, the deductions it claimed and the manner in which it
sought to assess its tax liability for the 2003 tax year. The figures reflect the relevant
amounts in rand terms, rounded off to the closest million.8
Figure 1
St Helena Freegold Joel Non-min
1 Balance of assessed loss
nil
nil nil
nil
2 Taxable income (before capex) (51)
1 177 20
3 Capex deductible in 2003
n/a
1 177 20
n/a
4 Taxable income (2-3)
(51)
nil nil
5 Assessed loss (current year)
(51)
n/a n/a
n/a
Accordingly, the appellant argued that its overall taxable income for the year should
be assessed at R105 million, being its taxable income of R156 million from its non-
mining operations less the R51 million loss made by the St Helena mine.
[18] On the other hand, the SARS assessment proceeded as follows:
Figure 2
St Helena Freegold Joel Non-min
1 Balance of assessed loss
nil
nil nil
nil
2 Gross taxable income before capex (51)
1 177 20
3 Set off St Helena loss
(50) (1)
n/a
4 Nett taxable income before capex
nil 1 127 19
8 In the heads of argument the taxable income (before capex) in respect of St Helena is reflected as
‘n/a’. In fact, after deductions the mine had incurred a loss of R51 million and I have used that figure
reflected in brackets to convey that it is a loss.
5 Redemption of capex nil 1 127 19 nil
6 Taxable income for year nil nil nil 156
[19] As is apparent from this, the main point of departure between the two sides
lies in SARS having deducted the St Helena loss for the year in question – such loss
being arrived at by deducting its operating expenses from its gross income under s
11(a) – from the taxable income before capex of the two remaining mines after
apportioning such loss between them, thereby reducing the taxable income before
capex of each profitable mine and, at the same time, reducing their capex
deductions.
[20] The appellant submitted that the loss of the St Helena mine effectively
amounted to its ‘assessed loss’ as envisaged by s 20(1)(b). It therefore argued that
in order to assess the appellant’s taxable income, each mine should be regarded as
being a separate trade and that, doing so, in order to calculate the appellant’s final
taxable income the ‘assessed loss’ of the St Helena mine could only be deducted
under s 20(1)(b) once the taxable incomes of the other mines (trades) had been
determined. In addition, the appellant submitted that as s 36(7F) required the
taxable incomes of each individual mine to be determined separately, approaching
the assessment in the manner SARS had done resulted in the operating expenses
of the St Helena mine being used to reduce the Freegold and Joel mines’ taxable
incomes before capex. This, it submitted, was impermissible, both as it offended s
20(1)(b) and as the Act, by ring-fencing those mines, intended their pre-capex
taxable incomes to be determined by each individual mine’s gross incomes and
deductions.
[21] The appellant argued that support for this was to be found both in s 36(10) of
the Act and in para 2(d) of the Schedule of Rates of Normal Tax and Rebates – as
the former stipulates that where ‘separate and distinct mining operations are carried
on in mines that are not contiguous’ (and it is not suggested that any of the
appellant’s mines are contiguous) then ‘the allowance for redemption of capital
expenditure shall be computed separately’ (my emphasis) ─ and the latter refers to
the taxable income derived by any company from mining for gold ‘on any gold mine’
and provides for a rate of tax for gold mines which may vary from mine to mine, such
rate to be applied to a mine’s taxable income ‘before the set-off of any assessed loss
or deduction not attributable to the mining for gold from the said mine’.
[22] The appellant argued that all of this showed that it was impermissible to allow
the St Helena loss, incurred by deducting its operating expenses from its gross
income, to be deducted from the taxable income of the Joel and Freegold mines as,
to do so, would amount to setting off of St Helena’s operating expenses against the
other two mines’ incomes to determine their taxable incomes before making their
capex deductions.
[23] Compelling though this argument is in certain respects, I do not see how the
mining activities conducted by the appellant at each one of its three mines can be
said to be a separate ‘trade’ – defined in s 1 of the Act as including, inter alia, ‘every
profession, trade, business, employment, calling, occupation or venture . . .’ – from
that conducted at the other mines. A company which carries on mining operations
certainly carries on the ‘trade’ of mining,9 but it would be both fanciful and artificial to
regard its mining operations at the St Helena mine as being a different trade from
the operations it conducts at its other two mines. Had the legislature intended each
mine’s operations to be regarded as a separate trade, it could easily have said so.
Not only did it not, but the provisions of s 36(7E) in which reference is made to the
‘aggregate of the amounts of capital expenditure . . . in relation to any mine or
mines,’ clearly exclude different mining operations being regarded as different
trades. The appellant’s argument based upon the necessity to regard its operations
at its different mines as different trades must therefore fail.
[24] On the other hand, however, much of the appellant’s criticism of SARS’s
method of assessment has merit. Section 36(7F) envisages the capex deduction of
each mine to be determined by having regard to the taxable income derived from
that mine, an objective that will be defeated if the operating expenses incurred of
one mine are to be taken into account in respect of another. In addition, in ITC 1420
Kriegler J held in regard to the variable tax rate levied against different mines, that
9 Compare ITC 1420, 49 (1987) SATC 69.
the effect of the formula ‘is to tax richer mines at a higher rate than poorer mines’10.
That effect would be nullified if the operating expenses of a poor mine could be used
to reduce the tax liability of a rich mine, and it is not surprising that it was stated in
the Explanatory Memorandum on the Income Tax Bill, 1990 ‘that the profitability of
each mine must determine the tax rates of the relevant mine and that it should not
be influenced by losses and expenditure of other mines or from other sources.’11
Finally, but most importantly, s 36(7C) provides for the amount to be deducted under
s 15(a) to be the capital expenditure on a particular mine, determined by the income
derived from working that mine. Violence would be done to this if the operating
expenses of one mine were set-off against the income of another, and I have
therefore concluded that it is impermissible to do so.
[25] That does not mean that the appellant correctly calculated its taxable income.
My principal concern with its method is that it effectively excludes the operation of
s 36(7E). This is apparent from the summary set out in the appellant’s heads of
argument, which reads:
‘To summarise, the capex deductible by the appellant in respect of any individual mine was
in terms of s 36(7C) and (7F) limited only to the taxable income (before capex) derived from
that mine, reduced by any “balance of assessed loss” in relation to that mine carried forward
from the preceding year. It was not otherwise limited.’
In terms of s 36(7C), however, the amount of capital expenditure which may be
deducted under s 15(a) is made subject to both sub-sections 36(7E) and 36(7F), and
the appellant’s argument essentially ignores the former. But as pointed out by
Silke:12
‘Section 36(7E) sets a general cap on a taxpayer’s deductions of capital expenditure under s
36(7C) for all mines by limiting them to his taxable income from mining; while s 36(7F) sets a
particular cap on a taxpayer’s deductions of capital expenditure under s 36(7C) for any one
mine by limiting them to his adjusted taxable income from mining on that mine . . . . In other
words, capital expenditure incurred is deductible in the year in which it is incurred but only to
the extent permitted by these various caps’ (My emphasis.)
10 At 74.
11 Silke § 16.11 page 16-21.
12 At § 16.3 page 16-9.
[26] It must be remembered that s 36(7E) sets the maximum amount of capital
expenditure that may be deducted in respect of the aggregate of the appellant’s
taxable income before capex derived from its various mines (the so-called ‘general
cap’). This does not mean that its full cap must necessarily be allowed. As not all of
the appellant’s mines have produced a taxable income at that stage, it must of
necessity mean that the aggregate mining taxable income will be less than the
combined taxable incomes of just those that have been profitable. Consequently, the
general cap under s 36(7E) must of necessity be less than the aggregate of the
taxable incomes of the profitable mines ─ and the taxpayer will not be entitled to
deduct the full amount of each particular cap calculated in respect of those profitable
mines as would have been the case had the St Helena mine not operated at a loss.
To hold otherwise would be to permit the deduction of an amount exceeding the
general cap prescribed by s 36(7E).
[27] This may be demonstrated in the present case by reference to Figure 1
above. As set out therein, the appellant seek to deduct a total of R1 197 million in
respect of its 2003 capital expenditure in respect of the Freegold and Joel mines,
that sum being assessed with reference to the taxable incomes of R1 177 million
derived from the Freegold mine and R20 million derived from the Joel mine.
However, a total of R1 197 million cannot be allowed as a capital deduction as the
appellant’s aggregate capex deductions for the year is limited to R1 146 million
under s 36(7E), being its taxable income from mining before any capex deduction
(the total of the taxable incomes of the Freegold and Joel mines less the loss of R51
million incurred by the St Helena mine). Accordingly, although the combined taxable
income, before capex, of the Freegold and Joel mines exceeds R1 146 million, no
more than that sum may be allowed as a total capex deduction under s 36(7E).
[28] The appellant sought to meet this by arguing that its aggregate taxable
income from mining before capex was in fact R1 197 million. This was based on the
submission that as the St Helena mine had incurred a loss, it had earned no taxable
interest and that, rather than taking its loss that year of R51 million into account in
calculating the appellant’s taxable income before capex, it should merely be treated
as having a taxable income of nil. The effect of this, if accepted, would be that the
loss actually incurred by the St Helena mine would not be deducted from the
combined incomes of the Freegold and Joel mines.
[29] This cannot be accepted. The amount to be determined under s 36(7E) is the
taxable income to the appellant’s mining operations from all its mines, and in
determining that amount the gross incomes and the operating expenses of all three
mines have to be taken into account. The taxable income of a taxpayer is, after all,
determined by deducting operating expenses from gross income, and the St Helena
loss therefore cannot just be left out of reckoning. Accordingly, the appellant’s
taxable income before capex derived from its mining activities must be assessed at
the sum of R1 146 million, ie R51 million less than the aggregate of the capex the
appellant wishes to have deducted in regard to its Freegold and Joel mines.
[30] The end result of this is that, by reason of the operation of s 36(7E), the
appellant is not entitled to deduct the full caps of the capex it calculated in respect of
the Freegold and Joel mines but, rather, lesser amounts. The issue then becomes,
how should the individual amounts of capex in respect of the Freegold and Joel
mines be reduced?
[31] SARS purported to do so by setting off the St Helena loss from the taxable
incomes of the Freegold and Joel mines. But in principle that is impermissible, doing
violence to the scheme already described which requires the taxable incomes of
mines to be assessed separately and without the operating expenses of one mine
being used to reduce the taxable income of another.
[32] Although s 36(7F) provides for a maximum (or particular cap) that may be
deducted for capital expenditure in respect of each of the Freegold and Joel mines,
it does not necessarily entitle the appellant to deduct the full amount of each such
cap. Thus, the answer seems to me to be for the individual capex caps of the
Freegold and Joel mines to be reduced so that their total does not exceed the
general cap imposed by s 36(7E). In this way the two sub-sections will work in
tandem, setting a maximum total deduction and reducing the Freegold and Joel
mines maximum caps proportionally (an exercise similar to that adopted by the
respondent in prorating the St Helena loss of R51 million between the Freegold and
Joel mines). This is similar to what is done when it becomes necessary to apportion
between trades a balance of assessed loss brought into reckoning from a previous
year, the process of which is described by Silke as follows:13
‘It is submitted that the assessed loss must be apportioned among the different trades in
proportion to the income derived from each. For example, if in one year a company had an
assessed loss of R100 000 and in the next year it derived an income from mining of
R200 000 and an income from manufacturing of R300 000, the assessed loss must be
apportioned between the two trades, R40 000 being apportioned to mining and R60 000 to
manufacturing. In practice SARS accepts this view.’
[33] Adopting that approach, the simplest method of calculating the amount of the
allowable capex deduction is to deduct the amount of the appellant’s taxable income
from its mining operations (R1 146 million) from the total of the taxable incomes of
the Freegold and Joel mines (R1 197 million) and to apportion the difference (R51
million) between the two mines in the manner just described. Doing so, using the
same ratio of approximately fifty to one used by the respondent (that is the
approximate ratio between the incomes derived from the two mines: and the
appellant did not quarrel with such a ratio – merely that it was impermissible to set
the amounts off against the taxable incomes of those mines) reduces the Freegold
mine’s capex deduction by R50 million to R1 127 million and that of the Joel mine by
R1 million to R19 million, with the balance of capital expenditure in respect of those
two mines standing over to the succeeding year under s 36(7F) being increased
accordingly.
[34] In the light of these conclusions and the reduction of capex mentioned above,
the correct treatment of the appellant’s taxable liability for the 2003 year is set out in
Figure 3 below.
Figure 3
St Helena Freegold Joel Non-min
1 Balance of assessed loss
nil
nil
nil nil
2 Taxable income before capex
(51)
1 177 20 156
3 Capex deductible
nil
1 127 19 n/a
13 § 8.127C.
4 Taxable income after capex
(51)
50 1 156
[35] This exercise shows that the appellant had no taxable income from mining (the
loss of the St Helena mine being offset by the aggregate of the taxable incomes after
capex of the Freegold and Joel mines), resulting in the appellant’s taxable income
being limited to R156 million, being its income from its non-mining activities. I
appreciate it that this is the same result arrived at by SARS, but that is a matter of
arithmetic, not of principle. The underlying principles giving rise to the calculations
differ. In Figure 3, the general cap capex deduction is reduced by reason of the St
Helena mine having operated at a loss, and the particular caps of the appellant’s two
profitable mines being reduced as a result. In Figure 2, SARS made its calculations,
in my view impermissibly, by setting off the St Helena loss against the respective
taxable incomes before calculating the capex deduction of the two profitable mines.
The result may be the same, but the route followed to reach it is different.
[36] It is clear from this that the appellant’s principal argument cannot succeed.
That makes it necessary to deal, albeit briefly, with the appellant’s alternative
argument based upon s 36(7G).
[37] That section relates to the deduction of capital expenditure in respect of mining
operations commenced by a taxpayer after 14 March 1990. However, it was
correctly common cause that the section is only of application in the event of a
taxpayer having a taxable income from mining after deduction of whatever capex
may be allowable for each of its mines. In the present case that does not arise as
after applying the provisions of sections 36(7E) and (7F) the appellant was left with
no taxable income from mining. Section 36(7G) therefore does not apply.
[38] Be that as it may, the appellant’s appeal cannot succeed. There is no reason
for costs not to follow the event.
[39] The appeal is dismissed with costs, such costs to include the costs of two
counsel.
______________________
L E Leach
Judge of Appeal
APPEARANCES:
For Appellant:
T S Emslie SC
Instructed by:
Cliffe Dekker Hofmeyr Inc, Sandton
Naudes, Bloemfontein
For Respondent:
A R Bhana SC (with him G D Goldman)
Instructed by:
State Attorney, Pretoria
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: 01 October 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
Neutral citation: Armgold/Harmony Freegold Joint Venture v CSARS (703/2011)
[2012] ZASCA 152 (1 October 2012)
The Supreme Court of Appeal today delivered judgment in a dispute between
Armgold/Harmony Freegold Joint Venture and SARS relating to the application of sections
36(C), 36(7E) and 36(7F) of the Income Tax Act 58 of 1962 and capital expenditure
deductions for a mining company. It had been contended by the appellant that each of its
mines should be regarded as a separate trade, resulting in each of its profitable mines being
entitled to deduct the full cap of its capex calculated under s 36(7F) without any regard being
had to the loss suffered by another of its mines. SARS had sought to apportion that loss
between the appellant’s profitable mines and to reduce their taxable incomes before capex,
reducing the amount of the capex deduction of each profitable mine.
The Supreme Court of Appeal rejected the appellant’s approach to the calculation of the
capex deductions it was entitled to make. However, it also rejected the respondent’s
calculation in principle. It held that the effect of s 36(7E) was to set a maximum for the total
amounts deductible as capex, but as the loss suffered on the one mine reduced the overall
taxable income derived by the appellant from mining, and thereby reduced the general cap on
allowable deductions, the individual caps allowable under s 36(7F) had to be reduced
correspondingly.
The result of this is that SARS had arrived at the correct figure of the appellant’s tax liability,
albeit by the application of an incorrect principle. The appeal was therefore dismissed with
costs.
---ends---
|
2951
|
non-electoral
|
2015
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 20786/2014
Reportable
In the matter between:
CITY OF CAPE TOWN
APPELLANT
and
SOUTH AFRICAN NATIONAL ROADS AUTHORITY LIMITED
FIRST RESPONDENT
PROTEA PARKWAYS CONSORTIUM
SECOND RESPONDENT
N1/N2 OVERBERG CONSORTIUM
THIRD RESPONDENT
GTIMV CONSORTIUM
FOURTH RESPONDENT
MINISTER OF TRANSPORT
FIFTH RESPONDENT
MINISTER OF WATER AND ENVIRONMENTAL AFFAIRS
SIXTH RESPONDENT
MINISTER OF TRANSPORT AND PUBLIC WORKS,
WESTERN CAPE PROVINCE
SEVENTH RESPONDENT
MINISTER OF FINANCE, ECONOMIC
DEVELOPMENT AND TOURISM, WESTERN
CAPE PROVINCE
EIGHTH RESPONDENT
N2/T2 CRISIS COMMITTEE
NINTH RESPONDENT
THEEWATERSKLOOF MUNICIPALITY
TENTH RESPONDENT
BREEDE VALLEY LOCAL MUNICIPALITY
ELEVENTH RESPONDENT
Neutral citation:
City of Cape Town v South African National Roads Authority
Limited & others (20786/14) [2015] ZASCA 58 (30 March 2015)
Bench:
Ponnan, Saldulker and Zondi JJA and Van Der Merwe and Gorven
AJJA
Heard:
18 March 2015
Delivered:
30 March 2015
Summary: Open justice – court records by default should be open to the public – any
departure an exception and should be justified – high court‟s adoption of implied
undertaking rule and interpretation of rule 62(7) of the Uniform rules - inconsistent with
that constitutional principle.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Western Cape Division, Cape Town (Binns-Ward J, sitting as court of
first instance): judgment reported sub nom South African National Road Agency Limited
v City of Cape Town & others; In Re: Protea Parkway Consortium v City of Cape Town
& others [2014] 4 All SA 497 (WCC).
1.
The appeal is upheld with costs including the costs of three counsel.
2.
The order of the court below is set aside and replaced with the following:
„The application is dismissed with costs including the costs of three counsel.‟
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Ponnan JA (Saldulker and Zondi JJA and Van Der Merwe and Gorven AJJA
concurring):
[1] This appeal raises matters of the greatest public importance to the people of
Cape Town and the region, involving as it does the construction and tolling of principal
motorways in a project to be undertaken by an organ of State. And so one might say,
with apologies to John Donne of course, perchance he for whom the toll tolls may be so
ill as not to know that it tolls for open justice.
[2] The respondent, the South African National Roads Authority Limited (SANRAL),
an organ of State as defined in s 239 of the Constitution, is responsible for the strategic
planning, design, construction, management, control, maintenance and rehabilitation of
our national roads. Pursuant to a tender and evaluation process SANRAL selected
Protea Parkways Consortium (PPC) as the preferred bidder and Overberg Consortium
as the reserve bidder in respect of what is described as the N1/N2 Winelands Paarl
Highway Toll Project. The appellant, the City of Cape Town (the City), launched a
review application in the Western Cape High Court, Cape Town in terms of rule 53 of
the Uniform rules of court seeking, inter alia, to review SANRAL‟s decision to award the
tender to PPC.1 SANRAL furnished the City with the administrative record in terms of
rule 53(1)(b) in two parts, marked respectively as, the „non-confidential record‟ and „the
confidential record‟. That generated a dispute between the parties as to precisely what
constituted the rule 53 record. An exchange of correspondence followed, which
1 In addition to SANRAL, which was cited as the First Respondent, Protea Parkways Consortium, N1/N2
Overberg Consortium, GTIMV Consortium, Minister of Transport, Minister of Water and Environmental
Affairs, Minister of Transport and Public Works, Western Cape Province, Minister of Finance, Economic
Development and Tourism, Western Cape Province, N2/T2 Crisis Committee, Theewaterskloof
Municipality and Breede Valley Municipality were cited as the Second to Eleventh Respondents
respectively. But as none of them participated in the appeal, nothing further needs be said about them.
culminated in a letter dated 25 October 2013 written by the City‟s attorney to SANRAL‟s
attorney recording:
„3.
The terms to which the parties have already agreed are in a series of letters. For
convenience, and to avoid any future dispute as to what was agreed, in what follows we collate
the agreed terms, along with the City‟s position on the two issues discussed in the previous
paragraph.
3.1
SANRAL will provide the City‟s legal representatives with copies of the documents
forming part of the Rule 53 record which SANRAL considers to be relevant but claims to be
confidential, and such representatives will sign the attached confidentiality undertaking, which
prevents them from using or disclosing such documents except for purposes of the litigation,
and then only either in a manner agreed between the parties, or in accordance with any
directions by a judge or a court.
3.2
If in their opinion it is necessary, the City‟s legal representatives may disclose such
documents to the City‟s officials and experts, subject to their also signing the confidentiality
undertaking.
3.3
The City may place any document or information which SANRAL or the Consortium
claim to be confidential before the court hearing the review application, either publicly or in
closed affidavits, arguments and hearings. If the parties cannot agree whether a particular
document should be dealt with publically or on a closed basis, the parties will ask a judge or the
court to decide that question at a preliminary hearing. Any such preliminary hearing will be
closed, and the parties and the judge or court will be able to have sight of and refer to copies of
the contested documents. The parties will endeavour to agree suitable dates and arrangements
for any such hearing.
3.4
SANRAL will provide the City with a list of documents and information, including the bids
by persons other than the Consortium, which SANRAL proposes to exclude from the record on
the basis of irrelevance, so that the City can decide whether it wishes to see them. SANRAL will
provide copies of any such documents or information if the City requests them, provided that
any document or information which is also claimed to be confidential will be subject to the
confidentiality undertaking.
3.5
The City records that at this stage it does not concede the validity of any claim to
irrelevance or confidentiality. In the event of a dispute, the City contends that the onus rests on
SANRAL and/or the Consortium to prove that a document is confidential and/or may not be
produced in open court. SANRAL does not concede this and contends that the issue of onus
can be determined should a dispute arise.‟
[3] In accordance with that agreement, each of the City‟s representatives furnished
the envisaged confidentiality undertaking to SANRAL. And prior to serving and filing its
supplementary founding affidavit (the SFA), the City supplied SANRAL with a copy
thereof. The SFA made reference to both the „non-confidential‟ and „confidential‟
records provided by SANRAL on the basis, so the City contended, that the information
was not confidential and should immediately be made known to the public in the public
interest. SANRAL then made application to the high court, seeking orders that parts of
the SFA be redacted prior to it being formally served and filed. SANRAL sought an
order in the following terms:
„1.
The Confidentiality Undertakings signed by the parties to the Review Application, and
their legal representatives remain in force and binding, subject to any variations necessitated by
the order granted below;
2.
The Supplementary Founding Affidavit, including the annexures and annexed affidavits
(“the Supplementary Affidavit”) is to be redacted in accordance with the first and second
schedules, copies of which are attached hereto marked “NOM1” and “NOM2” respectively;
3.
The redacted Supplementary Affidavit may then be served and filed;
4.
After the service and filing of the Applicant‟s (First Respondent in the main application)
Answering Affidavit, the Supplementary Affidavit may be further amended, so as to exclude the
redaction set out in the first schedule (NOM1);
5.
The amended Supplementary Affidavit, subject to the retention of the redactions as set
out in “NOM2” which will remain effective, may then be served and filed;
6.
The full Supplementary Affidavit, without any redactions, may only be provided to the
Judge hearing the review application;
7.
Insofar as the Heads of Argument may refer to the contents of the un-redacted portions
of the Supplementary Affidavit, such Heads of Argument may only be provided to the Judge
hearing the review application;
8.
The review application is to be heard in camera, as and when any of the aspects and/or
information as set out in “NOM2” is raised and dealt with;
9.
The First Respondent is to pay the costs of the application.‟
[4] In support of the application, Mr Nazir Alli, SANRAL‟s Chief Executive Officer,
stated:
„71.
SANRAL objects to the service and the filing of the Supplementary Affidavit, and the
annexures thereto, in its current format, and has identified two separate categories of
documents, which are explained below.
72.
The first category relates to information and documentation that needs to be kept
confidential until after the filing of SANRAL‟s answering affidavit in the Review Application. Such
information and documentation has been identified and described in the schedule attached to
the Notice of Motion as annexure “NOM1” (“the First Schedule”). The first category of
documentation and information must be kept confidential, as the failure to do so will simply
cause unjustified and unnecessary concern among the general public, and will result in
unjustified antagonism and bias towards SANRAL by the general public.
73.
The second category relates to information and documentation that must be kept
confidential at all times during the legal proceedings, and thereafter. Such information and
documentation has been identified and described in the schedule attached to the Notice of
Motion as annexure “NOM2” (“the Second Schedule”). The second category of documentation
and information ought to be kept confidential, as the failure to do so will not only cause harm
and damage to SANRAL, but also to the bidders in the tender process, the South African fiscus
and economy and the general public. In addition, the disclosure of such information and
documentation will fall foul of SANRAL‟s statutory obligations.‟
Mr Alli added:
„74.
As appears from the City‟s correspondence and the City‟s submission, it is clear that the
City‟s aim in filing the Supplementary Affidavit is to enable the Press to report on the contents of
the Supplementary Affidavit and the annexures thereto.
75.
The City has attached Affidavits of “Experts” to the Supplementary Affidavit and in the
Supplementary Affidavit the City refers to certain costing implications of the Project and
ultimately SANRAL is criticized on a socio-economic basis.
76.
I do not intend to reply in this Affidavit, to the contents of the Supplementary Affidavit, as
this will be done, in detail, in the Answering Affidavit currently being prepared. I do however
intend to deal, in very general terms, with certain “observations” made by the City‟s “Experts”–
76.1
The “Expert” reports filed in support of the Supplementary Affidavit also raise the same
criticisms, as are raised in the Supplementary Affidavit, and provide commentary on the
commercial and economic viability of the entire Project.
76.2
The “Experts” utilized by the City suggest that the Project would ultimately result in a
negative benefits-to-cost ratio.
76.3
Naturally such conclusions and statements relating to the cost of the project, and
ultimately the effect thereof on the potential road users, may result in unjustified alarm being
created amongst the general public.
76.4
The “Experts‟ are “predicting” the economic and financial viability of the Project, by
incorrectly calculating the cost benefit ratio.
77.
In a nutshell, the conclusions and calculations put forward by the City‟s “Experts” are
simply wrong, and would create a false impression amongst the general public.
78.
I attach hereto some recent examples of press reports relating to the Project, which
clearly evidence the intention of the City to disclose information to the public by way of the
media, marked “H1” to “H7” respectively.
79.
In the circumstances, and in order to avoid unjustified alarm the portions of the
Supplementary Affidavit and the supporting documentation, as described in the First Schedule
should not be released until after SANRAL has had an opportunity of filing its Answering
Affidavit and its own expert reports, which will deal with and refute the allegations made.
80.
The Answering Affidavit will provide a proper response to the costing predictions set out
in the Supplementary Affidavit, and will provide appropriate answers to the fears expressed by
the City‟s “Experts”. It would certainly be to the benefit of the general public to have “both sides
of the story”, before drawing any conclusions.
81.
SANRAL will accordingly contend for a procedural directive, compelling the City and
other Respondents to comply with the confidentiality undertaking in regard to this category
pending the filing of SANRAL‟s Answering Affidavit in the Review Application.
82.
It is clear from the correspondence referred to above that the City seeks to file highly
confidential and sensitive information in respect of the tender received with an outstanding
tender process still to be conducted in respect of the financing of the Project (which process has
not been finally concluded) as a public record. This will allow access to and unfair advantage to
the other bidders, potential competitors, financial institutions, and the public at large to such
documentation.
83.
This will make a complete mockery of a competitive process required for the
procurement of goods and services in a transparent and fair manner.
84.
SANRAL‟s evaluation of the tenders is sensitive not only for the reason of the
confidential information discussed in relation to the tenderers, but also as SANRAL will be
placed at a massive disadvantage in its negotiations with the Preferred Bidder or if necessary
the Reserve Bidder and the financiers concerned if the documentation became public. The
release of the documentation and information into the public records may frustrate the
successful conclusion of the negotiations with PPC. It is important that confidentiality is
observed by all the parties, especially since negotiations are still to be finalized. Such
confidentiality is important not only to protect the integrity of SANRAL‟s evaluation and
negotiation strategy, but also to protect commercially sensitive or any proprietary trade
information that the bidders might have included in their proposals and which they would not
wish to be made known to their competitors.
85.
The second category of documents encapsulate the following sub-categories of
documents which require protection –
85.1
Bidders‟ commercial information;
85.2
Debt funding competition;
85.3
SANRAL‟s Bid Evaluation.‟
[5] The response to those allegations by the City Manager, Mr Achmat Ebrahim, on
behalf of the City, was:
„8.
In essence, the issue for determination in both secrecy applications is whether SANRAL
and PPC have made a case for secrecy. SANRAL and PPC seek orders which courts such as
ours, which are committed to open justice and the upholding and protection of constitutional
principles and rights – such as accountability, transparency, freedom of speech, and press
freedom – grant exceptionally rarely. The City contends that neither application makes out a
case for secrecy.
. . .
84.
Having considered the information listed in NOM1 and NOM2 on the basis of the case
presented by SANRAL, the City is of the view that disclosure of that information will probably not
cause any of the harm which SANRAL alleges.
85.
That being so, SANRAL has failed to provide sufficient evidence to make a case that
disclosure of the information listed in NOM1 and NOM2 will probably cause harm. Even if
SANRAL had pleaded a cause of action (which is not the case), I respectfully submit that this
Court is consequently unable to grant the secrecy orders on the grounds of alleged harm.
. . .
114.
SANRAL does not even suggest any legal basis or any cause of action for its
“procedural directive” imposing secrecy in respect of the first category of information. I am
advised that there is none.
. . .
153.
Even if this court finds that the disclosure of specified information would cause the harm
alleged (which the City does not accept), that does not mean that SANRAL is entitled to the
relief sought. I am advised that SANRAL must establish a cause of action for the extraordinary
secrecy orders which it seeks. Harm in itself is insufficient. SANRAL has not pleaded any cause
of action for the secrecy orders founded on the alleged harm.‟
[6] Accordingly, what called for determination on the papers as they stood was
whether: (a) the information in NOM1 and NOM2 was confidential; (b) its disclosure
would cause the harm to SANRAL, as asserted by it; and (c) such
harm
provided
a
basis for secrecy. The high court (Binns-Ward J) decided all of those issues in the City‟s
favour. It did so principally on the basis that SANRAL had failed to make out a case for
the relief sought. It held:
„59. . . . SANRAL would have to establish confidentiality in the true sense or such similar basis
for exclusivity, or show that its wider availability would be prejudicial to the fair and just
determination of the case. SANRAL has not sought to show any of these things in respect of the
material identified in schedule NOM1. Its object in respect of the NOM1 material is merely to
avoid premature publicity to evidence obtained by the City through Rule 53(1)(b).
67.
. . . Indeed, the impression is given that the deponent to the supporting affidavit made
his statement before the content of schedules NOM 1 and 2 to the notice of motion were settled.
In my view, it is not for the court, in the absence of sufficient indication in the body of the
supporting affidavit of a particularised link between the items listed in schedule NOM 2 and the
prejudice contended for, to have to search in the voluminous bid documentation to see if a case
could be made for SANRAL‟s position; cf. Crown Cork supra, at 1101F. Nor is it for a
respondent in such a situation to have to fathom the particularity of the case it is expected to
meet.
68.
SANRAL‟s founding papers failed to link the apprehended harm – described by the
deponent in the broadest terms – with particularised aspects of the documents concerned.
There is no excuse for this, especially considering that the parties had agreed that the court
would be requested to hear the interlocutory applications in camera.‟
[7] Having found that SANRAL had failed to make out a case in respect of each of
categories NOM1 and NOM2, the high court in paragraph 1 of its order dismissed
SANRAL‟s application. That, one would have thought, would have been the end of the
matter. It was not, because the high court then saw fit to issue the following orders:
„3.
It is declared that the administrative record disclosed by SANRAL in terms of rule
53(1)(b) of the Uniform Rules of Court is subject to the “implied undertaking rule” explained in
the body of this judgment, with the effect that no person, including any recipient of the
supplementary founding papers delivered in terms of paragraph 2 hereof, shall be permitted,
unless authorised thereto by SANRAL or by the Court, on application, to disseminate, publish,
or distribute any part of the administrative record, or any part of any affidavit in the
supplementary founding papers that quotes or substantively reproduces the content thereof,
before the hearing of the aforementioned pending review application.
4.
Paragraph 3 of this order shall not be construed to derogate from the right of any party in
the review application to refer to, or in any other manner deal with, the administrative record in
any affidavit to be delivered by it in the review application, provided that the dissemination,
publication, or distribution of the affected parts of any such affidavit shall likewise be limited by
the implied undertaking rule.
5.
The papers in the current interlocutory applications, save to the extent that their partial
release into the public domain was authorised in terms of the order obtained on 5 August 2014
at the instance of Right2Know and Section 16, shall remain under seal, subordinate to the
degree of access permitted to the papers in the review application, between now and the
hearing of the review.
6. There shall be no order as to costs in either application.‟
The high court, although thereafter recognising „that the application of the rule in the
context of disclosure in the judicial review process is unprecedented‟, somewhat
surprisingly dismissed the City‟s application for leave to appeal to this court. The City
appeals with the leave of this court. There is no cross appeal by SANRAL. With the
leave of the President of this Court, a range of public interest organisations – eleven in
all, were admitted as amici curiae.2
[8] The high court issued the additional orders because of what it described as:
„an evident misapprehension by the parties as to the extent to which the material that has been
made available by SANRAL in terms of Rule 53(1)(b) may be disseminated before the review
application is heard, I consider it appropriate to make an order with declaratory effect. The order
that I propose to make will also address the concerns of those respondents, such as the fourth
and fifth respondents in the review, who have not been favoured yet with unexpurgated copies
of the City‟s supplementary founding affidavits.‟
2 The Amici include media organisations, public interest law firms, research and advocacy institutions,
non-profit organisations that fight corruption and institutions established to promote free expression and
access to information. They are: Right2Know Campaign, Section16, Open Democracy Advice Centre,
Mandg Centre for Investigative Journalism, South African National Editors Forum, Legal Resources
Centre, Section27, Socio-Economic Rights Institute of South Africa, Corruption Watch, Democratic
Governance and Rights Institute, South African History Archive.
Paragraph 3 of the high court‟s order and the ancillary orders in paragraphs 4 and 5
stem directly from the high court‟s adoption of the implied undertaking rule (the rule). On
that score the high court stated:
„57.
I am thus of the view that if there be any doubt that the judgment in Crown Cork has not
already done so, the time has come to hold unequivocally that the implied undertaking rule
does form part of our law and that it is of application in respect of material disclosed by a
respondent in review proceedings in terms of rule 53(1)(b), save to the extent that any part of
the record on review was not already a matter of public record before its disclosure in the
litigation. For the reasons discussed above, the rule serves an important purpose; not only in
upholding the constitutional right to privacy, but, equally importantly, in promoting the effective
administration of justice. Its application is susceptible to adjustment to meet the effective
administration of justice. Its application is susceptible to adjustment to meet the exigencies of
any case that might afford sufficient reason to depart from its ordinary incidence. There is no
sound reason, in my view, to call its constitutional compatibility into question.‟
[9] The rule had not been raised by SANRAL in its affidavit. The City had thus not
been called upon to answer that case. The high court prohibited the publication of all
information from the rule 53 record, including „the non-confidential record‟ until the
review application is called, whereas SANRAL‟s case was that: all such information,
apart from NOM1 and NOM2, could be made public immediately; and the information in
NOM1 must be kept secret only until SANRAL filed its answering papers, not until the
hearing. The high court further held that documents filed with the registrar are, in any
event, regulated by rule 62(7) of the Uniform rules of court (the subrule). According to
the high court, that subrule regulates access to such information and „provides an
important administrative basis to support the implied undertaking rule‟. The subrule, so
held the high court, „permits the registrar to give only any party to the cause and any
person having a personal interest therein . . . access to the documents in the court file‟.
The high court took the view that „public access to the content of the court file in litigious
proceedings is permissible only after the matter has been called in open court‟.
[10] In respect of both issues the high court appears to have impermissibly ranged
beyond that which it had been asked to adjudicate. For, when one compares
SANRAL‟s notice of motion to the order that ultimately issued, it is clear that: (a)
SANRAL did not secure the relief that it had sought; and (b) conversely, the relief that
issued was not sought by it. In that regard the following from Fischer v Ramahlele 2014
(4) SA 614 (SCA) paras 13 and 14 is apposite:
„Turning then to the nature of civil litigation in our adversarial system, it is for the parties, either
in the pleadings or affidavits (which serve the function of both pleadings and evidence), to set
out and define the nature of their dispute, and it is for the court to adjudicate upon those issues.
That is so even where the dispute involves an issue pertaining to the basic human rights
guaranteed by our Constitution, for “(i)t is impermissible for a party to rely on a constitutional
complaint that was not pleaded”. There are cases where the parties may expand those issues
by the way in which they conduct the proceedings. There may also be instances where the court
may mero motu raise a question of law that emerges fully from the evidence and is necessary
for the decision of the case. That is subject to the proviso that no prejudice will be caused to any
party by its being decided. Beyond that it is for the parties to identify the dispute and for the
court to determine that dispute and that dispute alone.
It is not for the court to raise new issues not traversed in the pleadings or affidavits, however
interesting or important they may seem to it, and to insist that the parties deal with them. The
parties may have their own reasons for not raising those issues. A court may sometimes
suggest a line of argument or an approach to a case that has not previously occurred to the
parties. However, it is then for the parties to determine whether they wish to adopt the new
point. They may choose not to do so because of its implications for the further conduct of the
proceedings, such as an adjournment or the need to amend pleadings or call additional
evidence. They may feel that their case is sufficiently strong as it stands to require no
supplementation. They may simply wish the issues already identified to be determined because
they are relevant to future matters and the relationship between the parties. That is for them to
decide and not the court. If they wish to stand by the issues they have formulated, the court may
not raise new ones or compel them to deal with matters other than those they have formulated
in the pleadings or affidavits.‟3
So too, is the statement by Howie JA in Western Cape Education Department & another
v George 1998 (3) SA 77 (SCA) at 84E that it is desirable:
„. . . that any judgment . . . be the product of thorough consideration of, inter alia, forensically
tested argument from both sides on questions that are necessary for the decision of the case.‟
3 See also in this regard Baront Investments (Pty) Ltd v West Dune Properties 296 (Pty) Ltd & others
2014 (6) SA 286 (KZP) paras 80-82, 92 and 98.
[11] It nonetheless, remains, because the issues are not, primarily, about factual
disputes between the parties, but rather matters of law that will affect many litigants
beyond the confines of this case, to consider the correctness of the high court‟s
judgment. But, before turning to a consideration of the rule and subrule it would be
appropriate to first touch on some key principles that inform that discussion.
[12] „The open court principle is a venerable principle, deeply rooted in western
consciousness. And for good reason.‟ – so declared the Chief Justice of Canada, the Rt
Hon Beverley McLachlin PC, in an address to the Middle Temple during January 2014
entitled: „Is the open court principle sustainable in the 21st century‟.4 The Learned Chief
Justice began by saying that the „open court principle was rightly venerated as a key
component of the rule of law‟. She elaborated - the open court principle meant in
practice that: (a) court proceedings including the evidence and documents disclosed in
proceedings should be open to public scrutiny; and (b) juries and judges should give
their decisions in public. (It did not require every aspect of the judicial process to be
open, so that for example judges‟ deliberations could remain private, and some
evidence might be protected by privilege). Open justice was important for three reasons:
First, it assisted in the search for truth and played an important role in informing and
educating the public. Second, it enhanced accountability and deterred misconduct.
Third, it had a therapeutic function, offering an assurance that justice had been done.
[13] The principle of open justice, according to Chief Justice Spigelman,5 is one of the
most pervasive axioms of the administration of common law systems. It was from such
origins, so he states:
„that it became enshrined in the United States Bill of Rights and, more recently, in international
human rights instruments such as Article 14 of the International Covenant on Civil and Political
Rights (ICCPR) and Article 6 of the European Convention for the Protection of Human Rights,
4 Rt Hon B McLachlin PC „Openness and the rule of law‟ address by the Honourable Chief Justice to the
Annual
International
Rule
of
Law
Lecture
on
January
2014
available
at
http://www.barcouncil.org.uk/media/270848/jan_8__2014_-_12_pt.__rule_of_law_-
_annual_international_rule_of_law_lecture.pdf, accessed 23 March 2015;
5 Rt Hon J J Spigelman AC „The Principle of Open Justice: A Comparative Perspective‟ (September 20,
2005). University of New South Wales Law Journal (2006) Vol. 29 No. 1 at 147-166; also available on the
Social Science Research Network at http://papers.ssrn.com, accessed 30 March 2015. Address by the
Honourable JJ Spigelman AC, Chief Justice of New South Wales to the Media Law Resource Centre
Conference in London on 20 September 2005.
as adopted and implemented by the British Human Rights Act 1998. In both cases the right is
expressed as an entitlement to “a fair and public hearing by an independent and impartial
tribunal established by law.”‟6
The significance of the principle of open justice, he adds, „is of such a high order that,
even where there is no written constitution, or a written constitution does not extend to
the principle, the principle should be regarded as of constitutional significance.‟7 The
tradition of open justice had its origins in England before the Norman Conquest, when
freemen in the community participated in the public dispensing of justice.8 The tradition
had spread from England, particularly to those parts of the world which had adopted
and retained that common law heritage, but was also observed and respected in civil
law societies. The open court principle was affirmed in England in the strongest terms
by the House of Lords in the case of Scott v Scott [1913] AC 417, where Lord Atkinson
had said (at 463):
„The hearing of a case in public may be, and often is, no doubt, painful, humiliating, or deterrent
both to parties and witnesses, and in many cases, especially those of a criminal nature, the
details may be so indecent as to tend to injure public morals, but all this is tolerated and
endured, because it is felt that in public trial is to found, on the whole, the best security for the
pure, impartial, and efficient administration of justice, the best means for winning for it public
confidence and respect.‟
Later in R v Legal Aid Board, ex parte Kaim Todner (a firm),9 Lord Woolf said:
„This is the reason it is so important not to forget why proceedings are required to be subjected
to the full glare of a public hearing. It is necessary because the public nature of proceedings
deters inappropriate behaviour on the part of the court. It also maintains the public's confidence
in the administration of justice. It enables the public to know that justice is being administered
impartially. It can result in evidence becoming available which would not become available if the
proceedings were conducted behind closed doors or with one or more of the parties' or
witnesses' identity concealed. It makes uninformed and inaccurate comment about the
proceedings less likely. If secrecy is restricted to those situations where justice would be
frustrated if the cloak of anonymity is not provided, this reduces the risk of the sanction of
contempt having to be invoked, with the expense and the interference with the administration of
justice which this can involve.‟
6 J J Spigelman op cit at 9.
7 Ibid at 10.
8 B McLachlin op cit at 4-5.
9 R v Legal Aid Board, ex parte Kaim Todner (a firm) [1998] 3 All ER 541 at 549J-550B.
[14] Likewise, in the Canadian Supreme Court in Attorney General (Nova Scotia) v
MacIntyre [1982] 1 SCR 175 at 185, Justice (later Chief Justice) Dickson said:
„Many times it has been urged that the “privacy” of litigants requires that the public be excluded
from court proceedings. It is now well established, however, that covertness is the exception
and openness the rule. Public confidence in the integrity of the court system and understanding
of the administration of justice are thereby fostered. As a general rule the sensibilities of the
individuals involved are no basis for exclusion of the public from judicial proceedings.‟
With the advent of the Canadian Charter of Rights and Freedoms, the open court
principle was recognised as a component of freedom of expression, protected by s 2(b)
of the Charter.
[15] In the United States of America, Richmond Newspapers v Virginia 448 US 555
(1980), observed that the origins of the modern criminal trial in Anglo-American justice
can be traced back beyond reliable historical records. A summary of that history showed
that throughout its evolution, the trial has been open to all who cared to observe. Chief
Justice Burger pointed out that one „cannot erase from people's consciousness the
fundamental, natural yearning to see justice done . . .‟ He added:
„The crucial prophylactic aspects of the administration of justice cannot function in the dark; no
community catharsis can occur if justice is "done in a corner [or] in any covert manner." . . .
People in an open society do not demand infallibility from their institutions, but it is difficult for
them to accept what they are prohibited from observing.‟
More recently, the US Court of Appeals for the Sixth Circuit strongly affirmed the open
court principle when it stated:
„Democracies die behind closed doors. The First Amendment, through a free press, protects the
people‟s right to know that their government acts fairly, lawfully, and accurately . . . . When
government begins closing doors, it selectively controls information rightfully belonging to the
people. Selective information is misinformation. The Framers of the First Amendment “did not
trust any government to separate the true from the false for us” . . . They protected the people
against secret government.‟10
The court added that: „Open proceedings, with a vigorous and scrutinizing press, served
to ensure the durability of our democracy.‟11
10 Detroit Free Press v John Ashcroft 303 F.3d 681 at 683.
11 Ibid at 711.
[16] The idea that South African civil courts should be open to the public goes back to
1813.12 The principle of open courtrooms is now constitutionally entrenched.13
„Publicity‟, said the philosopher Jeremy Bentham, „is the very soul of justice. It is the
keenest spur to exertion, and the surest of all guards against improbity. It keeps the
judge himself, while trying, under trial.‟ The foundational constitutional values of
accountability, responsiveness and openness apply to the functioning of the judiciary as
much as to other branches of government.14 In Independent Newspapers,15 the
Constitutional Court dealt with an application for access to classified documents which
formed part of an appeal record. National security, so the Minister asserted, required
that the documents not be made available to the media and the public. The
Constitutional Court confirmed that the default position is one of openness and
disavowed an approach that proceeded from a position of secrecy, even in a case
where the documents in question had been lawfully classified as confidential in the
interest of national security. In deciding whether to make the disputed documents
publicly available, the Court expressly recognised a cluster of related constitutional
rights and principles which capture the „constitutional imperative of dispensing justice in
the open.‟16 It concluded that open justice is a crucial factor in any consideration of a
request to limit public disclosure of a court record.17 Although the issue at stake
concerned only access to the record – all the court proceedings were held in public. Yet
the court still emphasised the importance of openness and ordered that, despite claims
of national security, the vast majority of the record should be made publicly available.
12 Marais J explained in Financial Mail (Pty) Ltd v Registrar of Insurance & others 1966 (2) SA 219 (W) at
220F-G that: „Until 1813, in consonance with the then universal practice in Holland . . . whilst judgments
and orders of the Cape courts had to be pronounced in public, evidence and argument in trial cases were
heard in camera, with only the parties and their lawyers in attendance. The British Governor of the Cape,
in 1813, issued a proclamation requiring all judicial proceedings in future to be carried on with open doors
as a matter of “essential utility, as well as the dignity of the administration of justice”; it would imprint on
the minds of the inhabitants of the Colony the confidence that equal justice was administered to all in the
most certain, most speedy and least burdensome manner.‟
13 Section 34 of the Constitution provides that: „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.‟
14 South African Broadcasting Corporation v National Director of Public Prosecutions 2007 (1) SA 523
(CC) paras 30-31.
15 Independent Newspapers (Pty) Ltd v Minister for Intelligence Services and another, In Re Masetlha v
President of the Republic of South Africa and another 2008 (5) SA 31 (CC).
16 These included the rights contained in ss 16, 34 and 35(3)(c) of the Constitution and the founding
values of the Constitution: Independent Newspapers paras 39 and 40.
17 Independent Newspapers paras 42 and 43.
[17] There exists, as Moseneke DCJ put it, „a cluster or, if you will, umbrella of related
constitutional rights which include, in particular, freedom of expression and the right to a
public trial, and which may be termed the right to open justice.‟18 That animating
principle, it is submitted by the City and the amici, is undermined by the judgment of the
high court, which endangers a range of overlapping and inter-related constitutional
rights, namely: (a) the rights of litigants to a public trial in both civil and criminal matters;
(b) the right of the public to open justice; (c) the right of everyone to access information;
(d) the right of a litigant to freedom of expression; and (e) the media‟s right to report on
court proceedings. Those rights, so the submission goes, are underpinned by the same
broad principle, namely a system where court proceedings and court documents are, by
default, open to the public. The right to a public hearing in s 34 of the Constitution and
the right to a public trial in s 35(3)(c) is afforded to litigants in civil matters and accused
persons in criminal matters. The publicity of a trial usually serves as a guarantee that
the matter will be determined independently and impartially. The glare of public scrutiny
makes it far less likely that the courts will act unfairly. In Shinga v The State19 Yacoob J
put it thus:
„Seeing justice done in court enhances public confidence in the criminal-justice process and
assists victims, the accused and the broader community to accept the legitimacy of that
process. Open courtrooms foster judicial excellence, thus rendering courts accountable and
legitimate. Were criminal appeals to be dealt with behind closed doors, faith in the criminal
justice system may be lost. No democratic society can risk losing that faith. It is for this reason
that the principle of open justice is an important principle in a democracy.‟
[18] As a general rule litigants are prejudiced when their proceedings are not held in
public. That is not to say that litigants may not sometimes wish to keep their litigation
private or that there may not be situations where a court may justifiably depart from the
default rule that court proceedings are public. But it will be a dangerous thing for all
litigants in both civil and criminal matters, for court documents, as a general rule to be
inaccessible and unpublishable. For, it may be said that the right to public courts, which
is one of long standing, does not belong only to the litigants in any given matter, but to
18 Independent Newspapers para 42.
19 Shinga v The State & another (Society of Advocates, Pietermaritzburg Bar as Amicus Curiae);
O’Connell and Others v The State 2007 (4) SA 611 (CC) para 26.
the public at large. Open justice is, moreover, required by s 32 of the Superior Courts
Act 10 of 2013, which provides:
„Save as is otherwise provided for in this Act or any other law, all proceedings in any Superior
Court must, except in so far as any such court may in special cases otherwise direct, be carried
on in open court.‟
[19] It needs be emphasised that courts are open in order to protect those who use
the institution and to secure the legitimacy of the judiciary, not to satisfy the prurient
interests of those who wish to examine the private details of others. The public, said
Langa CJ in SABC v NDPP, „is entitled to know exactly how the judiciary works and to
be reassured that it always functions within the terms of the law and according to time-
honoured standards of independence, integrity, impartiality and fairness‟.20 Without
openness, the judiciary loses the legitimacy and independence it requires in order to
perform its function. Thus Moseneke DCJ accepted in Independent Newspapers (para
43) that „the default position is one of openness‟. Accordingly, court proceedings should
be open unless a court orders otherwise. The logical corollary must therefore be that
departures should be permissible when the dangers of openness outweigh the benefits.
And by extension, the right of open justice must include the right to have access to
papers and written arguments which are an integral part of court proceedings
(Independent Newspapers para 41). That must follow axiomatically, it seems to me,
because the public would hardly be in a position to properly assess the legitimacy or
fairness of the proceedings if they could observe the proceedings in open court but
were denied access to the documents that provide the basis for the court‟s decision.
[20] The right to freedom of expression lies at the heart of democracy, and is one of a
„web of mutually supporting rights‟ that hold up the fabric of the constitutional order.21
Section 32(1) of the Constitution guarantees everyone the „right of access to information
held by the state‟. Citizens and public interest groupings rely on this right to uncover
wrongdoing on the part of public officials or for accessing information to report on
matters of public importance. The Constitutional Court has noted that the media has a
20 SABC v NDPP 2007 (1) SA 523 (CC).
21 Case and Another v Minister of Safety and Security and Others; Curtis v Minister of Safety and Security
and Others 1996 (3) SA 617 (CC) para 27.
duty to report accurately, because the „consequences of inaccurate reporting may be
devastating.‟22 It goes without saying that to report accurately the media must be able to
access information. Access to information is „crucial to accurate reporting and thus to
imparting information to the public.‟23 Whilst s 32 of the Constitution guarantees the right
of persons to access relevant information, s 16 entitles them to distribute that
information to others. Section 16(1)(b) of the Constitution provides: „Everyone has the
right to freedom of expression, which includes freedom to receive or impart information
or ideas‟. Importantly, therefore, the right to freedom of expression is not limited to the
right to speak, but also to receive or impart information and ideas. The media hold a key
position in society. Courts have long recognised that an untrammelled press is a vital
source of public information (see Grosjean v American Press Co. 297 US 233 (1936)).
Grosjean recognised that „since informed public opinion is the most potent of all
restraints upon misgovernment, the suppression or abridgement of the publicity afforded
by a free press cannot be regarded otherwise than with grave concern‟. In this country
the media are not only protected by the right to freedom of expression, but are also the
„key facilitator and guarantor‟ of the right.24 The media‟s right to freedom of expression
is thus not just (or even primarily) for the benefit of the media: it is for the benefit of the
public.25 In Khumalo v Holomisa,26 the Constitutional Court put it thus:
„In a democratic society, then, the mass media play a role of undeniable importance. They bear
an obligation to provide citizens both with information and with a platform for the exchange of
ideas which is crucial to the development of a democratic culture. As primary agents of the
dissemination of information and ideas, they are, inevitably, extremely powerful institutions in a
democracy and they have a constitutional duty to act with vigour, courage, integrity and
responsibility.‟
When justice is open, court reporting is a crucial avenue for public knowledge about
what the government does. It is particularly important where the government is one of
the parties in a case and where other sources of information are limited.
22 Brummer v Minister for Social Development 2009 (6) SA 323 (CC) para 63.
23 Ibid.
24 SABC V NDPP 2007 (1) SA 523 (CC) para 24; Mail and Guardian v Minister for Social Development
2009 (6) SA 323 (CC) para 63.
25 Midi Television (Pty) Ltd t/a e-tv v Director of Public Prosecutions (Western Cape) 2007 (5) SA 540
(SCA) para 6.
26 Khumalo & others v Holomisa [2002] ZACC 12; 2002 (5) SA 401 (CC) at para 24.
See also De Reuck v Director of Public Prosecutions (Witwatersrand Local Division) and Others [2003]
ZACC 19; 2004 (1) SA 406 (CC) at para 49.
[21] Not all information is readily revealed by the State and even powerful media
organisations sometimes face great difficulty in obtaining information in some areas. In
an environment of secrecy, journalists become vulnerable to off-the-record briefings and
strategic leaks by government. In this context, open justice is particularly important
because through court cases information can be exposed and tested in ways that may
not otherwise be possible. The judicial process generally shrinks from hearsay.
Witnesses swear to the truth and if they lie make themselves open to prosecution for
perjury. The rules of evidence, which regulate what is revealed, are applied by an
independent judiciary. The whole process is thus designed to limit the extent to which
parties can craft and shape information for public consumption. In Scott (at 477), Lord
Shaw of Dunfermline famously warned „in the darkness of secrecy, sinister interest and
evil in every shape have full swing.‟
[22] Dr Lawrence McNamara27 makes the point that:
„As well as helping to ensure the fairness of trials and being a dimension of free speech rights,
open justice also has broader implications for democratic governance and government
accountability. The government derives its authority from the democratic process. Executive
action should, in theory at least, be carried out in the public interest. The public are able to
express this interest through a variety of forums and channels, the most obvious being general
elections. In order for the public to be able to express its opinion in an informed way, it is
heavily reliant on the media‟s ability to scrutinize the executive.‟
The big-picture view of open courts is thus that it protects those on trial not just from the
unfair application of the law, but crucially and in the long term, from unfair laws.28 Open
justice therefore serves democracy as much as it serves justice. It allows voters to
review the outcomes of current laws and to advocate, if needs be, for law reform.29 This
is an essential feature of a flourishing democracy, because, and this cannot be
emphasised enough, more openness and visibility about government activities helps to
build citizens‟ trust in their government. Even where national security is concerned and
27 Dr Lawrence McNamara is a Global Uncertainties Fellow and a Reader & Director of Postgraduate
Research at the School of Law at the University of Reading. See L McNamara „Opinion: Civil liberties
open justice and protection from terrorism‟ (2010) available at
http://www.debatingmatters.com/globaluncertainties/opinion/civil_liberties_open_justice_and_protection_f
rom_terrorism/, accessed on 25 March 2015.
28 K Fitzpatrick „Courts need to expand view of open justice‟ Irish Times of 16 June 2014 available at
http://www.irishtimes.com/news/crime-and-law/courts-need-to-expand-view-of-open-justice-1.1831537.
29 Ibid.
there are frequent restrictions on public access to evidence or information, as Dr
McNamara points out, limiting public access to evidence on national security grounds is
invariably controversial because the decision to impose restrictions will often be based
on information which is itself secret and cannot be publicly tested. 30
[23] Reverting then to the judgment of the high court – it did not provide a precise
formulation of the implied undertaking rule.31 Jenkins J first coined the expression
„implied undertaking‟ in 1948 (Alterskye v Scott [1948] 1 All ER 469). Until then, the
court often required an express undertaking before ordering production of particularly
confidential or sensitive documents. In Home Office v Harman [1982] 1 All ER 532 (HL),
it was held that the rule continued to bind the parties to a matter even after the hearing.
That aspect of the rule was successfully challenged before the European Commission
of Human Rights.32 As a result, in 1987 the legislature changed the law so that it would
no longer be a contempt of court to make public material contained in documents
compulsorily disclosed in civil proceedings once those documents had been read out or
referred to in open court.33 In April 1999 the Rule was codified in the Civil Procedure
30 Dr McNamara observes that courts face a dilemma where any party – but in practice usually the
government – claims that openness would result in a danger to national security and restrictions must be
placed on the ability of the public to scrutinize the judicial process. On the one hand, the court should be
convinced that the danger is genuine and that national security is not just being used as an excuse to
keep politically embarrassing information from the public. On the other, the courts may not always be in
the best position to judge whether information will pose a danger to national security as it is the executive
government which arguably has a more complete picture of the circumstances and relevance of the
information concerned. L McNamara op cit.
31 The high court stated in para 40:
„The notion of an “undertaking” is, however, somewhat misleading. The use of the term arises from the
original requirement in the early 19th century of an express undertaking. Its continued use is convenient in
the context of characterising breaches of the rule as contempt of court in the sense of involving the
breaking of a national undertaking to the court.‟ In Bourns Inc v Raychem Corp [1999] 1 All ER 908 at
para 16, Laddie J put the position more realistically when he explained that the fiction of an implied
undertaking was in fact an expression of the existence of a legal obligation:
“The implied undertaking not to make collateral use of documents disclosed on discovery arises
automatically as an incident of the discovery process. It is in no sense implied as a result of dealings
between the parties. The discloser may well not have thought of the implications of giving discovery and
the disclosee may well not have turned his mind to the matter of what use he can make of the documents
outside the action. Had he thought of it, he might well have wanted full freedom to do what he liked with
the material, particularly if his own discovery is non-existent or very limited. So the obligation is not to be
likened to a term implied in a contract between the parties to the litigation. On the contrary, it is an
obligation to the court, not the other party, which is implied. It is for that reason that its breach is treated
as contempt. The obligation is imposed as a matter of law.”‟ (Footnotes omitted.)
32 Harman v UK (1985) 7 EHRR 146 (EComm).
33 RSC Ord. 24, r. 14A (CCR Ord. 14, r. 8A).
Rules 1998 (CPR) as a self-contained provision.34 The English codification sought to
introduce uniformity in part because prior cases were inconsistent. The general rule
under CPR r. 31.22 is that a party to whom a document has been disclosed may use
such document only for the purposes of the proceedings in which it is disclosed. There
are three exceptions however, namely, where: (a) the document has been read to or by
the court, or referred to, at a hearing that has been held in public; (b) the court gives
permission; or (c) the party who disclosed the document, and the person to whom the
document belongs agree. While the rule generally binds third parties, a court may grant
the Crown leave to use material covered by the rule as evidence for the prosecution in
criminal proceedings.35 In some cases third parties are not bound and a court may, in
the public interest, allow a third party to use material disclosed in breach of the rule
without leave of a court.36
[24] The rule is applied in Australia,37 but does not appear to have found universal
favour. In a minority judgment in Hearne v Street [2008] HCA 36 (6 August 2008), Kirby
J pointed out that there has been recognition in both England and Australia that the
rationale for the rule is looking „rather threadbare‟ and that the arguments for a court
34 CPR r. 31.22(1)(a) states:
„Any undertaking, whether express or implied, not to use a document for any purposes other than those of
the proceedings in which it is disclosed shall cease to apply to such document after it has been read to or
by the Court, or referred to, in open Court, unless the Court for special reasons has otherwise ordered on
the application of a party or of the person to whom the document belongs.‟
35 Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 (HL); Attorney General for
Gibraltar v May and Others [1999] 1 WLR 998.
36 In re Judicial Review [2010] NIQB 95 (17 September 2010): The Northern Ireland Queen‟s Bench
refused to bar the use in professional misconduct proceedings of documents which had been disclosed in
breach of the Rule. The court held that the third party was not bound by the implied undertaking and
could use the documents obtained as it was in the public interest that the disciplinary charges proceed.
This was confirmed in H v W [2012] NIFam 8 (29 May 2012).
37 A Stanfield and P N Argy Electronic Evidence 3ed paras 8.35 and 8.36 state:
„There is an implied undertaking by the recipient of discovered material not to use the discovered
documents or material contained in them for any ulterior purpose other than the proceedings in relation to
which they were produced. A breach of this duty will be punishable as contempt of court. If discovered
documents contain commercially sensitive or confidential information, the court may require the party
seeking inspection to give express confidentiality undertakings and may limit the persons authorised to
inspect the documents (most commonly to outside legal advisors).
The court may allow a party, upon application, to use discovered documents for a purpose other than
conduct of the proceedings in which they were discovered if there are “circumstances which take the
matter out of the ordinary course” which make such an exercise of the court's discretion in the interests of
justice. The same implied undertaking not to use documents for a collateral purpose applies to “wherever
the coercive power of the court has been employed to enable a person to obtain the documents of
another” including in relation to witness statements, answers to interrogatories, affidavits, subpoenaed
documents and documents obtained pursuant to search orders.‟ See also Australian Competition and
Consumer Commission v Allphones Retail Pty Limited (No 3) [2009] FCA 1075.
continuing to uphold and enforce the rule left him „unconvinced‟. There appear to be
differences in the application of the rule there. The Australian Federal Court Rules
provide that the rule ceases to apply to any document after it has been read to or by the
court or referred to in open court in such terms as to disclose its contents unless the
court otherwise orders.38 In the State of Victoria, however, there is a distinction between
original documents that exist independently from and generally prior to the litigation and
those produced solely for the purposes of litigation such as witness statements. In the
case of the former, the rule remains in force even if those documents had been
tendered in evidence in open court and, in the latter, the rule applies only until the
witness statement passes into evidence.39 The rule generally applies to third parties,
including journalists and other non–parties who acquire the documents and who are
compelled to seek leave to be released from the undertaking to be able to use it.40 In
Victoria, third parties are permitted to inspect the documents to determine whether they
wish to use them and whether they wish to apply for them to be released from the
undertaking.41 A court may in the public interest grant a release from the rule to allow for
evidence to be used in a criminal investigation and prosecution.42
[25] The rule was first introduced in Canada in 1985. In some provinces, the rule
exists as part of the common law while Ontario, Manitoba and Prince Edward Island
have codified the rule.43 The implementation varies significantly across Canadian
jurisdictions. An issue on which there is no uniformity is whether the rule remains
operative for an indeterminate period or expires when the information to which it
38 Federal Court of Australia, Federal Court Rules, No. 140 of 1979 Order 15 rule 18, provides:
„Any order or undertaking, whether express or implied, not to use a document for any purpose other than
those of the proceedings in which it is disclosed shall cease to apply to such a document after it has been
read to or by the Court or referred to, in open Court, in such terms as to disclose its contents unless the
Court otherwise orders on the application of a party, or of a person to whom the document belongs.‟
39 British American Tobacco Australia Services Ltd v Cowell (No 2) (2003) 8 VR 571 at para 43. See also
R Williams „Implied Undertaking: Express reform required‟ Monash Law Review (Vol 34, No. 1) which sets
out the differences in the Federal code and State of Victoria.
40 Esso Australia Resources Ltd v Plowman [1995] 183 CLR 10 at 37.
41 As provided for in r 28.05 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). See also
British American Tobacco Australia Services Ltd v Cowell (No 2) (2003) 8 VR 571 at para 37. This was
based on the rationale that since such persons can only know the use to which they intend to put the
documents once they have read and considered it, they should be able to read them subject to the
undertaking in order to determine whether to seek leave to be released from the undertaking. In relation
to documents tendered in evidence, Cowell is inconsistent with the course adopted in most other
jurisdictions but remains the Victorian position on the issue.
42 Andrew Koh Nominees Pty Ltd v Pacific Corporation Ltd [No 2] [2009] WASC 207.
43 C Papile „The Implied Undertaking revisited‟ The Advocates Quarterly 2006 at 191 and 194.
pertains is introduced in open court. The divergence arises from the tension between
wanting to preserve confidentiality on the one hand and a resistance to creating the
anomalous situation that third parties can access information but the recipient of the
discovery cannot use it on the other. For that reason, the rule usually ceases to apply
once the discovered document is presented in open court. In three provinces - British
Columbia, Alberta and Nova Scotia - the rule ceases to operate only when the court so
orders.44 Unlike in England and Australia, the Canadian Supreme Court45 refused to
grant a release from the rule to allow material covered by it to be used as evidence in
the prosecution of serious criminal charges.
[26] The rule does not form part of the law in the United States of America. It is for the
party making production to obtain an express agreement of confidentiality from the
receiving party or a protective order from court. Absent an express confidentiality
agreement between the parties or an order of court, there are no restrictions on the
uses to which materials received on discovery may be put. If the agreement seeks to
maintain confidentiality beyond the pre-trial stage it is likely to raise public policy and
First Amendment issues. Once the material is filed at court, the principle of public
access to court records creates a presumption that the material will be available to the
public.46
[27] The rule is not part of our law. Only three earlier reported South African
authorities have referred to the rule. In the first, Crown Cork & Seal Co Inc & another v
Rheem South Africa (Pty) Ltd & others 1980 (3) SA 1093 (W), Schutz AJ, recognised at
the commencement of his judgment that there appears to be no direct authority in South
Africa as to whether a court „may place limitations upon a litigant‟s ordinary right of
untrammelled inspection and copying of documents discovered by his opponent . . .‟.
After usefully summarising the position as it obtained in England, the learned judge
posed the question (at 1098F-G) whether the „English practice may be adopted in South
Africa, and if it may, whether it should?‟ Implicit in that statement, it seems to me, was
44 C Papile op cit at 191.
45 Juman v Doucette 2008 SCC 8.
46 C Papile op cit at 193. A party may motion the court in terms of Federal Rule of Civil Procedure 26(c)
for a protective order to keep disclosed materials confidential.
the recognition that the English practice was not yet a part of our law. Although he did
thereafter state (at 1099H) that in his view „it is open to a South African court to adopt
the English practice‟, he proceeded to decide the matter in accordance with our rule
35(7). I do not read the rest of the judgment as having, one way or the other,
affirmatively answered the question earlier posed by the learned judge. The high court
appears to have been plagued by similar uncertainty when it stated: „[I]f there be any
doubt that the judgment in Crown Cork has not already done so, the time has come to
hold unequivocally that the rule does form part of our law. . .‟.47 In the second -
Replication Technology Group & others v Gallo Africa Ltd 2009 (5) SA 531 (GSJ) -
which considered whether documents disclosed during arbitration proceedings between
the parties could be relied upon in related contempt proceedings, Malan J stated (para
17) that he did not have to determine whether the rule forms part of South African law
because the use of the documents in question was permitted by a recognised exception
to the rule in that case. The third – Mathias International Ltd & another v Baillache &
others 2015 (2) SA 357 (WCC) – also a judgment by Binns-Ward J, held in the context
of Anton Piller proceedings that the applicant‟s supporting affidavit in the ex parte
application brought in that case to obtain a search order had contained such an implied
undertaking. The high court accepted that no South African court had made any „explicit
determination‟ that the rule is part of our law and that we have hitherto regulated access
to and dissemination of information forming part of the court record or discovered
documents which were regarded as confidential, without any invocation of the rule.48
[28] In adopting the rule, the high court appears to have invoked its inherent power to
regulate its own processes in terms of s 173 of the Constitution.49 That our courts were
endowed with such power even in our pre-constitutional era is evident from the following
dictum of Corbett JA: „There is no doubt the Supreme Court possesses an inherent
reservoir of power to regulate its procedures in the interests of the proper administration
47 Paragraph 57.
48 Paragraph 53.
49 Section 173 of the Constitution provides:
„The Constitutional Court, Supreme Court of Appeal and High Courts have the inherent power to protect
and regulate their own process, and to develop the common law, taking into account the interests of
justice.‟
of justice . . . „.50 Courts now derive their power from the Constitution itself.51 As it was
put by the Constitutional Court in SABC v NDPP:52
„This is an important provision which recognises both the power of Courts to protect and
regulate their own process as well as their power to develop the common law. . . . The power
recognised in s 173 is a key tool for Courts to ensure their own independence and impartiality. It
recognises that Courts have the inherent power to regulate and protect their own process. A
primary purpose for the exercise of that power must be to ensure that proceedings before
Courts are fair. It is therefore fitting that the only qualification on the exercise of that power
contained in section 173 is that Courts in exercising this power must take into account the
interests of justice.‟ (Footnotes omitted.)
But the Constitutional Court did remind us that „it is a power which has to be exercised
with caution53 and sparingly having taken into account the interests of justice in a
manner consistent with the Constitution.‟54
[29] In addition, s 39(2) of the Constitution makes it plain that, when a court embarks
upon a course of developing the common law, it is obliged to „promote the spirit, purport
and objects of the Bill of Rights.‟55 This ensures that the common law will evolve, within
the framework of the Constitution, consistently with the basic norms of the legal order
that it establishes.56 The Constitutional Court has already cautioned against
overzealous judicial reform. Thus, if the common law is to be developed, it must occur
not only in a way that meets the s 39(2) objectives, but also in a way most appropriate
for the development of the common law within its own paradigm.57 Faced with such a
task, a court is obliged to undertake a two-stage enquiry: It should ask itself whether,
given the objectives of s 39(2), the existing common law should be developed beyond
existing precedent - if the answer to that question is a negative one, that should be the
end of the enquiry. If not, the next enquiry should be how the development should
50 Universal City Studios Inc and others v Network Video (Pty) Ltd 1986 (2) SA 734 (A) at 754G.
51 Phillips & others v National Director of Public Prosecutions 2006 (1) SA 505 (CC) para 47.
52 SABC v NDPP 2007 (1) SA 523 (CC) para 35 and 36.
53 S v Pennington and another 1997 (4) SA 1076 (CC).
54 Parbhoo and others v Getz NO and another 1997 (4) SA 1095 (CC).
55 S v Thebus 2003 (6) SA 505 (CC) para 25; City of Tshwane Metropolitan Municipality v RPM Bricks
(Pty) Ltd 2008 (3) SA 1 (SCA) para 20.
56 Pharmaceutical Manufacturers Association of South Africa; In re Ex parte President of the Republic of
South Africa 2000 (2) SA 674 (CC) para 49.
57 Carmichele v Minister of Safety and Security 2001 (4) SA 938 (CC) para 55.
occur and which court should embark on that exercise. None of these considerations
merited even a mention in the judgment of the high court.
[30] Even were it open to the high court to invoke s 173, that section does not
empower a court to create a procedural rule in the absence of a lacuna. And it has not
been suggested that the existing law is insufficient. Moreover, s 173 did not empower
the high court to make a law of general application. Independent Newspapers58
stressed that a court had to consider the competing rights or interests at stake on a
case by case basis to ensure a fair trial. According to the Constitutional Court, when
there is a claim for secrecy in respect of part of the court record, „the court is properly
seized with the matter and is obliged to consider all relevant circumstances and to
decide whether it is in the interests of justice for the documents to be kept secret and
away from any other parties, the media or the public.‟59 Independent Newspapers did
not authorise or contemplate the adoption by a court of a new rule which would apply
indiscriminately to all cases without regard to the circumstances.
[31] A court attempting to transplant a rule from a foreign jurisdiction should of
necessity have regard to the differing constitutional contexts between that country and
this. The Constitutional Court recently affirmed that the following principles apply in
considering the use of foreign law:60
„(c)
The similarities and differences between the constitutional dispensation in other
jurisdictions and our Constitution must be evaluated. Jurisprudence from countries not under a
system of constitutional supremacy and jurisdictions with very different constitutions will not be
as valuable as the jurisprudence of countries founded on a system of constitutional supremacy
and with a constitution similar to ours.
(d)
Any doctrines, precedents and arguments in the foreign jurisprudence must be viewed
through the prism of the Bill of Rights and our constitutional values.‟
All law, in this country, must be grounded in constitutional values and respect must be
given to the fundamental rights set out in the Bill of Rights. The adoption of a rule from
another country must be considered in that context and in particular against a
58 Independent Newspapers para 45.
59 Independent Newspapers para 55.
60 H v Fetal Assessment Centre (CCT 74/14) [2014] ZACC 34; 2015 (2) SA 193; 2015 (2) BCLR 127;
(CC) para 31.
constitutional right of access to information held by the State regardless of the reason,
and a right of access to privately-held information required for the exercise or protection
of any right.61
[32] In procedural matters, s 171 of the Constitution makes plain that „[a]ll courts
function in terms of national legislation and their rules and procedures must be provided
for in national legislation‟. A further bar to the adoption of the rule would thus seem to be
the doctrine of the separation of powers. There are a number of reasons why a court is
ill-suited to adopting the rule. They include the following: the rule, on the face of it,
would appear to be at odds with the default Constitutional position - which makes
openness, access to information and free expression the norm, and requires justification
of an exception. The rule, by contrast, makes secrecy the default position. The content,
timing, duration, ambit, limitations on and enforcement of the rule are complex matters
involving controversial and difficult policy considerations. This is evident from the fact
that where the rule does apply in comparable foreign jurisdictions, its content is not
uniform. Questions of whether such a rule is necessary, and if so its content, are
matters that may well require public debate and consideration. This is a legislative and
not a judicial task. If there is a deficiency, the remedy lies in appropriate legislation or
the amendment of Uniform rules of court.62
[33] Although the high court shied away from any attempt at formulating the rule, from
its references to other jurisdictions, one may infer that it intended the rule to have some
- if not all - of the following attributes: A party may use discovered documents only for
the litigation in which it is engaged and not for a „collateral‟ or „ulterior‟ purpose.
Impermissible „collateral‟ use includes use of information in different legal proceedings,
use as evidence of a serious criminal charge, and the dissemination, publication or
distribution of discovered information in a pending case. The rule applies not only to the
documents discovered, but also to information derived from those documents and
covers even innocuous information that is not confidential. The rule binds any third party
who receives the discovered documents. The rule applies as well to a rule 53 record. It
ceases to apply at the latest when the matter is placed before the court for hearing.
61 Section 32 of the Constitution.
62 Universal City Studios Inc v Network Video (Pty) Ltd 1986 (2) SA 734 (A) at 755J.
Both the court and the party making discovery may authorise their dissemination,
publication or distribution. In matters of public interest, the court would tend to allow
general access to the content of a court file at an earlier stage, once pleadings in the
case have closed and application has been made for a hearing date, or such a date has
been fixed. A court may relax or modify the rule to meet „the exigencies of a case that
might afford sufficient reason to depart from its ordinary incidence.‟
[34] In the event, and notwithstanding the fact that it had not properly defined the rule,
the high court appears to have been in favour of reformulating the rule - from what is not
exactly clear:
„to, in general, allow public access to the content of the court file, including any information
subject to the implied undertaking rule that has been included in the pleadings or affidavits,
once a matter has been set down for hearing, rather than only after the matter had been called
in court, because this would conduce to more effective open justice without unduly impinging on
the parties‟ rights of privacy. . .‟63
But declined to do so because:
„I do not consider that the current case affords a suitable basis to undertake the exercise. It is
one that in any event probably would be more appropriately addressed by the Rules Board after
a process of public participation.‟64
The high court thus appears to have seen only the reformulation of the rule, but
paradoxically, not its adoption or initial formulation, as a matter for the Rules Board.
[35] The high court held that the rule applies to discovered documents and that since
rule 53(1)(b) is „an incident of discovery in our law, by parity of reasoning‟ the rule
derived from English law applies to rule 53(1)(b). Rule 53,65 which governs review
63 Paragraph 50.
64 Ibid.
65 Rule 53 provides:
„(1). Save where any law otherwise provides, all proceedings to bring under review the decision or
proceedings of any inferior court and of any tribunal, board or officer performing judicial, quasi-judicial or
administrative functions shall be by way of notice of motion directed and delivered by the party seeking to
review such decision or proceedings to the magistrate, presiding officer or chairman of the court, tribunal
or board or to the officer, as the case may be, and to all other parties affected-
(a) calling upon such persons to show cause why such decision or proceedings should not be reviewed
and corrected or set aside, and
(b) calling upon the magistrate, presiding officer, chairman or officer, as the case may be, to dispatch,
within fifteen days after receipt of the notice of motion, to the registrar the record of such proceedings
sought to be corrected or set aside, together with such reasons as he is by law required or desires to give
proceedings in this country, is home-grown. In Jockey Club of South Africa v Forbes
1993 (1) SA 649 (A) at 660, Kriegler AJA explained:
„Not infrequently the private citizen is faced with an administrative or quasi-judicial decision
adversely affecting his rights, but has no access to the record of the relevant proceedings nor
any knowledge of the reasons founding such decision. Were it not for Rule 53 he would be
obliged to launch review proceedings in the dark and, depending on the answering affidavit(s) of
the respondent(s), he could then apply to amend his notice of motion and to supplement his
founding affidavit. Manifestly the procedure created by the Rule is to his advantage in that it
obviates the delay and expense of an application to amend and provides him with access to the
record. In terms of para (b) of subrule (1) the official concerned is obliged to forward the record
to the Registrar and to notify the applicant that he has done so. Subrule (3) then affords the
applicant access to the record. (It also obliges him to make certified copies of the relevant part
thereof available to the Court and his opponents. The Rule thus confers the benefit that all the
parties have identical copies of the relevant documents on which to draft their affidavits and that
they and the Court have identical papers before them when the matter comes to Court.) More
important in the present context is subrule (4), which enables the applicant, as of right and
without the expense and delay of an interlocutory application, to “amend, add to or vary the
terms of his notice of motion and supplement the supporting affidavit”. Subrule (5) in turn
or make, and to notify the applicant that he has done so.
(2). The notice of motion shall set out the decision or proceedings sought to be reviewed and shall be
supported by affidavit setting out the grounds and the facts and circumstances upon which applicant
relies to have the decision or proceedings set aside or corrected.
(3). The registrar shall make available to the applicant the record dispatched to him as aforesaid upon
such terms as the registrar thinks appropriate to ensure its safety, and the applicant shall thereupon
cause copies of such portions of the record as may be necessary for the purposes of the review to be
made and shall furnish the registrar with two copies and each of the other parties with one copy thereof,
in each case certified by the applicant as true copies. The costs of transcription, if any, shall be borne by
the applicant and shall be costs in the cause.
(4). The applicant may within ten days after the registrar has made the record available to him, by delivery
of a notice and accompanying affidavit, amend, add to or vary the terms of his notice of motion and
supplement the supporting affidavit.
(5). Should the presiding officer, chairman or officer, as the case may be, or any party affected desire to
oppose the granting of the order prayed in the notice of motion, he shall-
(a) within fifteen days after receipt by him of the notice of motion or any amendment thereof deliver notice
to the applicant that he intends so to oppose and shall in such notice appoint an address within eight
kilometers of the office of the registrar at which he will accept notice and service of all process in such
proceedings; and
(b) within thirty days after the expiry of the time referred to in subrule (4) hereof, deliver any affidavits he
may desire in answer to the allegations made by the applicant.
(6). The applicant shall have the rights and obligations in regard to replying affidavits set out in rule 6.
(7). The provisions of rule 6 as to set down of applications shall mutatis mutandis apply to the set down of
review proceedings.‟
regulates the procedure to be adopted by prospective opponents and the succeeding subrules
import the usual procedure under Rule 6 for the filing of the applicant's reply and for set down.‟
Kriegler AJA emphasised at 662C:
„Our Rule 53 and our practice for the review of decisions by extrajudicial tribunals differs toto
caelo from Order 53 of English practice. Indeed, virtually all they have in common is the
number.‟
[36] Rule 53 exists to facilitate applications for review. Thus the simple equation by
the high court of discovery to a rule 53 disclosure appears inappropriate and unjustified.
In terms of rule 53, the right to require the record of the proceedings of a body whose
decision is taken on review, is primarily intended to operate for the benefit of the
applicant.66 While there is a similarity between trial discovery and review proceedings,
inasmuch as in both a party is compelled to make disclosure for the purposes of
litigation there are fundamental differences between the two. Unlike rule 53, discovery is
only undertaken after the pleadings have closed. The object of mutual discovery is to
give each party before trial, all the documentary material of the other party so that each,
after the contours have already been drawn, can consider its effect on his own case and
his opponent‟s case and decide whether to carry on at all and, if so, how to carry on the
proceeding. Discovered documents do not form part of the record, and are not before
the court unless a party decides at the trial to make use of them. It is therefore quite
possible, even likely, that many of the documents which were discovered will never see
the light of day in court. In those cases, there may possibly be reason to argue that such
privacy interest as originally existed, continues to exist unless and until the documents
are used in the litigation. Review, on the other hand, usually arises from the exercise of
a statutory or public power. When an applicant in review proceedings files its
supplementary affidavit, after having had sight of the record, it is, in effect fully stating its
case for the first time. Here, the City has used the material in question for the purpose
for which it was provided, namely in its SFA. The material is relevant. The high court
found that the information is not confidential or secret in the sense that it requires
sealing or other protection. It saw „no reason why, when the review application gets to
be heard, [the documents] should be kept secret‟. The approach of the high court
66 Saccawu v President Industrial Tribunal 2001 (2) SA 277 (SCA) para 7.
appears to be that the rule protects the right to privacy. The privacy, so it seems, would
come to an end „at the latest‟ when the matter is placed before the court for hearing.
What remains unexplained though is what privacy can possibly exist in material that: (a)
has been used for the purpose for which it was provided; (b) is relevant to the litigation;
(c) is not secret or confidential; and (d) in any event will be disclosed in due course.
[37] Discovery impinges upon the right to privacy of the party required to make
discovery. According to Lord Denning MR,67 „compulsion is an invasion of a private
right to keep one‟s documents private‟. But while there is an interest in protecting
privacy there is also the public interest in discovering the truth. The purpose of the rule
therefore is to protect, insofar as may be consistent with the proper conduct of the
action, the confidentiality of the disclosure. Litigants must accordingly be encouraged to
make full discovery on the assurance that their information will only be used for the
purpose of the litigation and not for any other purpose. In that sense, so the thinking
goes, the interests of the proper administration of justice require that there should be no
disincentive to full and frank discovery.68 Those considerations can hardly apply in
respect of documents disclosed by a public body in rule 53 proceedings. And, as rule 53
will only ever apply to the disclosure of documents by public bodies, I entertain some
doubt as to whether such body can invoke the right to privacy to protect from disclosure
documents relied upon by it to make its decisions. That does not mean that public
bodies never have a claim to keep their documents confidential. But any claim of
confidentiality arises from other interests such as security or perhaps even the privacy
rights of persons mentioned in the documents, but not from its right to privacy. It must
be remembered that SANRAL did not plead any reliance on the right to privacy. It
claimed only a confidentiality right and not a privacy right, and then only in respect of
the material in NOM2. That confidentiality claim was rejected by the high court. The
production of the administrative record is inherently necessary for a court to undertake
the task of determining the regularity of the proceeding sought to be impugned. „Without
the record a court cannot perform its constitutionally entrenched review function‟
(Democratic Alliance v Acting NDPP 2012 (3) SA 486 (SCA) para 37).
67 Riddick v Thames Board Mills Ltd [1997] 3 All ER 677 at 687-688.
68 Replication Technology Group & others v Gallo Africa Ltd 2009 (5) SA 531 (GSJ) at 539D-F.
[38] Section 32(1)(a) of the Constitution affords everyone „the right of access to
information held by the state‟. Section 32(2) requires national legislation to be enacted
to give effect to that right. The Promotion of Access to Information Act 2 of 2000 (PAIA)
is the national legislation in question. It establishes, in accordance with s 32 of the
Constitution, a default position of openness in relation to documents held by the State.
Once a record is obtained under PAIA there are no restrictions on how the information
may be used. PAIA does not prevent persons who have obtained documents from the
State from further distributing them. Those documents are public documents and can be
made publicly available. However, a person, in the position of the City, who may obtain
those self-same documents through review proceedings is, on the approach of the high
court, prohibited from using them and, what is more, would appear to commit an offence
by doing so. In importing the rule into South African law, the high court held that its
breach would lay the person concerned „open to being committed for contempt of court‟.
Without quite appreciating it, the high court appears to have created a new crime or
extended the definition of an existing crime. But, as Schreiner ACJ observed in R v
Sibiya 1955 (4) SA 247 (A) at 256G-H, „it is not for the Courts to create new crimes, nor
is it for the Courts to give an extended definition to a crime‟. And, in Jayiya v MEC for
Welfare, Eastern Cape 2004 (2) SA 611 (SCA), this court held that the definition of
contempt of court may not be extended by a court.
[39] Turning to the subrule: The high court interpreted the subrule restrictively to
permit only persons with a direct legal interest access to a court file. Anyone else who
seeks access must apply to court. This interpretation applies to all court documents and
in all cases (not just documents produced by way of discovery or in terms of rule 53). It
effectively seals court records which, at least before a hearing, would no longer be
treated as public records. It does so without regard to whether their contents are in fact
confidential or should be secret, or whether it in fact serves a public interest that it be
available. The high court‟s approach to the subrule was informed by its view that the
subrule is „an important administrative basis to support the implied undertaking rule‟.
The restriction of public access was so that „the effect of the implied undertaking rule
would not be materially curtailed‟. The high court noted in its judgment that the parties
had approached the matter on the assumption that once the pleadings had been filed at
court they became „generally open to the public‟. But that was in accordance with the
then prevailing practice in the high court.
[40] Rule 62(7) reads: „Any party to a cause, and any person having a personal
interest therein, with leave of the registrar on good cause shown, may at his office,
examine and make copies of all documents in such cause‟. {move next sentence back}
Section 39(2) of the Constitution enjoins courts when interpreting any legislation and
when developing the common law to promote the spirit, purport and objects of the Bill of
Rights. That requires courts when interpreting a statute (or in this instance a rule of
court) to avoid an interpretation that would render the statute unconstitutional and adopt
an interpretation that would better promote the spirit, purport and objects of the Bill of
Rights. The purpose is to find a reasonable interpretation which saves the validity of the
subrule. The subrule must be understood in the context of the whole of rule 62. Rule 62
deals with technical, procedural and oftentimes plain mundane matters. It is concerned
with the preparation, filing and inspection of documents. It specifies the type of ink and
paper that must be used; deals with numbering and indexing; and affords the registrar
the power to refuse to accept documents that do not comply with the rule. It would thus
be somewhat surprising that if the drafters had meant to drastically restrict access to
court documents, they would have done so in terms of the subrule. In the context of the
rule as a whole, the subrule is better read as doing no more than permitting the copying
and examination of court records, which must occur with the registrar‟s leave, at his or
her office, rather than as a substantive prohibition on access.
[41] The high court held that „the expression “personal interest” in the context of rule
62(7) connotes something equivalent to a direct legal interest‟.69 It thus interpreted the
subrule to mean that the registrar may only provide access to: (a) parties; and (b) those
with a direct legal interest in the case. That requires the registrar to make a
determination as to whether or not a party has a direct legal interest in the matter. It is
entirely unclear how the high court envisioned this determination would be made by the
registrar.
69 Paragraph 35.
[42] The subrule uses the phrase „personal interest‟. The qualifier „personal‟ can
equally well be read to mean any person who is personally interested in the matter. The
amici submitted that there are several pointers that this is not only the only plausible -
but also a preferable - interpretation of the subrule. First, the rules of this court,70 the
Constitutional Court,71 the Land Claims Court,72 the Labour Court73 and the Magistrates‟
Court,74 all state that „any person‟ may make copies of all court documents in the
presence of the registrar (or clerk). Only the Uniform rules qualify the phrase „any
person‟ with the words „having a personal interest therein‟. Yet there appears to be no
reason in logic that would suggest that the difference in wording requires a different
approach in practice in the high court. The phrase „any person having a personal
interest therein‟ is clearly capable of referring, as the other rules do, simply to „any
person‟. The ambiguity in the meaning should therefore be resolved by adopting the
meaning that is consistent with the unambiguous intent of every other rule in South
African courts on the issue. Second, this is how the rule has in fact been interpreted in
practice. Prior to the high court judgment, that was the practice in that court. With a few
exceptions, it remains the default practice in most, if not all, the other divisions that any
person may obtain access to court documents. This thus appears the most natural
interpretation of the subrule. Third, such an interpretation, moreover, coheres with how
the phrase is used elsewhere in the rules. The only other place the phrase „personal
interest‟ appears is in rule 57. That rule requires an application for the appointment of a
curator ad litem to be accompanied by an affidavit of a person who knows the patient,
and two medical practitioners. If the person „has any personal interest in the terms of
any order sought‟ the affidavit must disclose the „full details of such relationship or
70 Supreme Court of Appeal Rule 4(3)(a) reads: „Documents filed for Court purposes are public
documents and may be inspected by any person in the presence of the registrar.‟ (My emphasis.)
71 Constitutional Court Rule 4(6) reads, in relevant part: „Copies of a record may be made by any person
in the presence of the Registrar.‟ (My emphasis.)
72 Land Claims Court Rule 4(4) reads: „All documents forming part of the records in a case may be
perused by any person in the presence of the Registrar or any person designated by him or her.‟ (My
emphasis.)
73 Labour Court Rule 28(4) reads: „Any person may make copies of any document filed in a particular
matter, on payment of the fee prescribed from time to time, and in the presence of the registrar, unless a
judge otherwise directs.‟ (My emphasis.)
74 Magistrates‟ Court Rule 3(5) reads: „Copies of the documents referred to in rule 3(4) may be made by
any person in the presence of the registrar or clerk of the court.‟ Rule 3(4) refers to all documents filed
with the court. Magistrates‟ Court Rule 63(6) reads: „Any person, with leave of the registrar or clerk of the
court and on good cause shown, may examine and make copies of all documents in a court file at the
office of the registrar or clerk of the court.‟ (My emphasis.)
interest‟. In addition, the medical practitioners should be people „without personal
interest in the terms of the order sought‟. It is meant to capture those people who have
an intimate or financial relationship with the patient. That appears to demonstrate that
„direct legal interest‟ is not the necessary, let alone the most obvious, meaning of
„personal interest‟ when the phrase is used in the Uniform rules. In my view there is
much to be said for these submissions by the amici. Textually, it appears the most
plausible. It does not seek to give the term personal interest a stretched or unnatural
meaning. It adopts the ordinary meaning that: (a) is consistent with the constitutional
right to open justice; (b) is compatible with the position in all other comparable courts as
expressed in the rules and as given effect to in practice; and (c) fits with the other uses
of personal interest in the Uniform rules. Clearly, there is nothing inherent in the use of
the word interest that requires it to be interpreted to mean direct legal interest.75 Indeed,
it is the interpretation advanced by the amici that best promotes constitutional rights. It
is, therefore, the interpretation that this court should endorse. The high court‟s
interpretation is inconsistent with the Constitution. It severely limits the basic principle of
open justice, and the rights to public hearings, freedom of expression and access to
information for the reasons described earlier. And it relies on a contrived textual
interpretation. It makes the high court an outlier, with far more restrictive rules of access
than any other superior court. It should be rejected for all those reasons.
[43] With a view to limiting the degree of violation, the high court held that: (a) „the
court may permit an inspection of the record at any time if it is appropriate to do so, and
due cause is shown for a departure from the usual consequences of the rules‟; and (b)
the prohibition in each instance operates only until the case is called in open court.
Neither procedure materially ameliorates the restriction, inasmuch as: First, an
applicant, having no access to the court file, may well have great difficulty in making out
a case as to why such access should be granted. Such person is thus expected to show
„good cause‟ without having had sight of the papers, and would have to approach a
court blindfolded, so to speak. It may thus prove well-nigh impossible for any third party
75 It is so that where this court was required to interpret a similar phrase, namely „person with an interest‟
in Minister of Environmental Affairs and Tourism & others v Atlantic Fishing Enterprises (Pty) Ltd & others
2004 (3) SA 176 (SCA) para 14, it was willing to assume, without deciding, that it referred to „a legal
interest‟. Streicher JA stated „I shall assume in favour of the appellants that the word “interest” should be
given the narrow meaning contended for by them.‟
to intervene. In any event one would imagine that such an applicant would need the
papers before the hearing in order to assess whether or not they even wish to intervene.
Second, the public generally may have as legitimate an interest in cases that never get
heard in open court, because they are settled or withdrawn, as in cases that are called
in open court. It is not clear to me how or why the interest of either the litigants or the
public would materially alter simply by virtue of the fact that the matter has been called
in open court. One way or the other the parties have still chosen to engage in court
proceedings. Even if a matter settles, it seems to me, that it should still be subject to the
requirement of openness, more especially where litigation involves public entities. For,
the public will have as real an interest in evaluating the court papers to determine
whether the decision to settle or withdraw was justified. Third, it is not possible for the
media to report accurately on court proceedings if they can only access the documents
once the case is called. It is vital that the public be able to have access to court records
prior to the hearing so that they can follow the proceedings in open court. Without prior
access to the papers, the proceedings will have less meaning for them. Moreover,
having access to papers in advance allows journalists to prioritise reporting on matters
of public interest. Fourth, cases that are settled may also provide vital evidence that
reveals wrongdoing and the public would be entitled to know whether a case was
properly settled, or whether the settlement was influenced by some improper motive.
That can only be determined by access to the papers. Fifth, an application for access to
papers is an additional cost in time and money. In many cases, people who otherwise
have an interest in the matter may be unable to afford an application for access. While
the high court attempts to paint this option as enhancing access, in reality, it may prove
an insuperable barrier to many, particularly litigants with limited funds. This not only
negatively affects access to justice, it may disadvantage courts who will be deprived of
the benefit of the submissions that amici curiae make.
[44] Both the rule and the high court‟s interpretation of the subrule thus impinge on
open justice by preventing the public and media from being able to scrutinise court
proceedings before a matter is heard. But there is a strong default position in our law
against prior restraints on publication.76 Prior restraints „should only be ordered where
76 Midi Television (Pty) Ltd t/a e-tv v Director of Public Prosecutions (Western Cape) 2007 (5) SA 540
there is a substantial risk of grave injustice.‟77 A blanket rule can hardly, without more,
meet that high threshold. If the rule and the subrule apply as found by the high court,
they appear in my view to be almost certainly inconsistent with the Constitution. The
blanket and default prior restraint on publication, as well, could hardly pass
constitutional muster. The high court pointed out that the City did not challenge the
constitutionality of the subrule or bring a counter-application seeking leave to depart
from the incidents of the subrule. But the City could hardly have brought a counter-
application or challenged a law: (a) which was not then in use or relied upon by
SANRAL but employed by the high court in support of a right to privacy, which was not
pleaded; and (b) on the basis of an interpretation which was not advanced by SANRAL
and emerged only in the high court judgment.
[45] In the present case, the demand for accountability arises with particular force
because of what is in issue in the review proceedings. Secrecy is the very antithesis of
accountability. It prevents the public from knowing what decision was made, why it was
made, and whether it was justifiable. As Ngcobo CJ pointed out in M&G Media, „[i]t is
impossible to hold accountable a government that operates in secrecy‟.78 On that score
Justice Brandeis of the US Supreme Court famously remarked that „[s]unlight is said to
be the best of disinfectants‟; electric light the most efficient policeman.‟79 It is a matter of
fundamental importance to the administration of justice that members of the public, who
are directly affected by the controversial issue of tolling, be allowed access to all of the
arguments, the court records and the hearing of the review. The controversy would
deepen if SANRAL were to ultimately succeed in having the review application
dismissed after a partially secret hearing. That would not serve the public interest or the
interests of justice.
[46] Our law and practice already impose limits on the dissemination of material
produced by discovery or in terms of rule 53. They include: (a) the law of defamation;
(b) the actio injuriarum which protects both dignity and privacy, and which prevents the
(SCA) para 15.
77 Print Media South Africa and Another v Minister of Home Affairs and Another Print Media South Africa
and Another v Minister of Home Affairs and Another 2012 (6) SA 443 (CC) para 44-46.
78 President of the Republic of SA v M & G Media Ltd 2012 (2) SA 50 (CC) para 10.
79 L Brandeis „What Publicity Can Do‟ in Harpers Weekly of 20 December 1913 at 10.
publication of private facts‟;80 (c) a court‟s discretion under rule 35(7) to limit inspection
of discovered documents which are confidential (as in Crown Cork); (d) statutes which
restrict publication of private and confidential information;81 and (e) any reasonable
limitation on the use of material which a court may order in a particular case, exercising
its power in terms of s 173, to prevent an abuse of the rules of discovery or rule 53.
There are cases where parties have – as the City did here – voluntarily provided
express confidentiality undertakings, or where the courts have granted orders, tailored
to the circumstances of the case, to protect allegedly confidential information, and
provided mechanisms to resolve disputes. The principle of open justice has its limits of
course and concomitantly a commitment to open justice does not mean that there
should always be unrestricted reporting, nor that there may not be good and genuine
reasons why information should sometimes be restricted. But whether that be so, falls to
be determined on a case by case basis. To be sure, the science is unlikely to be exact
and so the task may not be an easy one. Yet it can be accomplished if the court
identifies and carefully evaluates what is at stake on both sides of the issue. If indeed
the high court was satisfied that a proper case had been made out (it evidently was not)
it could have fashioned appropriate relief to meet the exigencies of the particular case
instead of impermissibly laying down – as it did - blanket rules.
[47] The animating principle therefore has to be that all court records are, by default,
public documents that are open to public scrutiny at all times. While there may be
situations justifying a departure from that default position – the interests of children,
State security or even commercial confidentiality – any departure is an exception and
must be justified. The high court‟s judgment, which is inconsistent with that basic
principle with regard to both the rule and subrule, cannot be endorsed by this court. Its
interpretation of the subrule creates a default rule of secrecy for all court records. In
addition, its application of the rule limits the ability of litigants to ensure publicity when
they challenge the actions of the State. In order meaningfully to exercise the right to
open justice, members of the public (and the media) cannot simply be relegated to the
role of spectator. While the gist of the matter may be apparent to a person attending the
80 NM v Smith (Freedom of Expression Institute as Amicus Curiae) 2007 (5) SA 250 (CC) para 34 and 55.
81 Such as ss 33 to 37 of the International Trade Administration Act 71 of 2002 and ss 44 and 45 of the
Competition Act 89 of 1998.
hearing, it is only through an understanding of the background and issues raised on the
papers that proper comprehension and critical analysis of the proceedings, and
ultimately the court‟s findings, is possible. This is especially so in motion proceedings,
which are based on the affidavits before the court and their annexures, and where oral
evidence is not given in open court. This means that court challenges to government
action will be less open than they currently are. Thus where openness is most sorely
needed – the consideration of government conduct – the high court judgment limits
openness the most. The blanket of secrecy it throws over previously open proceedings
undermines the legitimacy and effectiveness of the courts.
[48] It follows that as the high court was correct in dismissing SANRAL‟s application,
costs, including those of three counsel (which it was accepted was necessary),
obviously should have followed that result. For the rest, the order of the high court
cannot stand and falls to be set aside. In the result:
1.
The appeal is upheld with costs including the costs of three counsel.
2.
The order of the court below is set aside and replaced with the following:
„The application is dismissed with costs including the costs of three counsel.‟
_________________
V M Ponnan
Judge of Appeal
APPEARANCES:
For Appellant:
G Budlender SC (with him N Bawa and
R Paschke)
Instructed by:
Cullinan & Associates, Cape Town
Cordiers, Bloemfontein
For First Respondent:
J G Wasserman SC (with him G J Nel and
I B Currie)
Instructed by:
Fasken Martineau, Sandton
Webbers, Bloemfontein
For Amici Curiae:
W Trengrove SC (with him M Bishop)
Legal Resources Centre, Cape Town
Honey Attorneys, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
30 March 2015
STATUS
Immediate
Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.
City of Cape Town v South African National Roads Authority Limited & others
(20786/14) [2015] ZASCA 58 (30 March 2015)
The Supreme Court of Appeal (SCA) today handed down judgment in a matter relating to access to
court records and whether such records should be open to the public.
The appeal to the SCA by the City of Cape Town (the City) was against the judgment of the Western
Cape Division of the High Court, Cape Town that held, in favour of the South African National Roads
Authority Limited (SANRAL), that the publication of all information from the rule 53 record, including
‘the non-confidential record’ was prohibited until the review application was called.
Proceedings began in the Westen Cape Division of the High Court, when the City launched a review
application in terms of rule 53 of the Uniform rules of court, seeking to review SANRAL’s decision to
award the tender to Protea Parkways Consortium as the preferred bidder and Overberg Consortium
as the reserve bidder in respect of what has been described as the N1/N2 Winelands Paarl Highway
Toll Project. SANRAL furnished the City with the administrative record in terms of Uniform rule
53(1)(b) in two parts, marked respectively as, the ‘non-confidential record’ and ‘the confidential
record’. That created a dispute between the parties as to precisely what constituted the rule 53
record. Having found that SANRAL had failed to make out a case in respect of each of the specified
categories, the Western Cape Division dismissed SANRAL’s application. However, the court a quo
went further to issue an order holding that the record disclosed by SANRAL is subject to the ‘implied
undertaking rule’ (the rule) which meant that unless authorised by SANRAL or by the court, the
administrative record was not to be disseminated or published before the review application.
The SCA found that the rule had not been raised by SANRAL in its affidavit and that the City had thus
not been called upon to answer that case in the court a quo. The SCA also found that the court below
prohibited the publication of all information from the rule 53 record, including the non-confidential
record, whereas SANRAL’s case was that: all such information, apart certain specified portions, could
be made public immediately, while other parts of the information must be kept secret only until
SANRAL filed its answering papers, not until the hearing.
The SCA held that the rule is not part of South African law. The notion of ‘open justice’ and the ‘open
court principle’ which has been part of the South African law since the eighteenth century and other
foreign jurisdictions is now constitutionally entrenched in section 34 of the Constitution.
The SCA further held that courts are open in order to protect those who use the institution and to
secure the legitimacy of the judiciary, not to satisfy the prurient interests of those who wish to
examine the private details of others. Without openness, the judiciary loses the legitimacy and
independence it requires in order to perform its function. Accordingly, held the SCA, court
proceedings should be open unless a court orders otherwise. The logical corollary must therefore be
that departures should be permissible when the dangers of openness outweigh the benefits. And by
extension, the right of open justice must include the right to have access to papers and written
arguments which are an integral part of court proceedings.
The SCA held that the right to freedom of expression lies at the heart of democracy, and is one of a
web of mutually supporting rights that hold up the fabric of the constitutional order. The media hold a
key position in society. They are not only protected by the right to freedom of expression, but are also
the key facilitator and guarantor of that right and thus, the media’s right to freedom of expression is
thus not just for the benefit of the media, but it is for the benefit of the public. The Court held that both
the rule and the court a quo’s interpretation of the rule 53(1)(b) thus impinge on open justice by
preventing the public and media from being able to scrutinise court proceedings before a matter is
heard, whereas there is a strong default position in our law against prior restraints on publication.
The SCA found that demand for accountability arose with particular force because of what was in
issue in the review proceedings in the court below; and that secrecy is the very antithesis of
accountability which prevents the public from knowing what decision was made, why it was made,
and whether it was justifiable.
The SCA accordingly upheld the appeal with costs and the judgment of the Western Cape Division
was set aside and replaced with an order dismissing SANRAL’s application with costs.
--- ends ---
|
4105
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 730/2022
In the matter between:
DINKWANYANE KGALEMA MOHUBA
APPELLANT
and
THE UNIVERSITY OF LIMPOPO
RESPONDENT
Neutral citation:
Mohuba v University of Limpopo (730/2022) [2023] ZASCA 139
(27 October 2023)
Coram:
ZONDI, MOTHLE, WEINER and GOOSEN JJA and UNTERHALTER
AJA
Heard:
28 August 2023
Delivered:
27 October 2023
Summary: Whether the relationship between a university and a student is contractual
or administrative in nature – refusal by a university to confer a degree on a student –
termination of the student’s registration – whether separation order in terms of rule
33(4) of the Uniform Rules of Court should have been granted – question raised in the
special plea should have been allowed to stand over for determination in the trial.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Ledwaba AJ, sitting
as court of first instance):
1 The appeal succeeds.
2 The order of the high court upholding the special plea and dismissing the appellant’s
claim against the respondent is set aside and is substituted with the following order:
‘The issues raised in the special plea are to be determined in the trial.’
3 The matter is remitted to the high court for trial.
4 Each party shall pay its own costs occasioned by both the hearing of the special plea
in the high court and the appeal.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Zondi JA (Mothle and Weiner and Goosen JJA and Unterhalter AJA concurring):
[1] This is an appeal against the judgment and order of the Limpopo Division of the
High Court, Polokwane (the high court) (Ledwaba AJ) upholding the respondent’s
special plea that the contractual relief sought by the appellant was incompetent and
dismissing the appellant’s action with costs. The appeal is before this Court with the
leave of the high court. The issue is whether the high court was correct to uphold the
special plea and dismiss the appellant’s claim.
[2] The appellant is Mr Dinkwanyane Kgalema Mohuba and the respondent is the
University of Limpopo, as defined in terms of s 1 of the Higher Education Act 101 of
1997 (the university). At the time of the dispute, the appellant was employed by the
university as Executive Director for Marketing and Communication. During August
2016, the appellant applied for enrolment, and was accepted by the university, as a
student for the degree of Doctor of Commerce (the degree). In due course, the
appellant submitted his thesis proposal for consideration and approval by the Central
Higher Degrees Committee (Committee). It was approved on 13 June 2017. On 12
February 2018, the Acting Director: School of Economics and Management
recommended the assessment of the thesis. The Committee met on 12 March 2018
to consider the assessment reports and after considering the reports, it recommended
that the degree be awarded to the appellant.
[3] On 14 March 2018, the university received a complaint from a member of the
university Senate (the Senate) in which he expressed concern that the appellant, who
was in full time employment at the university, was recommended for the award of the
degree, after having been registered with the university for less than two years. The
complainant was concerned that the university’s statutory requirements regarding the
conferment of degrees might have been breached in the process. On 3 April 2018, the
university received a similar complaint from a member of the Committee. The gist of
the complaint was that the appellant did not meet the requirements stipulated in
various statutes of the university relating to the completion of a doctorate. The
university caused these complaints to be investigated, after which it refused to confer
the degree on the appellant, and later terminated his registration on 5 October 2018.
[4] Aggrieved by the university’s decisions to refuse to confer the degree upon him
and to terminate his registration as a doctoral student, the appellant, on 24 July 2019,
instituted action against the university in the high court in which he claimed specific
performance of the contract entered into by him and the university. He sought an order
directing the university to confer the degree on him. His claim was founded on contract
and was pleaded in paras 4-7 of the particulars of claim as follows:
‘4. [T]he plaintiff and the defendant entered into a tacit contract of which the material terms
were that the defendant would award the said degree upon the plantiff once the plaintiff had
been registered as a student of the defendant for the period prescribed by the defendant’s
Senate and completed the work and attained the standard of proficiency determined through
assessment as required by the Senate.
5. The plaintiff was duly registered as a student of the defendant for the period prescribed by
the Senate and completed the work and attained the standard of proficiency determined
through assessment as required by the Senate and was in all respects entitled to the
conferment of the said degee during the defendant’s Easter 2018 graduation ceremony.
6. The defendant, in breach of the said contract, refused to confer the degree during the said
ceremony and then repudiated the agreement during October 2018 when the defendant
summarily terminated the plaintiff’s enrolment as student and refused that the plaintiff be re-
registred as such.
7. The plaintiff rejects the defendant’s said breach and repudiation and elects to hold the
defendant to the contract between the parties.’
[5] The basis for the appellant’s claim was that upon acceptance of his application
for enrolment as a doctoral student, a tacit agreement was concluded between him
and the university. The terms of the agreement, the appellant averred, were that he
had to be registered with the university as a student for the period prescribed by the
university Senate, complete the work and attain the standard of proficiency determined
through assessment as required by the Senate. He alleged that he had met all these
conditions. He contended that, upon meeting all these requirements, the university
was obliged to confer the degree upon him during the university’s Easter 2018
graduation ceremony.
[6] The appellant averred that, in breach of the agreement, the university refused
to do so, and during October 2018, it summarily terminated his enrolment as a student
and refused to accept his re-registration application. The appellant alleged, further,
that the university’s conduct constituted a repudiation of the contract. He sought an
order directing the university to confer the relevant degree upon him (the specific
performance remedy).
[7] The university filed a special plea in which it averred that the appellant’s claim
for specific performance of the contract was incompetent. It contended that its decision
to refuse to confer the degree on the appellant and its decision to terminate his
registration as a student constituted administrative action as envisaged in the
Promotion of Administrative Justice Act 3 of 2000 (PAJA). The university therefore
asserted that the appellant should have applied for the review and setting aside of its
decision. This was so, the university argued, because that decision remained valid
until set aside by way of judicial review under PAJA. The allegations underlying this
contention were the following:
‘3.1 The plaintiff applied and was registered for the Doctorate Degree in terms of the
defendant’s rules in 2016.
3.2 Pursuant to an investigation the defendant’s Executive Committee of Senate took a
decision to terminate the plaintiff’s registration for the Doctorate Degree on the 5th of October
2018.
3.3 The decision to terminate the plaintiff’s registration is valid and extant and has not been
set aside.
3.4 The defendant is prohibited from awarding the Doctorate Degree until the decision to
terminate his registration taken on 5 October 2018 has been set aside.
3.5 The defendant’s refusal to award the plaintiff the Doctorate Degree in issue constitutes an
administrative action which remains valid until set aside by a competent authority.
4. It s a preremptory requirement that review proceedings in terms of PAJA must be instituted
in accordance with Rule 53 of the Uniform Rules of Court.
5. The plaintiff did not institute review proceedings in terms of Rule 53 within the prescribed
time period in compliance with section 7(1) of PAJA.
6. In the circumstances, the plaintiff was not enititled to institute the present action for relief
that is subject to and regulated in terms of PAJA.’
[8] The university accordingly sought the dismissal of the appellant’s claim with
costs, alternatively the stay of the action pending the final resolution of review
proceedings.
[9] In the amended plea on the merits the university sought to justify its decision
not to confer a degree on the appellant on the grounds that the appellant had failed to
comply with s 65B of the Higher Education Act 101 of 1997 (the Act) and the university
rules relating to admission and registration requirements for all degrees and
certificates. The university alleged that the appellant:
‘9.2.5.1. did not have sufficient knowledge of the field of study in issue to enrol for doctoral
study as required in terms of paragraph G53.3 of the [university’s] admission rules;
alternatively
9.2.5.2. did not complete a doctoral thesis as required in terms of paragraph G 56.1 of the
[university’s] admission rules; further alternatively
9.2.5.3. did not fulfil the requirements to be awarded [a] doctoral degree in the opinion of the
senate and assessment panel as contemplated in paragraph G60.3 of the [university’s]
admission rules.’
[10] The matter proceeded to trial. Before the hearing, the parties agreed that the
special plea was to be dealt with on a separated basis before any other issues, in
accordance with the provisions of rule 33(4) of the Uniform Rules of Court. It is not
apparent from the judgment whether the high court made a separation order. The high
court made no formal ruling to that effect, but the trial nevertheless proceeded in
accordance with the agreement. The high court eventually upheld the special plea and
dismissed the appellant’s claim with costs.
[11] The high court appears to have accepted that the relationship between the
appellant and the university is contractual in nature and that the remedy of specific
performance was available to the appellant in the event of breach of the contract.
However, it refused to grant the appellant specific performance on the ground that the
appellant was no longer a student after the university had cancelled his registration.
This was so, reasoned the high court, because the Act, in particular s 65B, and the
university rules require a person to be registered as a student at the time the degree
is conferred and these statutory provisions preclude the university from conferring a
degree on a person whose registration as a student has been cancelled. It would be
unlawful, proceeded the high court’s reasoning, for a university to confer the degree
on the appellant in circumstances where he was no longer registered as a student with
the university.
[12] The appellant challenges the findings and conclusions of the high court. It is
submitted on his behalf that the termination of the appellant’s registration as a student
is not, for purposes of his claim, an administrative act. It is simply a form of repudiation
of the contract. The appellant accordingly argues that the high court erred in refusing
to grant him specific performance on the ground that it would have been unlawful for
the university to confer a degree on student who is no longer registered with the
university.
[13] The conditions under which the university confers degrees are regulated by the
Act, its Institutional Statutes and General Rules. The relevant provision of the Act is s
65B(2) which provides as follows:
‘Save as provided in section 65C, no diploma or certificate may be awarded and no degree
may be conferred by public higher education institution upon any person who has not–
(a)
been registered as a student of such public higher education institution for the period
prescribed by the Senate of such institution; and
(b)
completed the work and attained the standard of proficiency determined through
assessment as required by the senate of the public higher education institution, subject to
section 7.’
[14] In terms of rule G53 of the General Rules of the university, a doctorate may
only be awarded on the basis of a completed thesis. In terms of rule G60, a doctorate
may only be awarded after the candidate has been registered for the degree at the
university for at least two academic years before presenting his or her thesis. In terms
of the Higher Education Qualifications Sub-Framework (HEQSF), the duration for a
PhD is a minimum of two years of full-time study.
[15] It is difficult to follow the reasoning of the high court for refusing to grant specific
performance and for upholding the special plea. The high court conceived the
relationship between the university and the appellant as one of contract but it upheld
the special plea in which the university had contended that the relationship between it
and the appellant was entirely one of public law. That reasoning cannot be supported
because if the relationship between the university and the appellant is to be
understood as one of contract, the special plea should have been dismissed in which
event the high court should have proceeded to consider whether the appellant was
entitled to specific performance. As a party who was seeking specific performance,
the onus was on the appellant to allege and prove the terms of the contract and
compliance with any antecedent or reciprocal obligation. He had also to allege non-
performance by the university which amounted to a repudiation, alternatively breach
of the contract. If the appellant could not prove the contract on which he relied as well
as compliance with its terms, his claim for specific performance had to fail. If on the
other hand, the court was satisfied that the appellant had established the terms of the
contract, that he had complied with any antecedent obligation, including statutory
requirements, and that the university had repudiated the contract, it had to grant
specific performance unless there existed factors which justified the refusal of the
remedy.1
1 Haynes v King Williamstown Municipality 1951 (2) SA 371 (A) at 378F-379B; SWJ Van der Merwe
Contract-General Principles 4 ed (2011) at 331.
[16] During the hearing before this Court, a considerable amount of time was spent
debating the nature of the relationship between a student and the university, whether
it is contractual or properly framed as a matter of public law. In the view that I take of
the matter, it is unnecessary to resolve that debate. In any event, the high court found
that the relationship between a student and the university is contractual and it
approached the case on that basis.
[17] The order of the high court upholding the special plea and dismissing the
appellant’s claim cannot stand. I do not think that the procedure of the special plea is
appropriate to resolve the questions raised by the university in the special plea. Given
the course that the matter has followed, the high court would have been justified in
declining to decide the matter on the special plea. It should have allowed the question
raised by the special plea to stand over for decision by the trial court, as it appears
that the question is interwoven with the evidence that will be led at the trial.
[18 ] The relationship between a student and the university is not straightforward
(Sibanyoni v University of Fort Hare2; Mkhize v Rector, University of Zululand and
Another3). It cannot be characterised as one that is is either entirely of a private law or
public law nature (Lunt v University of Cape Town and Others4). There appears on the
face of it, to be elements of both. What this means for the appellant’s cause of action
is a matter best left trial, when all the evidence has been led. On the pleadings at this
stage, whether a decision taken on the basis of the university’s statutes amounts to
administrative action that must be set aside, is an issue that needs to be considered
in the light of all the facts proven at trial (South African National Parks v MTO Forestry
(Pty) Ltd and Another5). Hence the high court should not have decided the special plea
but rather left the issue for trial.
[19 ] This case is not a proper case in which a separation order should have been
granted. The high court should have exercised its discretion against the grant of the
2 Sibanyoni v University of Fort Hare 1985 (1) SA 19 (CkS) at 301.
3 Mkhize v Rector, University of Zululand and Another 1986 (1) SA 901 (D) at 904.
4 Lunt v University of Cape Town and Others 1989 (2) SA 438 (C).
5 South African National Parks v MTO Forestry (Pty) Ltd and Another [2018] ZASCA 59; 2018 (5) SA
177 (SCA).
separation order, as the issues to be decided are inextricably linked.6 The separation
order in this case does not facilitate the convenient and expeditious disposal of the
litigation. It follows that the matter must be remitted to the high court. The parties would
then be free to take such steps, as advised, with regard to the further conduct of the
proceedings.
[20] As regards costs both parties accepted that the agreement to proceed with the
matter on a separated basis was ill-considered in view of the fact that the issues to be
decided at the trial are inextricably linked. They agreed therefore that each party
should pay its own costs occasioned by both the hearing of the special plea in the high
court and the appeal.
[21] In the result the following order issues:
1 The appeal succeeds.
2 The order of the high court upholding the special plea and dismissing the appellant’s
claim against the respondent is set aside and is substituted with the following order:
‘The issues raised in the special plea are to be determined in the trial.’
3 The matter is remitted to the high court for trial.
4 Each party shall pay its own costs occasioned by both the hearing of the special
plea in the high court and the appeal.
_________________
D H ZONDI
JUDGE OF APPEAL
6 Denel (Pty) Ltd v Vorster [2004] ZASCA 4; 2004 (4) SA 481 (SCA) para 3.
APPEARANCES
For Appellant:
PF LOUW SC
Instructed by:
DS Sello Attorneys, Polokwane
Webbers Attorneys, Bloemfontein
For first Respondent:
V NOTSHE SC
Instructed by:
Motalane Inc, Pretoria
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:
27 October 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Mohuba v University of Limpopo (730/2022) [2023] ZASCA 139
Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Limpopo Division of the High
Court, Polokwane (high court), and replaced the order of the high court with one remitting the matter to
the high court for trial.
The appellant was an employee of the University of Limpopo (university) who applied, and was
approved, for enrolment for a doctoral degree. The appellant was recommended for the award of his
degree, but concerns were raised that certain statutory requirements relating to the duration of his study
were not complied with. After an investigation by an independent panel constituted by the university,
the decision was taken not to award the degree. In addition, his registration as a doctoral student was
terminated. Aggrieved by the university’s decisions, the appellant instituted action against the university,
claiming specific performance of the contract entered into by him and the university, for an order
directing the university to confer the degree on him. He claimed that, upon acceptance of his application,
a tacit contractual agreement was concluded that the degree would be conferred upon him after
complying with the stipulated requirements. He held that all the requirements were complied with and
the university was in breach. In turn, the university held that the appellant’s claim for specific
performance of the contract was incompetent. It contended that its decisions constituted administrative
action and that the appellant should have applied for review to set the decision aside. Additionally, the
university sought to justify the non-conferral of the degree on section 65B of the Higher Education Act
101 of 1997 and the university’s rules relating to admission and registration.
The high court accepted that there was a contractual relationship between the university and the
appellant and that the remedy of specific performance could be available if breach or repudiation of the
contract by the university was established. However, it refused to grant the specific performance on the
ground that the appellant was no longer a student after the university had cancelled his registration,
because the Act, in particular s 65B, and the university rules required that a person ought to have been
registered as a student at the time the degree was conferred and that the statutory provisions precluded
the university from conferring a degree when registration had been cancelled.
Before this Court, the appellant submitted that the termination of his registration should not have been
considered an administrative action, rather a form of repudiation of the contract. He argued that the
high court erred when it refused to grant an order of specific performance on the grounds that it would
have been unlawful to award the degree when he was no longer enrolled as a student. The high court
considered the relationship between the university and the appellant as one of contract but it upheld
the special plea in which the university had contended that the relationship between it and the appellant
was entirely one of public law. The SCA found that such reasoning could not be supported because if
the relationship between the university and the appellant was to be understood as one of contract, the
special plea should have been dismissed in which event the high court should have proceeded to
consider whether the appellant was entitled to specific performance. This Court maintained that, as a
party who was seeking specific performance, the onus was on the appellant to allege and prove the
terms of the contract and compliance with any antecedent or reciprocal obligation. If the appellant could
not prove the contract or compliance with its terms, his claim for specific performance had to fail. If on
the other hand, the court was satisfied that the appellant had established the terms of the contract, that
he had complied with any antecedent obligation, including statutory requirements, and that the
university had repudiated the contract, it had to grant specific performance unless there existed factors
which justified the refusal of the remedy.
This Court found that the order of the high court upholding the special plea and dismissing the
appellant’s claim could not stand. It held that the procedure of the special plea was not an appropriate
procedure to resolve the questions raised by the university; the high court should have allowed the
question raised by the special plea to stand over for decision by the high court, as it appears that the
question is interwoven with the evidence that will be led. The SCA emphasised that the relationship
between a student and the university is not straightforward. It cannot be characterised as one that is to
be understood as one that is either entirely of private or public law nature. In this matter, it meant that
the appellant’s case should have been left for determination at the trial after all evidence has been led.
This Court found that an award of a separation order was inappropriate and the matter ought to have
been remitted to the high court.
In the result, the appeal was upheld and the order of the high court replaced with one remitting the
matter to the high court for trial.
~~~~ends~~~~
|
3588
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 142/2020
In the matter between:
DEEPS BETTING GROUNDS (PTY) LTD
APPELLANT
and
DESERT PALACE HOTEL RESORT (PTY) LTD
FIRST
RESPONDENT
THE NORTHERN CAPE GAMBLING BOARD
SECOND
RESPONDENT
Neutral citation: Deeps Betting Grounds (Pty) Ltd v Desert Palace Hotel
Resort (Pty) Ltd and Another (142/2020) [2021] ZASCA 86 (21 June 2021)
Coram:
PETSE AP and MOCUMIE and DLODLO JJA and LEDWABA
and CARELSE AJJA
Heard:
9 March 2021
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 10h00 on 21 June 2021.
Summary: Civil procedure – Superior Courts Act 10 of 2013 – petition to appeal
to the Supreme Court of Appeal not filed – leave to appeal dismissed – Conduct
in contravention of sections 78, 79 and 80 of Northern Cape Gambling Act No 3
of 2008 –no valid gambling licence issued to conduct bookmaker’s activities on
premises.
ORDER
On appeal from: Northern Cape Division of the High Court, Kimberly
(Sieberhagen AJ sitting as court of first instance):
The application for leave to appeal against the order of Dauds AJ dated
13 December 2019 is dismissed with costs.
The appeal against the order granted by Sieberhagen AJ is likewise
dismissed with costs.
JUDGMENT
Ledwaba AJA (Petse AP, Mocumie and Dlodlo JJA and Carelse AJA
concurring):
Introduction
[1] This appeal concerns the order of Sieberhagen AJ, sitting in the Northern
Cape Division of the High Court, Kimberley (the high court), granted in favour
of the first respondent, Desert Palace Hotel Resort (Pty) Ltd (Desert Palace) in
the main application in terms of which the appellant, Deeps Betting Grounds (Pty)
Ltd (Deeps Betting), was interdicted from operating any gambling activities on
Erf 7195, Upington, known as 23 Scott Street, Upington (the premises) unless a
valid gambling licence authorising gambling activities at the premises is issued
by the second respondent, The Northern Cape Gambling Board (Gambling
Board). Deeps Betting applied for leave to appeal against this order which the
high court granted to this Court on 31 January 2020.
[2] Deeps Betting opposed the main application and filed a conditional
counter-application in which it sought to hold the Gambling Board’s Chief
Executive Officer liable for contempt of court and also an order compelling the
Gambling Board to issue Deeps Betting with a gambling licence for the premises,
in the event the main application succeeded. Desert Palace and the Gambling
Board opposed the relief sought by Deeps Betting in the counter-application.
[3] After the main application was heard on 30 August 2019, the high court
made the following order:
‘1.
The first respondent is interdicted from maintaining or operating the premises situated
at Erf 7195, Upington, known as 23 Scott Street, Upington (“23 Scott Street”) for the purpose
of any gambling activity in or on 23 Scott Street is granted to it by the Second Respondent.
2.
The first respondent is interdicted from permitting the said 23 Scott Street premises to
be used for the purposes of any gambling activity other than an informal bet, including but not
limited to bookmaking, unless a valid gambling licence that authorises that gambling activity
in or on 23 Scott Street is granted to them by the second respondent.
3.
The first respondent is interdicted from permitting any individual in or on the said 23
Scott Street premises to engage in any gambling activity other than an informal bet, including
but not limited to bookmaking, unless a valid gambling licence that authorises that gambling
activity in or on 23 Scott Street is granted to them by the second respondent.
4.
The first respondent is to pay the costs of the application.
5.
The parties are directed to approach the registrar to obtain a date for adjudication of the
first respondent’s counterclaim under case number 1698/2019.’
[4] The counter-application was heard by Dauds AJ on 1 November 2019. He
subsequently dismissed it and refused to grant Deeps Betting leave to appeal
against the dismissal of its counter-application. Deeps Betting’s counsel in his
heads of argument relating to the appeal sought leave of this Court to hear the
appeal in respect of the main application together with the 'appeal' against the
order of Dauds AJ in the counter-application. I have put the word 'appeal' in
inverted commas for reasons that will become apparent later.
Background facts
[5] The following factual background is common cause and important for the
proper understanding of this appeal. In 2017 Deeps Betting filed three
applications against the Gambling Board relating to a gambling licence issued to
Deeps Betting in respect of Erf 4965 in Upington. There was also a dispute
regarding whether due process was followed when the licence was issued.
[6] In the said applications Deeps Betting sought an order to amend the erf
number on the licence to read Erf 7195, Upington, 23 Scott Street. It is not
necessary for the adjudications of this appeal to deal in detail with the said
applications. In the urgent application filed on 15 December 2017, Deeps Betting
sought a declaratory order that the Gambling Board should grant a licence to it to
conduct bookmaker’s activities on the premises.
[7] On 9 March 2018 Stanton AJ dismissed the urgent application and later
granted Deeps Betting leave to appeal to this Court. On 9 March 2019, shortly
before the appeal against the order of Stanton AJ was heard, Deeps Betting and
the Gambling Board reached a settlement and their Deed of Settlement, signed
on 27 February 2019, was made an order of court on 4 March 2019 by this Court.1
[8] In the Deed of Settlement the parties, inter alia, agreed that:
‘2.1
[W]ithin 30 (thirty) days after the signing of this Agreement, the Gambling Board shall
grant to Deeps Betting permission to conduct its bookmaker’s activities at the property known
as Erf 7195, also known as 23 Scott Street, Upington, situated in the //Khara Hais Municipality,
Division Gordonia, Northern Cape Province.
2.2
In lieu Deeps Betting will immediately – upon the signature of this document –
withdraw its appeal and inform the Registrar of the Supreme Court of Appeal without delay of
the Settlement.’
1 See: Deeps Betting Grounds (Pty) Ltd v The Northern Cape Gambling Board Case no: 492/18 (SCA).
It is clear that in terms of the Deed of Settlement the Gambling Board was
required to grant Deeps Betting permission to conduct bookmaker’s activities at
the premises before the end of March 2019.
[9] In February 2018, before the judgment in Deeps Betting's urgent
application was delivered, Desert Palace became aware that the premises was to
be rezoned and utilised for gambling activities. Consequently, on 23 February
2018, it wrote to the Dawid Kruiper Municipality (the municipality) to object to
the proposed rezoning. On 28 February 2018, the municipality responded taking
note of Desert Palace’s objection and informed the latter that the rezoning
application had been granted. In July 2019 Desert Palace was informed that the
renovations on the premises were at an advanced stage and shop fittings were
installed at the premises. Desert Palace made enquiries and addressed a letter to
Deeps Betting and the Gambling Board, but did not receive a satisfactory
response. It then filed an urgent application, the main application, in the high
court against Deeps Betting and the Gambling Board was cited as the second
respondent. Deeps Betting opposed the main application and, as already
mentioned, filed a conditional counter-application.
[10] The Gambling Board filed a notice to abide the decision in the main
application, but opposed the relief sought by Deeps Betting in the counter-
application. In the counter-application before Dauds AJ, Deeps Betting sought an
order in the following terms:
‘The 2nd Respondent (Northern Cape Gambling Board) be ordered to immediately comply with
the order of the Supreme Court of Appeal dated 04 March 2019 and paragraph 2.1 thereof [the
SCA order] and grant to the Applicant [the 1st Respondent herein, namely, Deeps Betting
Grounds (Pty) Ltd] any licence needed to conduct its bookmaker’s activities at the property
known as Erf 7195, also known as 23 Scott Street, Upington, situated in the //Khara Hais
Municipality, division Gordonia, Northern Cape Province.’
The counter-application was dismissed with costs and the application for leave to
appeal suffered a similar fate.
Application for leave to appeal
[11] Since Deeps Betting’s counsel in his heads of argument applied that this
Court should also hear the 'appeal' in respect of the order of Dauds AJ in the
counter-application, this Court dealt first with Deeps Betting’s application for
leave to appeal against the order of Dauds AJ in respect of the dismissal of its
counter-application. Counsel invoked Safatsa2 to argue that the appellant has a
right to ask this Court to allow him to bring such an application at this very late
stage.3 The application was strongly opposed by Desert Palace and the Gambling
Board. The Gambling Board in its heads of argument submitted that this Court
did not have jurisdiction to hear the 'appeal' against the judgment of Dauds AJ
and that Deeps Betting should have, within one month of the refusal of its
application for leave to appeal, first sought leave in terms of s 17(2)(b)the
Superior Courts Act4 to appeal against the judgment of Dauds AJ which it
admittedly failed to do.
[12] Deeps Betting’s application based on Safatsa is devoid of merit. It is
generally accepted that an appeal should be restricted to specified grounds of
appeal. In Safatsa this Court dealt with a ground not covered by the terms of the
leave granted by the trial court and emphasised that the appellant had no right to
argue the appeal on grounds not covered in the notice of appeal. Nevertheless, the
court accepted that an appellant may apply to an appellate court to enlarge the
ambit of the appeal. Importantly, the court further clarified that this special
dispensation does not, for example, cover a situation where leave has been
granted to appeal against sentence only and the appellant then seeks to appeal
against the conviction as well.
2 S v Safatsa and Others 1998 (1) SA 868 (A).
3 The application was moved from the Bar and unsurprisingly counsel was hard-pressed to enlighten us as to why
this woefully belated application was not timeously brought in the ordinary way.
4 Superior Courts Act 10 of 2013.
[13] In Harlech-Jones Treasure Architects CC v University of Fort Hare5, a
case where a similar argument to that raised by Deeps Betting was advanced, the
court said:
‘It is, however, important to note the following:
(1) In terms of s 29(4)(b), where the Court of a Provincial or Local Division has refused leave
to appeal against its judgment or order, it is the Supreme Court of Appeal that must be
approached for such leave (ie in terms of s 21(2) and (3), by way of application in the form of
a petition addressed to the Chief Justice, to be considered by Judges designated by the Chief
Justice). There is no provision in the Act for a Full Court of a Provincial Division to grant leave
to appeal (save, impliedly, where it sits as a Court of first instance).
(2) In excluding the grounds of appeal referred to in paras [41] and [43] above, Jones J to that
extent refused leave to appeal.’ (Emphasis added.)6
[14] The matter before us is distinguishable from what obtained in Safatsa,
where additional grounds of appeal were entertained. In this case, Desert Palace
does not seek to augment its grounds of appeal against the judgment of
Sieberhagen AJ. What it seeks to do is to piggyback on this appeal in an attempt
to bring its application for leave to appeal against the order of Dauds AJ in
circumstances where not even the slightest attempt has been made to explain the
inordinate delay in doing so.
[15] Desert Palace applies to this Court to hear the appeal against the judgment
of another Judge where leave to appeal was refused. In terms of the Superior
Court Act, Deeps Betting should first have petitioned this Court. Deeps Betting
not only failed to do so but also failed to proffer a satisfactory explanation
supported by cogent reasons as to why the petition was not filed. Instead, it was
content to raise the issue for the first time in its heads of argument. As a result,
the belated application for leave to appeal, if it is such, should fail.
5 Harlech-Jones Treasure Architects CC v University of Fort Hare 2002 (5) SA 32 (E).
6 Para 51.
Appeal on merits of the main application
[16] Deeps Betting’s main argument for challenging the order of Sieberhagen
AJ, is that in terms of this Court's judgment (referred to in paragraph 7 above) in
terms of which the settlement agreement was made an order of court, it has extant
rights and its conduct in opening its gambling business at the premises was not
unlawful.
[17] Despite the fact that the Deed of Settlement had indeed been made an order
of court, the Gambling Board did not actually issue Deeps Betting with a licence
in compliance with that order. The Deed of Settlement explicitly states that within
30 (thirty) days after signature, the Gambling Board shall grant Deeps Betting
permission to conduct its bookmaker’s activities at the premises. It is common
cause between the parties that Deeps Betting has to date not been issued with the
requisite licence by the Gambling Board. On the contrary, the Gambling Board
stated in its papers that it will not issue Deeps Betting with the requisite licence
for the premises apparently on the ground that doing so would contravene the
law.
[18] It is interesting that Deeps Betting has not filed an application for contempt
of court against the Gambling Board in respect of its failure to grant it permission
or to issue it with the licence. Sections 78, 79 and 80 of the Northern Cape
Gambling Act7 (the Act) state that it is unlawful to engage in gambling activities,
possess gambling machine devices and to operate on any premises for purposes
of gambling activities without a licence.
[19] The premises is situated within 500 metres of Upington High School.
Regulation 7(c) of the Northern Cape Gambling Regulations8 (the Regulations)
reads as follows:
7 Northern Cape Gambling Act No 3 of 2008.
8 ‘Northern Cape Gambling Regulations GN 5, Provincial GN 1290, 18 March 2009.’
‘7. Location of gambling and betting premises.-
The Board may not issue a licence to an applicant if the
premises from which the licensed activities will take place, are, in the opinion of the Board –
. .
(c) on or in premises which are within 500 m of a school or a place of worship.’
On a simple reading of this regulation, the location of the premises offends against
reg 7(c) of the Regulations.
[20] The order of Sieberhagen AJ interdicts Deeps Betting from conducting
gambling activities unless a valid gambling licence has been issued, authorising
gambling activities on the premises. Such a licence has not been issued. In terms
of the clear provision of ss 78, 79 and 80 of the Act read with reg 7(c) of the
Regulations, Deeps Betting would be acting unlawfully if it conducts business at
the premises without a licence. Thus its reliance on this Court's order referred to
in paragraph 17 above is misplaced. The order itself contemplates that Deeps
Betting should be issued with a licence by the relevant Gambling Board before it
can lawfully engage in gambling activities.
[21] I therefore make the following order:
The application for leave to appeal against the order of Dauds AJ dated 13
December 2019 is dismissed with costs.
The appeal against the order granted by Sieberhagen AJ is likewise
dismissed with costs.
_____________________
A P LEDWABA
ACTING JUDGE OF APPEAL
APPEARANCES
For the Appellant:
S Grobler SC
Instructed by:
Van de Wall Inc, Kimberley
Honey Attorneys, Bloemfontein
For the First Respondent:
E Grobbelaar
Instructed by:
Morkel De Villiers, c/o Engelsman
Magabane, Kimberley
Symington
&
De
Kok,
Bloemfontein
For the Second Respondent:
G Ngcangisa
Instructed by:
The State Attorney, Kimberley
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:
21 June 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not form part of
the judgments of the Supreme Court of Appeal
Deeps Betting Grounds (Pty) Ltd v Desert Palace Hotel Resort (Pty) Ltd and Another
(142/2020) [2021] ZASCA 86 (21 June 2021)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the application to hear
the appeal in respect of the order of Dauds AJ and the appeal against the order of Sieberhagen AJ from
the Northern Cape Division of the High Court, Kimberly (high court).
In 2017, the appellant (Deeps Betting) filed three applications against the Gambling Board relating to a
gambling licence issued to Deeps Betting in respect of Erf 4965 in Upington where Deeps Betting
sought an order to amend the erf number on the licence to read Erf 7195, Upington, 23 Scott Street
(the premises). In one of the applications, Deeps Betting and the Gambling Board subsequently reached
an settlement which was made an order of court by this Court in terms of which the Gambling Board
was to grant Deeps Betting permission to conduct bookmaker’s activities at the premises before the
end of March 2019. The gambling licence was not issued.
Later the respondent, (Desert Palace) learnt that the premises was to be rezoned for gambling activities
and filed an application in the high court, which is the subject of this appeal, to interdict Deeps Betting
from operating any gambling activities on the premises, unless a valid gambling licence had been
issued. Deeps Betting filed a conditional counter-application to the main application, seeking to hold the
Gambling Board’s CEO liable for contempt of court and seeking an order to compel the Gambling Board
to issue Deeps Betting with a gambling licence for the premises, in the event the main application
succeeded. The high court through Sieberhagen AJ found in favour of Desert Place in the main
application and Dauds AJ dismissed the counter-application and refused leave to appeal.
The SCA when it dismissed the application for leave to appeal against the order of Dauds AJ stated
that it is generally accepted that an appeal should be restricted to specified grounds of appeal and in
terms of the Superior Court Act 10 of 2013. The SCA further said Deeps Betting should have first
petitioned the SCA and it failed to furnish the Court with cogent reasons as to why the petition was not
filed. On the merits of the appeal the Court held that in terms of sections 78, 79 and 80 of the Northern
Cape Gambling Act 3 of 2008 and regulation 7(c) of the Regulations, Deeps Betting would be acting
unlawfully if it conducted business at the premises without a licence.
~~~~ends~~~~
|
3552
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1112/2019
In the matter between:
MERIFON (PTY) LTD
APPELLANT
and
GREATER LETABA MUNICIPALITY
FIRST RESPONDENT
HOUSING DEVELOPMENT AGENCY SECOND RESPONDENT
Neutral citation: Merifon (Pty) Ltd v Greater Letaba Municipality and
Another (1112/2019) [2021] ZASCA 50 (22 April 2021)
Coram:
PETSE AP, MAKGOKA and SCHIPPERS JJA and GORVEN
and POYO-DLWATI AJJA
Heard:
23 February 2021
Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives by email, publication on the Supreme Court
of Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 09h45 on 22 April 2021.
Summary: Agreement for purchase and sale of immovable property –
validity – section 19 of the Local Government: Municipal Finance
Management Act 56 of 2003 – municipality concluding agreement without
compliance with peremptory provisions of s 19 – claim for specific
performance by seller – seller not entitled to order of specific performance –
no court competent to compel a party to commit an illegality.
ORDER
On appeal from: Limpopo Division of the High Court, Polokwane (Ledwaba
AJ sitting as court of first instance):
The appeal is dismissed with costs, including the costs attendant upon the
employment of two counsel.
JUDGMENT
Petse AP (Makgoka and Schippers JJA and Gorven and Poyo-Dlwati
AJJA concurring):
[1] The doctrine of legality and the rule of law lie at the heart of the
Constitution.1 There are numerous reported decisions of our courts that have
unequivocally affirmed the fundamental truism that the exercise of public
power derives from the law. Accordingly, no organ of state or public official
may act contrary to or beyond the scope of their powers as laid down in the
law.2 This is one of the foundational values of our constitutional democracy.
[2] In Nyathi v Member of the Executive Council for the Department of
Health Gauteng and Another [2008] ZACC 8; 2008 (5) SA 94 (CC); 2008 (9)
BCLR 865 (CC) Madala J aptly put it thus:
'Certain values in the Constitution have been designated as foundational to our democracy.
This in turn means that as pillar-stones of this democracy, they must be observed
scrupulously. If these values are not observed and their precepts not carried out
conscientiously, we have a recipe for a constitutional crisis of great magnitude. In a state
predicated on a desire to maintain the rule of law, it is imperative that one and all should
be driven by a moral obligation to ensure the continued survival of our democracy.'3
1 Section 1(c) of the Constitution of the Republic of South Africa Act 108 of 1996.
2 Affordable Medicines Trust and Others v Minister of Health and Another [2005] ZACC 3; 2006 (3) SA 247
(CC); 2005 (6) BCLR 529 (CC) para 49 and paras 75 to 77; Albutt v Centre for the Study of Violence and
Reconciliation and Others [2010] ZACC 4; 2010 (3) SA 293 (CC); 2010 (2) SACR 101 (CC); 2010 (5)
BCLR 391 (CC) paras 49-50; Electronic Media Network Limited and Others v e.tv (Pty) Limited and Others
[2017] ZACC 17; 2017 (9) BCLR 1108 (CC) paras 25, 110-112; Minister of Constitutional Development and
Another v South African Restructuring and Insolvency Practitioners Association and Others [2018] ZACC
20; 2018 (5) SA 349 (CC); 2018 (9) BCLR 1099 (CC) paras 27-29.
3 Paragraph 80.
[3] Almost ten years previously, in Fedsure Life Assurance Ltd and Others
v Greater Johannesburg Transitional Metropolitan Council and Others 1999
(1) SA 374 (CC);1998 (12) BCLR 1458 (CC), the Constitutional Court was
even more emphatic in underscoring the principle of legality. The Court said
the following:
'[A] local government may only act within the powers lawfully conferred upon it. There is
nothing startling in this proposition - it is a fundamental principle of the rule of law,
recognised widely, that the exercise of public power is only legitimate where lawful. The
rule of law - to the extent at least that it expresses this principle of legality - is generally
understood to be a fundamental principle of constitutional law.'4
[4] The central question which arises for determination in this appeal is
whether it would be appropriate, in the context of the facts of this case, for
this Court to grant an order of specific performance in favour of the appellant,
Merifon (Pty) Ltd (Merifon), together with consequential relief sought by
Merifon in this litigation. This question pertinently arises because of the
provisions of s 19 of the Local Government: Municipal Finance Management
Act 56 of 2003 (the MFMA). The section, which is headed 'Capital projects',
reads as follows:
'(1)
A municipality may spend money on a capital project only if–
(a)
the money for the project, excluding the cost of feasibility studies conducted by or
on behalf of the municipality, has been appropriated in the capital budget referred to in
section 17(2);
(b)
the project, including the total cost, has been approved by the council;
(c)
section 33 has been complied with, to the extent that that section may be applicable
to the project; and
4 Paragraph 56 (Citations omitted).
(d)
the sources of funding have been considered, are available and have not been
committed for other purposes.
(2)
Before approving a capital project in terms of subsection (1)(b), the council of a
municipality must consider–
(a)
the projected cost covering all financial years until the project is operational; and
(b)
the future operational costs and revenue on the project, including municipal tax and
tariff implications.
(3)
A municipal council may in terms of subsection (1)(b) approve capital projects
below a prescribed value either individually or as part of a consolidated capital
programme.'
[5] The factual background to this appeal may be summarised as follows.
For a considerable length of time, the Greater Letaba Municipality (the
municipality) had been in dire need of land for human settlement within its
area of jurisdiction. Yet it did not have the money to acquire land for this
purpose. As a result, it lost out, over several years, on the Limpopo
Government's provincial allocation of funds to municipalities in the province
to build low-cost houses for the less privileged citizens residing within its
municipal area because it did not have land.
[6] In order to extricate itself from this predicament the Executive Mayor
at the time, on 4 April 2011, wrote a letter to the Provincial Member of the
Executive Council (MEC) of the Department of Local Government and
Housing (the department) in which he proposed that the department purchase
three farms – identified in the letter – for the municipality. The department
expressed its willingness to assist. To this end, it engaged the Housing
Development Agency5 (the HDA) for assistance. The intervention of the HDA
5 The Housing Development Agency is an organ of state with juristic personality established in terms of s 3
of the Housing Development Agency Act, 23 of 2008 whose establishment is principally for the purposes of,
yielded positive results. Land was identified and negotiations with a
representative of the prospective seller for the purchase of a farm known as
Portion 5, 6, and the Remaining Extent of the Farm Mooiplaats 434 LT in the
Limpopo Province (the property), commenced. The negotiations bore fruit. In
the result, on 6 March 2013, the Head of the department addressed a letter to
the municipality in these terms:
'We refer to the above mentioned transaction and hereby [confirm] that the Department in
the current financial year ending 31 March 2013 has budgeted the required R52 Million
excluding VAT required to acquire the above mentioned property required for human
settlements development. The funds will be paid into the trust account of the transferring
Attorneys after the Deed of Sale between the Municipality and the Seller has been
concluded. The Department will furthermore pay the applicable transfer and registration
costs amounting to R209 892.90.'
[7] The letter from the Head of the department was placed before the
municipal council for adoption at its special meeting held on 22 March 2013.
Amongst the various resolutions adopted at this meeting was one under the
caption:
'COUNCIL RESOLUTION A. 1038/ 22/03/2013 / ACQUISITION OF REMAINING
EXTENT AND PORTION 5 AND 6 OF THE FARM MOOIPLAATS 434-LT'
And the resolution adopted by the council in relation thereto reads:
'1.
That the commitment letter from Department of Cooperative Governance, Human
Settlements and Traditional Affairs to purchase portion 5 and 6 of the farm Mooiplaats
434-LT is approved.'
[8] Pursuant to the adoption of the resolution described in the preceding
paragraph, Merifon concluded a written agreement of sale in respect of the
inter alia, facilitating the acquisition of land and landed property in order to compliment the capacity of
Government across all spheres and providing housing development services for the purpose of creating
sustainable human settlements.
property. It turned out, however, that before committing itself to pay the
purchase price for the property and transfer costs on behalf of the
municipality, the department had, on 18 October 2012, applied to the
Provincial Treasury seeking authorisation to disburse the amounts mentioned
in its letter of 6 March 2013. But, on 27 March 2013, the Provincial Treasury
declined the department's request on the grounds that, inter alia, the purchase
price was excessive. This had the effect of scuppering the transaction because
it meant that the department could no longer pay over the funds that it had
committed for the purchase price. And with the financial year-end being only
four days away, this meant that all of the entire unspent funds in the
department's 2012/2013 budget would have to be returned to the Treasury. In
the interim, Merifon was determined to enforce the agreement it had
concluded with the municipality. To that end, its attorneys addressed a letter
of demand to the municipality giving the latter 14 days within which to pay
the purchase price and transfer costs or, failing that, face legal proceedings
enforcing the agreement. This notice was not heeded.
[9] Consequently, during 2014 Merifon instituted an action in the Limpopo
Division of the High Court, Polokwane (the high court) against the
municipality as first defendant and the HDA as second defendant. Merifon
claimed payment, as against the municipality only, of the purchase price of
R52 million and transfer costs in the sum of R209 892.90. The foundation for
this claim was the agreement of sale for the purchase of property6 to which
reference has already been made in paragraph 8 above. No relief was sought
against the HDA. Consequently, the HDA did not enter the fray. It has
6 The agreement expressly provided that 17 industrial stands situated within the property were to be excluded
from the sale.
therefore played no part in this litigation either in the high court or in this
Court.
[10] In its particulars of claim, Merifon alleged that on 7 March 2013,7
represented by a Mr Mangena, and the municipality represented by its
municipal manager, Ms Mashaba, it sold the property to the municipality for
R52 million. The municipality also bound itself to pay the transfer costs
amounting to R209 892.90. Merifon alleged that Ms Mashaba was properly
authorised, alternatively, had ostensible authority to represent the
municipality.
[11] The municipality resisted the claim on several grounds. For present
purposes, it suffices merely to make reference to four of its defences. First, it
was denied that its representative had the requisite authority – whether actual,
ostensible or otherwise – to enter into the agreement. Second, it pleaded that
the agreement was 'illegal and null and void' for want of compliance with s 19
of the MFMA because the subject-matter of the sale constituted a capital
project. Third, it alleged that the municipal council 'never approved the
purchase of the property including the total costs thereof'. Fourth, it was
asserted that the municipality was precluded from incurring expenditure
otherwise than in accordance with 'an approved budget and within the limits
of the amounts appropriated . . . in the approved budget'.
[12] The municipality also filed a counter-claim in which it sought an order
declaring the agreement null and void and unenforceable. In the alternative –
7 There was a dispute at the trial in regard to the date of sale. The municipality's witness testified that she
signed the agreement after 22 March 2013. But nothing turns on this.
and conditional upon the first counter-claim being unsuccessful – the
municipality alleged that the agreement fell to be rectified because to the
knowledge of the parties the purchase price was to be paid not by the
municipality but by the Limpopo Provincial Government: Department of
Cooperative Governance, Human Settlements and Traditional Affairs
(CoGHSTA).
[13] The action came before Ledwaba AJ for trial who delivered his written
judgment on 18 July 2019. He dismissed the action and granted judgment in
favour of the municipality with costs, declaring the agreement 'null and void
and unenforceable'. After considering the import of the relevant provisions of
the MFMA, the learned Acting Judge in essence found, inter alia, that the
municipality's representative lacked the authority to sign the agreement
because the municipality had at no stage resolved 'to acquire the property'.
And the municipality had not appropriated funds for the acquisition of the
property either in its 2012/2013 annual approved budget or adjusted budget.
He further held that the municipal representative's authority to conclude the
agreement, actual or ostensible, had in any event not been established. Finally,
insofar as estoppel was concerned, upon which Merifon also relied, he held
that it did not avail Merifon. He reasoned thus:
'Failure by a statutory body to comply with the provisions which the legislature has
prescribed for the validity of a specified transaction cannot be remedied by estoppel
because that would give validity to a transaction which is unlawful and therefore ultra
vires.'
Subsequently, on 30 September 2019, Makgoba JP granted Merifon leave to
appeal to this Court on the basis that there was 'a compelling reason why the
appeal . . . should be heard . . .'.
[14] Apart from s 19 of the MFMA, there are also other provisions of the
MFMA to which reference has been made both in the judgment of the high
court and counsel's heads of argument. As these provisions play a significant
role in the determination of the issues that arise in this appeal, it is necessary
to give a brief overview of them before dealing with the issues in the context
of the relevant statutory framework.
[15] According to its preamble, the MFMA seeks to 'secure sound and
sustainable management of the financial affairs of municipalities and other
institutions in the local sphere of government; to establish treasury norms and
standards for the local sphere of government . . .'. One of the objects of the
MFMA is 'to secure sound and sustainable management of the fiscal and
financial affairs of municipalities . . . by establishing norms and standards and
other requirements for–
(a)
ensuring transparency, accountability and appropriate lines of
responsibility in the fiscal and financial affairs of municipalities and
municipal entities;
(b)
the management of their revenues, expenditures, assets and liabilities
and the handling of their financial dealings;
(c)
budgetary and financial planning processes and the co-ordination of
those processes with the processes of organs of state in other spheres of
government;
(d)
. . .
(e)
. . .
(f)
supply chain management; and
(g)
. . .'.8
8 See s 2.
[16] Section 3(1) provides that the MFMA applies to–
(a)
all municipalities;
(b)
all municipal entities; and
(c)
national and provincial organs of state to the extent of their financial
dealings with municipalities.
Section 3(2) in turn provides that where there is any inconsistency between
any provision of the MFMA and any other legislation which regulates any
aspect of the fiscal and financial affairs of municipalities, the provisions of
the MFMA shall prevail.9
[17] Section 15 provides for the appropriation of funds for expenditure. It
reads:
'A municipality may, except where otherwise provided in this Act, incur expenditure only–
(a)
in terms of an approved budget; and
(b)
within the limits of the amounts appropriated for the different votes in an approved
budget.'
The adoption of annual budgets for municipalities is provided for in s 16.10
Section 17(2) provides that an 'annual budget must generally be divided into
a capital and an operating budget in accordance with international best
practice, as may be prescribed'.
9 It reads:
'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.'
10 Section 16 is headed 'Annual budgets' and it reads:
'(1)
The council of a municipality must for each financial year approve an annual budget for the
municipality before the start of that financial year.
(2)
In order for a municipality to comply with subsection (1), the mayor of the municipality must table
the annual budget at a council meeting at least 90 days before the start of the budget year.
(3)
Subsection (1) does not preclude the appropriation of money for capital expenditure for a period not
exceeding three financial years, provided a separate appropriation is made for each of those financial years.'
[18] Finally, there is s 19 of the MFMA which is central to this appeal. Its
provisions have already been quoted in paragraph 4 above. In support of its
invocation of s 19, the municipality pleaded that: (a) the proposed acquisition
of the property constituted a capital project as contemplated; (b) it could spend
money on such a project only if– (i) the money for the project has been
appropriated in terms of s 17(2); (ii) the project has been approved by the
council; (iii) the sources of funding have been considered, are available and
have not been committed for other purposes. In addition, the council is
required to consider, before approving a capital project, that the projected cost
covering all financial years until the project is operational and future
operational costs and revenue on the project have been catered for.
[19] The municipality then asserted that: (a) the purchase price for the
property was never budgeted for; (b) its council never approved the project,
including the total cost thereof. Thus, the sources of funding were never
considered. Nor were projected costs covering all financial years until the
project is operational; and future operational costs and revenue considered.
Consequently, it was contended that the agreement that Merifon sought to
enforce was plainly unenforceable for want of compliance with the
peremptory provisions of s 19.
[20] It will be convenient first to deal with the most important issue in this
appeal for if it is determined in favour of the municipality that result would
render it unnecessary to delve into the other issues. This issue concerns the
question whether s 19 finds application in this litigation at all, to which I now
turn.
[21] The language of s 19 could not be clearer. It is by now well established
that in interpreting a statutory provision the language employed, its nature and
scope, the mischief sought to be prevented, consequences for non-compliance
and its purpose are all relevant factors.11 Equally important is the context in
which the provision under consideration is located.12 There can be no doubt
that one of the manifest underlying purposes of s 19 is to prevent
municipalities from spending money on capital projects that have not been
budgeted so as to ensure that transparency, accountability as well as fiscal and
financial discipline are fostered. Thus, it is beyond question that s 19 and the
other provisions adverted to above are intended to promote good governance
within the local sphere of government.
[22] Does s 19 apply to the transaction under consideration here? There can
be no denying that the procurement of land entails an acquisition of a capital
asset and thus a capital project as contemplated in s 19. There was no dispute
between counsel as to this categorisation. Nevertheless, counsel for Merifon
initially sought to argue that this section was not implicated in the litigation.
11 See, for example, Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012]
2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18; Department of Land Affairs and Others v Goedgelegen
Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (10) BCLR 1027 (CC) ; 2007 (6) SA 199 (CC) para 53;
Independent Institute of Education (Pty) Limited v KwaZulu-Natal Law Society and Others [2019] ZACC
47; 2020 (2) SA 325 (CC); 2020 (4) BCLR 495 (CC) para 41; Bato Star Fishing (Pty) Ltd v Minister of
Environmental Affairs and Tourism and Others 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) para 90;
Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869
(CC) para 28.
12 See: Jaga v Dönges N O and Another; Bhana v Dönges, N O and Another 1950 (4) SA 653 (A) at 662G-
H in which Schreiner JA said:
'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 scope and purpose, and, within limits, its background.'
But when his attention was drawn to the provisions of s 3 (which explicitly
states that the MFMA applies to all municipalities) counsel was constrained
to accept that s 19 finds application in this case. This notwithstanding, counsel
argued that the MFMA does not apply to third parties such as private entities
like Merifon. Counsel's acceptance that s 19 binds the municipality raises the
question whether this section was in fact complied with by the municipality
when it concluded the agreement upon which Merifon relied for the relief it
seeks.
[23] Counsel for Merifon argued that the municipality had to all intents and
purposes complied with the prescripts of s 19. In developing his argument,
counsel submitted that the department had by letter, dated 6 March 2013,
confirmed the availability of the requisite funds. And, pursuant thereto, the
municipality had, on 22 March 2013, adopted a resolution to acquire the
property. In support of the latter contention counsel relied on the council
resolution adopted on 22 March 2013. Because of its centrality in counsel's
contention, it is necessary to quote this resolution again. It reads:
'1.
That the commitment letter from Department of Cooperative Governance, Human
Settlements and Traditional Affairs to purchase portion 5 and 6 of the farm Mooiplaats
434-LT is approved.'
[24] But as I see it, this resolution does not bear out counsel's proposition.
Even on a charitable interpretation of its terms, it cannot be read to mean that
the council in actual fact resolved to acquire the property. On its own terms,
it is no more than a mere recordal that '[t]he commitment letter from the
Department of Cooperative Governance, Human Settlements and Traditional
Affairs to purchase portion 5 and 6 of the farm Mooiplaats 434-LT is
approved' whatever this phraseology was intended to mean. This is neither a
case of being pedantic or indulging in pure semantics. Far from it. Rather, it
is because a prominent feature of the resolution heavily relied upon does not
support the case advanced by Merifon. As already indicated, all that the
municipality did was merely to 'approve' the commitment letter from
CoGHSTA. In contrast to the council resolution A901/29/04/2011 adopted on
29 April 2011 in relation to the purchase of portion 3 of the selfsame farm
Mooiplaats 434-LT which explicitly stated that '[c]ouncil approves that full
settlement of R4 million for the purchase of Portion 4 of the farm 434-LT
Mooiplaats in the current financial year 2010/2011', the 2013 resolution says
nothing of the sort. On the contrary, the 2011 resolution, unlike the one
adopted in 2013, is couched in explicit terms leaving no room for any doubt
as to its purport.
[25] It therefore follows that the high court was correct in concluding that
the agreement which is the foundation of Merifon's claim was legally
unenforceable on account of the municipality's non-compliance with the
prescripts of s 19. As the performance undertaken by the municipality under
the impugned agreement would have been unlawful it cannot be sanctioned
through the remedy of specific performance. This conclusion is indeed
determinative of the outcome of this appeal.
[26] But Merifon had another string to its bow. Relying on City of Tshwane
Metropolitan Municipality v RPM Bricks (Pty) Ltd [2007] ZASCA 28; 2008
(3) SA 1 (SCA) (RPM Bricks),13 Merifon invoked estoppel. However, its
counsel was cognisant of the fact that as a general rule estoppel cannot be
invoked in circumstances where to uphold it would be tantamount to a court
13 Paragraphs 11-13.
giving its imprimatur to an illegality.14 Accordingly, counsel argued that on
the facts of this case it was not incumbent upon Merifon to enquire whether
the municipality had observed the relevant internal arrangements or
formalities, but was entitled to assume that these were in actual fact complied
with.15
[27] Counsel's proposition is only correct so far as it goes. But in the context
of the facts of this case it is plainly unsustainable. This is because the
municipality's non-compliance with s 19 falls not in the category for which
counsel contended but in a different one where the conclusion of the
agreement in issue amounts to an act beyond or in excess of the statutory
powers of the municipality as a public authority. Thus, the principle of legality
is manifestly implicated for what the municipality had done was at odds with
the dictates of s 19. If the peremptory provisions of the MFMA were not
complied with, as I have found, the agreement to purchase the property cannot
be 'validated' through the doctrinal device of estoppel. To do so would render
the relevant provisions of the MFMA nugatory. And the public interest of
promoting transparency, accountability and good governance within the local
sphere of government, which is the underlying purpose of the MFMA, would
be undermined. And, as this Court made plain in RPM Bricks (para 13):
'failure by a statutory body to comply with provisions which the legislature has prescribed
for the validity of a specified transaction cannot be remedied by estoppel because that
would give validity to a transaction which is unlawful and therefore ultra vires.' (Citations
omitted.)
That is precisely the situation in this case in more than one respect.
14 See in this regard: Trust Bank van Afrika Bpk v Eksteen 1964 (3) SA 402 (A) at 411H-412B.
15 See also, National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473
(A); Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 (A).
[28] It remains to deal with the last of Merifon's principal submissions. It
relates to the authority of the municipality's municipal manager to conclude
the impugned agreement on its behalf. It is not necessary to delve into this
aspect in the light of the earlier conclusion that the agreement is hit by s 19.
Suffice it to say that whether the municipality's representative had the
requisite authority, actual or ostensible, to conclude the agreement on its
behalf matters not, because the agreement itself is unenforceable for want of
compliance with the peremptory prescripts of the MFMA, and in particular s
19 for the reasons stated above.
[29] To sum up: it was plainly impermissible for the municipality to enter
into an agreement involving a capital project contrary to the prescripts of s 19.
This being the case, it must ineluctably follow that this Court cannot grant the
order for specific performance sought by Merifon in this litigation. To do so
in the face of the clear provisions of s 19 would, as Innes CJ said in Schierhout
v Minister of Justice 1926 AD 99 at 109,16 be tantamount to granting the
court's imprimatur to something proscribed by the law.17 The reason for this
principle is self-evident: no court can compel a party to flout the law and,
more fundamentally, the principle of legality which is the cornerstone of our
constitutional democracy. And sight should never be lost of the fact that in
16 Innes CJ put it thus:
'It is a fundamental principle of our law that a thing done contrary to the direct prohibition of the law is void
and of no effect . . . So that what is done contrary to the prohibition of the law is not only of no effect, but
must be regarded as never having been done - and that whether the law giver has expressly so decreed or
not; the mere prohibition operates to nullify the act.' (Emphasis added.)
17 Lester v Ndlambe Municipality and Another [2013] ZASCA 95; [2014] 1 All SA 402 (SCA); 2015 (6) SA
283 (SCA) paras 23-24 and the authorities therein cited; Home Talk Developments (Pty) Ltd and Others v
Ekurhuleni Metropolitan Municipality [2017] ZASCA 77; [2017] 3 All SA 382 (SCA); 2018 (1) SA 391
(SCA) paras 71-72; Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC);
2014 (8) BCLR 869 (CC) para 99.
exercising their judicial functions, courts are themselves constrained by the
principle of legality.18 With all of Merifon's principal arguments having been
determined against it, this result renders it unnecessary to consider the other
related issues argued on its behalf.
[30] For all the aforegoing reasons, Merifon's appeal against the dismissal
of its action by the high court is ill-founded. It therefore falls to be dismissed.
In the result the following order is made:
The appeal is dismissed with costs, including the costs attendant upon the
employment of two counsel.
________________________
X M PETSE
ACTING PRESIDENT
SUPREME COURT OF APPEAL
18 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA); 2009 (1)
SACR 361 (SCA); 2009 (4) BCLR 393 (SCA); [2009] 2 All SA 243 (SCA) paras 15-16.
Appearances
For appellant:
C A da Silva SC (with him D Prinsloo)
Instructed by:
Becker Attorneys Polokwane, Bellville
Symington & De Kok, Bloemfontein
For first respondent:
A B Rossouw SC (with him J A L Pretorius)
Instructed by:
Mohale Attorneys, Polokwane
Honey Attorneys, Bloemfontein
For second respondent: None
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED
Merifon (Pty) Ltd v Greater Letaba Municipality and Another (1112/2019)
[2021] ZASCA 50 (22 April 2021)
From:
The Registrar, Supreme Court of Appeal
Date:
22 April 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of the
case and does not form part of the judgments of the Supreme Court of Appeal
The Supreme Court of Appeal (SCA) today dismissed an appeal against the judgment of the
Limpopo Division of the High Court, Polokwane (high court). On 18 July 2019 the high court
dismissed an action instituted by the appellant, Merifon (Pty) Ltd, against the first respondent,
Greater Letaba Municipality (the municipality) for payment of the sum of R52 million and
R209 892. 90 being the purchase price and transfer costs respectively in respect of immovable
property that the appellant had sold to the municipality on 7 March 2013 together with ancillary
relief.
The municipality resisted the claim on four principal grounds. First, it denied that its
representative was duly authorised to conclude the agreement on its behalf. Second, it pleaded
that the agreement was illegal and null and void for want of compliance with s19 of the Local
Government: Municipal Finance Management Act 56 of 2003 (the MFMA) because the
subject-matter of the sale constituted a capital project. Third, it alleged that the municipal
council never approved the purchase of the property. Fourth, it asserted that it was precluded
from incurring expenditure otherwise than in accordance with an approved budget and within
the limits of the amounts appropriated in the approved budget. The municipality also filed a
counter-claim in which it sought an order declaring the impugned agreement null and void. In
the alternative the municipality alleged that the agreement fell to be rectified because to the
knowledge of the contracting parties the purchase price and transfer costs were not going to be
paid by the municipality but by the Limpopo Provincial Government: Department of
Cooperative Government Human Settlements and Traditional Affairs (CoGHSTA).
Section 19 of the MFMA provides that a municipality may spend money on a capital project
like the acquisition of land only if the money for the project has been appropriated in the capital
budget subject to compliance with certain statutory requirements. The MFMA, asserted the
municipality, also provides that a municipality may not spend money that has not been
appropriated in terms of an approved budget and within the limits of the amounts appropriated
for the different votes in an approved budget.
It was not in dispute in this case that the municipality did not appropriate any funds in its capital
budget in terms of an approved budget for the 2012/2013 financial year. It was common cause
that both the purchase price and transfer costs were, as contemplated by the parties, to be paid
by the CoGHSTA from its budget and not from the municipality. Hence the municipality did
not budget for these amounts. Unsurprisingly, the municipality did not have funds appropriated
for the project. But the Provincial Treasury refused to authorise payment of the amounts
payable stating that the purchase price was exorbitant.
The SCA found that s 19 of the MFMA was of application to the parties' agreement. And as
the peremptory provisions of s 19 were not complied with the agreement was not enforceable.
The SCA also rejected Merifon's reliance on estoppel holding that as the agreement was invalid
for want of compliance with s 19 it could not be validated through the deployment of the
doctrine of estoppel. Hence Merifon's appeal was dismissed with costs, including the costs of
two counsel.
________________________________________
|
466
|
non-electoral
|
2016
|
IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case Number: 127/15
In the matter between:
LUFUNO RADZILANE
APPLICANT
and
THE STATE
RESPONDENT
Neutral citation: Radzilane v S (127/15) [2016] ZASCA 64 (16 May 2016)
Coram:
Lewis and Zondi JJA and Baartman AJA
Heard:
3 May 2016
Delivered:
16 May 2016
Summary: Criminal Procedure – sections 297(7) and (9) of the Criminal Procedure
Act 51 of 1977 do not provide a mechanism to impose a new sentence pursuant to
an application to enforce a suspended sentence – court a quo correct in finding that
regional court exceeded its powers – matter remitted to trial court to consider
application to enforce suspended sentence.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Zondo and Ismail JJ
sitting as court of appeal).
The following order is made:
1 The application for special leave is granted.
2 The appeal is dismissed.
JUDGMENT
Baartman AJA (Lewis and Zondi JJA concurring):
[1] This is an application for special leave to appeal against the refusal by the court
a quo of the applicant’s application for leave to appeal. This court referred the
application for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of
2013 (the Act).
Background
[2] The facts that gave rise to this application are largely common cause. The
applicant pleaded guilty to one count of theft in the regional court, Makhado. He
admitted that he had unlawfully and intentionally, while in the employ of ABSA Bank,
between 18 September 2008 and 9 October 2008, withdrawn R560 000 from the
accounts of various ABSA clients. The trial court convicted the applicant on the basis
of his plea and sentenced him, in terms of s 297 of the Criminal Procedure Act 51 of
1977 (the CPA), to seven years’ imprisonment, wholly suspended for five years on
certain conditions including that he repay the amount stolen in instalments as
directed in the court order.
[3] The applicant made an initial payment of R210 031.53, consisting of his pension
due from ABSA Bank and money held in his accounts at the time of his arrest. He
made a further payment of R4 000, after which he paid no further amounts. The
respondent applied to have the suspended sentence put into operation. The trial
court, motivated by the substantial repayment he had already made and his personal
circumstances, sentenced the applicant to three years’ imprisonment in terms of
s 276(1)(i) of the CPA (the new sentence). The applicant has served that sentence in
full.
[4] The respondent appealed to the Gauteng Division, Pretoria against the
imposition of the new sentence. Zondo and Ismail JJ upheld the appeal and set aside
the new sentence and referred the matter back to the trial court to consider the
application to put the suspended sentence into operation. On 20 September 2014,
the court a quo refused the applicant’s application for leave to appeal its order. The
present application is against that order.
Special leave
[5] It is settled law that leave to appeal is only granted where there are reasonable
prospects of success. A mere possibility of success is not sufficient. In Van Wyk v S,
Galela v S,1 this court emphasised the stringent requirements for granting special
leave as follows:
‘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. 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, 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. . . .’
[6] The applicant has served the new sentence, irregularly imposed, and now faces
the possibility of a further seven years’ imprisonment. The apparent unfairness is of
concern to both parties. In the circumstances of this matter, granting special leave is
warranted. I deal with the grounds of appeal below to the extent necessary.
Legal representation
[7] The applicant was unrepresented at the appeal hearing; the court a quo had
refused an application for postponement to obtain legal representation, reasoning
1 Van Wyk v S, Galela v S [2014] 152 ZASCA; 2015 (1) SACR 584 (SCA), para 21.
that the applicant had had sufficient time, approximately 10 months, to obtain legal
representation. The court below further considered that the matter had been ongoing
since 2008 and ruled that in 2011, when it heard the appeal, it had been in the
interests of justice that the matter be finalised. I cannot fault that finding.
Appeal procedure
[8] The applicant submitted that the court a quo was not competent to have upheld
the appeal; instead, so the argument went, the respondent should have brought a
review application. The court below dealt with the respondent’s appeal as an appeal
on a point of law: whether it was competent for the trial court to have imposed a new
sentence pursuant to an application to enforce a suspended sentence. The court a
quo held that it was not ‘competent for the [trial court] to have imposed a new
sentence …’.
[9] The provisions of ss 297(7) and (9) circumscribe the court’s power when the
conditions of suspension are not met – it may enforce the suspended sentence or
further suspend it, ‘…subject to any existing condition or such further conditions as
could have been imposed at the time of such postponement or suspension’.
(See E Du Toit et al Commentary on the Criminal Procedure Act – vol 2 at 28-41). It
follows that as a matter of law, the trial court erred when it imposed the new
sentence, making the respondent entitled to the order it obtained.
Just and equitable
[10] The applicant further contended that in the circumstances of this matter, as the
applicant has already served the new sentence, it would be just and equitable to
impose a lesser sentence. The CPA does not make provision for the trial court to
impose a lesser sentence. However, the trial court will be at liberty to consider the
deplorable delay in bringing this matter to finality and how it has prejudiced the
applicant. The trial court imposed the new sentence on 24 March 2010 but the
appeal was only heard in September 2011. The reasons for the delay appear from
the condonation applications and it is not necessary to repeat them. Although the trial
court found ‘no good or sufficient reason’ to further suspend the suspended
sentence, it found good grounds to impose a lesser sentence. The applicant has
served the lesser sentence. The applicant made it clear when the respondent applied
to put the suspended sentence into operation that he is unable to make any further
payments to the complainant.
[11] It follows that putting the suspended sentence into operation will result in a
harsher sentence than originally imposed or intended when the trial court imposed
the new sentence. These are factors the trial court will take into account in deciding
whether to effect the suspended sentence or further suspend it on the same or other
appropriate conditions.
Conclusion
[12] It is so that the applicant has already served a period of imprisonment and that
it would be patently unfair if he were to serve a further seven years’ imprisonment.
Although I am reluctant to make any suggestion that may appear to fetter the trial
court’s discretion, as it seems clear that the applicant is unable to further compensate
the complainant, I consider it appropriate to express the view that the trial court
should consider further suspending the sentence for a period of five years, on
condition that the applicant is not convicted of theft or any crime entailing dishonesty
during the period of suspension for which he has been sentenced to a period of
imprisonment exceeding three years without the option of a fine.
Order
1 The application for special leave is granted.
2 The appeal is dismissed.
_____________________________
E D Baartman
Acting Judge of Appeal
Appearances
For Appellant:
H L Alberts
Instructed by:
Pretoria Justice Centre, Pretoria
Bloemfontein Justice Centre, Bloemfontein
For Respondent:
J J Kotzé
Instructed by:
Director of Public Prosecutions, Pretoria
Director of Public Prosecutions, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
16 May 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Radzilane v S
(127/15) ZASCA [2016]
MEDIA STATEMENT
Today the Supreme Court of Appeal (SCA) dismissed the appeal by the applicant and upheld an
order of the Gauteng Division of the High Court, Pretoria.
The issue before the SCA was whether it was competent for the trial court to have imposed a new
sentence pursuant to an application to enforce a suspended sentence.
The applicant pleaded guilty to one count of theft in the regional court. He admitted that he had
unlawfully and intentionally, while in the employ of ABSA Bank, between 18 September 2008 and 9
October 2008, withdrawn R560 000 from the accounts of various ABSA clients. The trial court
convicted the applicant on the basis of his plea and sentenced him, in terms of s 297 of the Criminal
Procedure Act 51 of 1977 (the CPA), to seven years’ imprisonment, wholly suspended for five years
on certain conditions including that he repay the amount stolen in instalments as directed in the court
order. The applicant, after making a few initial payments, defaulted on the remaining payments
thereby prompting the respondent to apply to have the suspended sentence put into operation. The
trial court sentenced the applicant to three years’ imprisonment in terms of s 276(1)(i) of the CPA
which sentence the applicant had served.
On appeal, the SCA held that the provisions of ss 297(7) and (9) circumscribed the court’s power
when the conditions of suspension were not met – it could enforce the suspended sentence or further
suspend it. It therefore followed that as a matter of law, the trial court erred when it imposed the new
sentence, entitling the respondent to the order it obtained. The SCA found that as the CPA did not
make provision for the trial court to impose a lesser sentence, the implementation of the suspended
sentence would result in a harsher sentence than originally imposed or intended when the trial court
imposed the new sentence and considering the fact that the applicant had already served a period of
imprisonment, it would be patently unfair if he were to serve a further seven years’ imprisonment.
--- ends ---
|
3608
|
non-electoral
|
2021
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 256/2020
In the matter between:
ZOLA CEDRIC MACHI
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation: Machi v The State (256/2020) [2021] ZASCA 106 (30 July
2021)
Coram:
ZONDI, MOCUMIE and MAKGOKA JJA and KGOELE and
EKSTEEN AJJA
Heard:
13 May 2021
Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of
Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 09h45 on 30 July 2021.
Summary: Criminal law – murder – circumstantial evidence – sufficiency and
reliability thereof – whether common purpose was established – whether
contradictions material – whether sentence is appropriate.
ORDER
On appeal from: Gauteng Division of the High Court, Johannesburg (Msimeki,
Twala and Opperman JJ sitting as court of appeal):
The appeal against both the conviction and sentence is dismissed.
JUDGMENT
Kgoele AJA (Zondi, Mocumie and Makgoka JJA and Eksteeen AJA
concurring):
[1] The appeal is a sequel to the death of Mr Walter Mandla Thusi
(the deceased), who was fatally shot in his office at Engen Diesel Depot,
Langlaagte, Johannesburg (the depot) while on duty on 19 January 2007. Mr Zola
Cedric Machi (the appellant), his co-worker at that time, was subsequently
arrested following this incident. He was charged and convicted of murder on
11 December 2008 by Mayat AJ sitting at the South Gauteng High Court
(the trial court). He was sentenced to life imprisonment. With the leave of the
trial court the appellant appealed to the full court of that Division against
conviction and sentence. The full court (Msimeki J with Twala and Opperman JJ
concurring) dismissed the appeal against conviction but upheld the appeal against
sentence. It set aside the sentence of life imprisonment imposed by the trial court
and substituted it with one of 20 years’ imprisonment. The appellant, with the
special leave granted by this Court, appeals against his conviction and sentence.
He is currently on bail pending the finalisation of the appeal.
[2] The appeal lapsed because the appellant did not file the record timeously
and the appellant applied for condonation for the late filing thereof and the
reinstatement of the appeal. As the application was unopposed we granted
condonation. In doing so we had regard to the fact that the delay is not excessive,
(not more than 20 days); the appellant did not willfully disregard the time frames
provided for in the rules and practice directives of this Court; and that the
respondent was not prejudiced by the delay. With this, I now proceed to consider
the merits of the appeal.
[3] The issues are, firstly, whether the State had proved beyond reasonable
doubt that the appellant was at the scene of the crime when the deceased was
fatally shot by an unknown person; secondly, whether the appellant had actively
associated himself with the murder of the deceased; and lastly, whether the
sentence imposed was appropriate.
The facts
[4] The events which gave rise to the appellant’s conviction and sentence are
briefly to the following effect. As I have said, the shooting took place at the depot,
located behind the Engen garage (the garage), where the two state witnesses,
Messrs Sunnyboy Ntunja (Mr Ntunja) and Sonwabo Alfred Makholisa
(Mr Makholisa) were employed. The appellant was a truck driver employed by
Engen and based at the depot, whilst the deceased had been his supervisor. The
relationship between the appellant and the deceased was strained because,
sometime before the incident, the appellant had been suspended from work. He
blamed the deceased for his suspension, which was later lifted; the lighting at the
garage was sufficient for one to be able to see at night; the Mercedes Benz
allegedly involved in the incident belonged to the appellant’s cousin, Ms Mlauli;
at the time of the incident the motor-vehicle was under the control of the appellant
for his personal use. The contentious issues, as I have said, are firstly, whether
the appellant was at the crime scene on the evening in question; and, secondly,
whether he was correctly convicted on the basis of the common purpose doctrine.
The appellant’s defence was an alibi.
[5] For the purposes of placing the appellant on the scene, the State led the
evidence of Messrs Ntunja and Makholisa. Their oral evidence, summarised, was
to the effect that on 19 January 2007 at about 20h30, the appellant came to the
garage driving a Mercedes Benz motor vehicle. He was in the company of an
unknown man who wore clothing resembling an Engen uniform. When the two
arrived, the witnesses were sitting and enjoying their meal next to a fridge, located
outside the shop at the garage (the shop), not far from the entrance. They
recognised the appellant as a truck driver from the depot who was a regular
customer at the filling station. Prior to the incident Mr Makholisa had known the
appellant for almost a year and Mr Ntunja for almost a month.
[6] Mr Ntunja said that the appellant and the unknown man had disembarked
from the motor vehicle, where after the following unfolded: The unknown man
walked away from the garage, in the direction of the depot and Spoornet offices,
while the appellant entered the shop and bought airtime. Upon leaving the shop,
the appellant gave him a R50-note to share with his colleagues. The appellant
allegedly told him that there was ‘someone who was disturbing him at work’, but
did not elaborate.
[7] He testified further that upon leaving the shop, the appellant proceeded to
the motor vehicle, drove to one of the bowsers and filled up petrol, before driving
out of the garage in the direction of Langlaagte police station. Upon reaching the
robot-controlled intersection, he made a U-turn and drove back slowly in the
direction of the garage. The motor vehicle proceeded past the garage, with its
hazard lights on, for some distance before stopping near the depot. At that stage
he heard five or six gunshots coming from behind the shop (the depot side). He
ran into the shop and looked through the toilet window in an attempt to establish
the source of the gunshots. He did not see anything, nor who fired the shots.
After a few minutes, he came out of the shop and stood on the tar road in front
of the garage. There he saw the appellant’s motor vehicle, still in a stationery
position, with its hazard lights flashing, in the vicinity of the depot. The same
unknown man he had earlier observed moving in the direction of depot came
running back from there and climbed into the appellant’s motor vehicle, after
which it drove away.
[8] Mr Makholisa corroborated Mr Ntunja to a great extent, although his
account of what happened after the two men had alighted from the motor vehicle
differs in some respects from that of Mr Ntunja. There were also inconsistencies
in, and discrepancies between, their written statements, which counsel for the
appellant highlighted. I shall revert to these. It suffices for now to record that his
version was that the appellant and the unknown man walked together towards
the direction of the depot and the Spoornet offices. The appellant returned alone
and went into the shop. When he exited the shop, he gave Mr Ntunja a R50-note
to share and told him that ‘he came to assault someone who is an ‘impimpi’
(an informer) at the back’.
[9] The State also led the evidence of the police officers who conducted the
identification parade. Their unrefuted evidence was that both Messrs Ntunja and
Makholisa identified the appellant positively.
[10] In denying complicity in the commission of the murder, the appellant
raised an alibi as his defence. In short his defence was that he could not have
been at the scene of the crime at the time of the shooting because he was at his
home in Soweto. Whilst the appellant admitted that Messrs Ntunja and
Makholisa knew him, he denied ever being at the garage or near the depot on the
night in question. His evidence was that he did not report for duty on
19 January 2009 because of ill-health. According to him, he started to feel ill
whilst on duty on 18 January. He produced a copy of a sick note issued by a
doctor whom he had consulted on 19 January 2009. His alibi was basically that
he had spent the entire evening at his residence with his girlfriend, Madi, who
corroborated him on their whereabouts on the two days. A totally new aspect of
his version only emerged towards the end of his cross-examination when he
stated that he was in fact driving a Corolla, and not a Mercedes Benz, on the day
in question, as the Mercedes Benz was parked in Killarney at his grandfather’s
place.
[11] Mr David van Zyl (Mr van Zyl), a security officer who was on duty at the
depot on the night in issue, was called by the appellant. He testified that he did
not hear the gunshots, due to the noise made by the delivery trucks arriving at,
or leaving, the depot. He received a report at 22h36 that there had been a shooting
incident on the premises and he immediately made an entry to that effect in his
occurrence book. He assumed that the shooting had just occurred. His reasoning
was that, had the shooting taken place around 20h30, as the two State witnesses
testified, he would have received the message much earlier.
The trial court
[12] The trial court found that Messrs Ntunja and Makholisa were reliable
witnesses; they corroborated each other on material aspects and their evidence
that several shots were fired was corroborated by other objective facts, in this
case, the post-mortem report. Regarding the inconsistencies or contradictions in
the oral evidence of these two state witnesses and those found in the statements
of Mr Makholisa in particular, the trial court found that they did not adversely
affect their credibility. In rejecting the appellant’s alibi as false, it accepted the
evidence of the state witnesses and found that the only inference that could be
drawn from the proven facts was that the appellant was present at the scene of
crime and acted in common purpose with the unknown man who shot the
deceased.
The full court
[13] Once more the contradictions and the inconsistencies in the evidence
relied on by the State took centre stage before the full court. The full court found
no demonstrable and material misdirection in the manner in which the trial court
had evaluated the evidence. It furthermore, concluded that the application of the
law, by the trial court, to the facts, had been sound. The appeal on the conviction
was dismissed. As I have said, it only interfered with the sentence imposed.
Before this Court
[14] Before this Court, the appellant again attacked the credibility and the
factual findings of the trial court, and the full court’s upholding of them. The
appellant also complained that the reduced sentence is inappropriately severe. In
respect of the conviction, it was argued, on behalf of the appellant, that
‘the evidence of the so-called eyewitnesses, [Mr] Ntunja and [Mr] Makholisa,
was riddled with material contradictions and inconsistencies to such an extent
that it should have been rejected by both the trial court and the full court’.
[15] Two key submissions were advanced on behalf of the appellant to support
the above argument. First, that, considering the contradictions in the evidence
of the state witnesses, the quality of the identification evidence that placed the
appellant at the scene, was very poor. Second, that the trial court failed to accord
sufficient weight to the fact that the two key witnesses were not in a position to
positively identify the motor vehicle, including the driver thereof at the time it
picked up a person who came running from the direction of the depot after the
gunshots had been heard. In developing this argument, it was contended that,
even if it could be found that the appellant was positively identified as the person
who was seen at the garage on that evening, the State failed to prove common
purpose between that man (the shooter) and the appellant.
[16] This Court is therefore, required to determine whether the evaluation of
the evidence by the trial court, confirmed by the full court was sound. Put
differently, whether the factual and credibility findings by the trial court,
confirmed by the full court, stand scrutiny, and if so, whether the evidence
adduced by the State was sufficient for the trial court to draw an inference that
the appellant was at the scene of crime and whether he acted in common purpose
with the shooter to kill the deceased.
The law
[17] It is trite that in the absence of demonstrable and material misdirection a
trial court’s findings of fact are presumed to be correct and that they will only
be disregarded on appeal if the recorded evidence shows them to be clearly
wrong.1
[18] It is against this principle that the credibility and factual findings made
by the trial court, and decried by the appellant, must be considered. In particular,
this Court is called upon to determine whether this principle was correctly
applied by the full court. It is important to first deal with the contradictions as
they cut across the two bases of this appeal.
1 Rex v Dhlumayo and Another [1948] 2 All SA 566 (A); 1948 (2) SA 677.
Contradictions
[19] The manner in which the contradictions between the version of two
witnesses and the contradictions between the versions of the same witness
(such as, inter alia, between their viva voce evidence and a previous statement
made by them) should be approached was outlined by this Court more than a
decade ago in S v Mafaladiso and Andere.2
[20] As far as the oral evidence of the two key state witnesses is concerned, it
was argued on the one hand, that in his evidence in chief, Mr Ntunja did not
testify about the R50 bribe allegedly given to them, but only mentioned this in
cross-examination. On the other hand, the argument continued, Mr Makholisa
was quick to mention this when he testified a day after Mr Ntunja’s testimony.
The criticism levelled in this regard is that the inconsistency or contradiction
does not only affect their credibility, but shows that they were schooled to tailor
their evidence to corroborate each other. This criticism is not justified. The mere
fact that Mr Ntunja mentioned this part of evidence after being prompted during
cross-examination as opposed to Mr Makholisa who mentioned it without being
prompted, does not make it a contradiction. Furthermore, it remains speculative
to suggest, as the appellant’s counsel seems to do, that ‘the probabilities are that
[Mr] Makholisa was alerted to the criticism levelled against [Mr] Ntunja for not
mentioning this on the previous day, and made sure that he mentions this aspect
when he was not led on it’.
[21] An added string to the appellant’s bow relating to the R50 note was that
the two State witnesses contradicted each other with regard to the reason or
purpose for which it was given. This argument need not detain this Court either.
It suffices to say that it cannot advance the appellant’s case. The difference
2 S v Mafaladiso en Andere [2002] 4 All SA 74 (SCA); 2003 (1) SACR 583 (SCA) at 584-585.
between ‘he came there to assault someone who is an ‘impimpi’ at the back’ and
that ‘he was being disturbed by someone at work’ is neither here nor there.
Rather, it illustrates the absence of collusion.
[22] The other feature of their oral evidence which evoked a lot of criticism
by counsel for the appellant was the testimony in chief of Mr Ntunja that when
he came out of the toilet of the shop, his colleagues were not where he had left
them. This, according to the appellant’s counsel, contradicted the evidence of
Mr Makholisa that he was outside. This, it was contended, was a material
contradiction which the trial court had overlooked. This criticism is
ill- conceived. A careful reading of the record of the proceedings reveals that,
although Mr Ntunja indicated that he did not see his colleagues when he came
out of the shop, Mr Makholisa testified that he saw Mr Ntunja when he came
out. Upon being asked where he (Mr Makholisa) was at that time, he indicated
that he was standing next to a tree. Understandably, he could not, during
cross- examination, explain Mr Ntunja’s evidence that when he came out of the
shop, his colleagues had disappeared. Of significance is that it was not
established where the tree was, or where he, Mr Makholisa, was standing in
relation to the tree for Mr Ntunja not to see him. Quite frankly, a contextual and
holistic evaluation of their account of events reveals that their evidence is not
mutually incompatible. This is because, the possibility that Mr Ntunja could not
see Mr Makholisa where he was next to the tree, although outside, cannot be
discounted. The fact that Mr Makholisa was no longer in the vicinity of the
fridge where they were having a meal when the gunshots were heard or in the
vicinity where Mr Ntunja could see him, does not necessarily mean he was not
outside. The difference in what they said can therefore not be classified as a
contradiction at all.
[23] The record reveals that the trial court was not oblivious to these supposed
contradictions and the criticism levelled against the evidence of the two state
witnesses. The same applies to the seeming inconsistencies found in the
sequence of their account as to how the appellant and the shooter conducted
themselves after disembarking from the motor vehicle. It considered the
criticisms, and rejected them, on the basis that they were not material as to affect
the witnesses’ credibility. The conclusion by the trial court cannot, in my view,
be faulted. Instead, they show that their evidence was not tailored in order to
falsely implicate the appellant.
[24] As regards the contradictions in the key state witnesses’ written
statements, it was submitted that the trial court should have rejected
Mr Makholisa’s evidence because he had made two statements which are not
only at odds with each other, but also at variance with his oral evidence and that
of Mr Ntunja. It was pointed out that in his first statement Mr Makholisa did not
identify the appellant by name as the person who told him that he and the other
man were there to kill a person and who gave him R50, whereas in his second
statement, made two months after the first one, he identified the appellant by
name. It was further pointed out that, Mr Makholisa stated in the same statement
that the appellant and the unknown man had walked around the corner of the
garage and ‘after few minutes shots of [a] gun were heard in the vicinity and
Zola Machi came back walking to the silver BMW and drove away’. The
argument proceeded that his statements are at variance with his evidence in that
he did not say that the appellant had said that he was there to kill someone; that
the R50 was given to him; that he knew the appellant by name; and that the
appellant had walked, after the sound of gunshots from the depot, to the silver
BMW. It was submitted that Mr Makholisa’s evidence had to be rejected in its
totality because he changed his evidence from the first statement to the second,
and from his statements and oral evidence.
[25] In evaluating these contradictions and inconsistencies levelled at
Mr Makholisa’s evidence including his written statements the trial court
reasoned:
‘[It] is my view that to the extent that such inconsistencies are relevant, his explanation
relating to the errors in these written statements were not implausible in the circumstances of
this trial. Moreover, if one takes into cognisance the relevance of the averred inconsistencies
in the context of the rest of the material evidence, such inconsistencies do not cast any doubt
on his material evidence. Mr Makholisa also confirmed in this regard that he gave his
statement in Zulu and that his statement was recorded in English.’ (Emphasis added.)
[26] There is in my view, no demonstrable irregularity that can be relied upon
regarding the manner in which the trial court evaluated all of these contradictions
and inconsistencies and the weight attached thereto. I am thus not persuaded that
the contradictions and inconsistencies highlighted and considered were fatal to
their credibility. The principle in Rex v Dhlumayo and Another3 was therefore
correctly applied by the full court. Having come to this conclusion, I proceed to
consider below the evaluation of the facts found proven by the trial court.
Identity
[27] As regards the evidence of the appellant’s identity, it is significant to note
that the appellant did not dispute the fact that the two key state witnesses,
Messrs Ntunja and Makholisa, knew him prior to this incident. He also admitted
that he knew them too. Even though they testified that they did not know his
name at first, the fact that in their statements mention was made of his name,
does not take this matter any further, as there is no dispute that they knew him.
There is therefore, in my view, no room for mistaken identity. Their evidence
regarding the identity of the appellant was beyond doubt and could be relied upon
3 Dhlumayo note 1 above.
independently of their identification in court and during the identification parade.
Their evidence was that visibility in and around the filling station was good. They
not only saw him, but spoke to him too.
[28] The finding of the trial court that Mr van Zyl could not positively testify
about the exact time as to when the incident took place, as he did not hear the
sound of a single shot, is unassailable. The recorded time of 22h36 in the
occurrence book clearly relates to the time when a report was made to him, and
not when the shots were fired. His evidence that the shooting took place closer
to 22h36 was based on his own assumption. Consequently, the evidence of
Mr van Zyl regarding the time of the shooting was correctly rejected by the
trial court. In any event, the time is a neutral factor in this matter because the
appellant’s defence is an alibi.
[29] It was also submitted that an adverse inference should be drawn from the
failure of the State to call an eye-witness, Mr Maxwell Njoi, who, it was said,
could have corroborated the evidence of Mr van Zyl. Apart from the fact that the
name of this witness did not feature in the list of witnesses for the State, I do not
see how the evidence of this witness would have advanced the appellant’s case
considering that his defence was an alibi. No cogent reasons were advanced why
the appellant could not call this witness in circumstances where the State elected
not to call him.
[30] The conclusion by the trial court that the identity of the appellant was
proven beyond reasonable doubt, cannot be faulted. The sum total of all the
pieces of the proven facts from the evidence of all the witnesses called by the
State, when sewn together, create an impregnable mosaic of proof that the
appellant was at the garage at the time the deceased was killed.
[31] Regarding an alibi defence this Court held in S v Liebenberg:4
‘Once the trial court accepted that the alibi evidence could not be rejected as false, it was not
entitled to reject it on the basis that the prosecution had placed before it strong evidence linking
the appellant to the offences. The acceptance of the prosecution’s evidence could not, by itself
alone, be a sufficient basis for rejecting the alibi evidence. Something more was required. The
evidence must have been, when considered in its totality, of the nature that proved the alibi
evidence to be false. . . .’ (Emphasis added.)
[32] In R v Hlongwane5 the court stated that ‘. . . the alibi does not have to be
considered in isolation’.
[33] The alibi defence of the appellant was correctly rejected by the trial court
as being not reasonably possibly true. The full court cannot be faulted for
confirming the finding of the trial court that, the nature of the evidence of the
State, considered in its totality, proved the evidence of the alibi to be false.
Doctrine of common purpose
[34] It is common cause that although the State rested its case on the doctrine
of common purpose in this matter, the evidence adduced did not establish prior
agreement to commit murder. It relied on active participation.
[35] This Court in S v Mgedezi and Others6 had this to say where liability arises
from active participation:
‘In the first place, he must have been present at the scene where the violence was being
committed. Secondly, he must have been aware of the assault on the inmates of room 12.
Thirdly, he must have intended to make common cause with those who were actually
perpetrating the assault. Fourthly, he must have manifested his sharing of a common purpose
with the perpetrators of the assault by himself performing some act of association with the
4 S v Liebenberg 2005 (2) SACR 355 (SCA) para 14.
5 R v Hlongwane 1959 (3) SA 337 (A) at 340H.
6 S v Mgedezi and Others [1989] 2 All SA 13 (A); 1989 (1) SA 687 (A) at 705I-706B.
conduct of the others. Fifthly, he must have had the requisite mens rea; so, in respect of the
killing of the deceased, he must have intended them to be killed, or he must have foreseen the
possibility of their being killed and performed his own act of association with recklessness as
to whether or not death was to ensue.’ (Emphasis added.)
[36] In Dewnath v S7 Mocumie AJA, explained the application of the common
purpose doctrine as follows:
‘In the light of the facts of this case, it is important to note that the common purpose doctrine
as espoused in S v Mgedezi [and] others has been pronounced by the Constitutional Court to
be constitutional. The most critical requirement of active association is to curb too wide a
liability. Current jurisprudence, premised on a proper application of S v Mgedezi [and] others,
makes it clear that (i) there must be a close proximity in fact between the conduct considered
to be active association and the result; and (ii) such active association must be significant and
not a limited participation removed from the actual execution of the crime.’ (Emphasis
added.)
[37] The next question is whether the evidence of Messrs Ntunja and
Makholisa was sufficient to prove that the appellant acted in common purpose
with the shooter. It was argued that the trial court failed to attach sufficient
weight to the fact that the two witnesses were not in a position to identify the
driver of the vehicle which they saw picking up the shooter who came running
from the direction of the depot. This contention was based on the argument that
Mr Ntunja had testified that he remained in the toilet for seven to eight minutes
while he tried to ascertain what was happening before he went out to look down
Main Reef Road. The argument was that, in the intervening 7 to 8 minutes,
several things could have happened that Mr Ntunja did not observe. This
included the fact that a different Mercedes Benz may have arrived in order to
pick up the shooter from the direction of the depot or that a different man got into
the Mercedes Benz.
7 Dewnath v S [2014] ZASCA 57 para 15.
[38] There are three reasons why these propositions adumbrated above should
be rejected. In the first instance, the two key state witnesses testified that the man
who disembarked from the appellant’s vehicle and went to the direction of the
depot, was the same man they saw being picked up by the Mercedes Benz, driven
by the appellant, after it stopped, having made a U-turn at the robot – controlled
intersection. In particular, Mr Ntunja stated that although he could not see the
face of this man, he recognised him by the clothing he wore. Even though
Mr Makholisa did not mention any particular feature by which he identified this
person, he was adamant that it was the same man. He could see him from the
lighting provided by the street lights. Secondly, they both testified that it was not
busy at the garage that evening; the road was also not busy and there were no
other motor vehicles at that time on the road. It was quiet.
[39] Thirdly and most importantly, Mr Makholisa indicated that from the time
he saw the appellant leaving the garage until he made a U-turn, and ultimately
stopped next to the depot with his hazard lights on, he never alighted from the
vehicle. The ineluctable conclusion must be that he kept watch of the appellant’s
motor vehicle until the shooter jumped into the appellant’s motor vehicle.
[40] It is clear from Mr Makholisa’s evidence that he was at the forecourt of the
filling station all the time. There is no evidence that he went inside the shop. The
likelihood of another Mercedes Benz coming at that time, which happened to
pick up the unknown man, is minimal. The same applies to the proposition that
another man may have jumped into this motor vehicle. The finding by both courts
that there was enough evidence from which an inference could be drawn that the
appellant and an unknown man, who shot the deceased, acted in common purpose
to kill the deceased cannot be faulted.
Sentence
[41] As far as the sentence is concerned, it was submitted that the full court did
not go far enough to reduce the sentence, as the appellant has led an exemplary
life throughout the period he has been on bail pending the outcome of this appeal
and that he is a good candidate for rehabilitation.
[42] That the appellant has been convicted of a very serious offence admits of
no doubt. It is also apparent that the murder falls within the ambit of Part 1 of
Schedule 2 of the Criminal Law Amendment Act 105 of 1997, for which life
imprisonment is a prescribed sentence. The prescribed sentence could not be
deviated from unless there were substantial and compelling circumstances.
However, the full court found favour with the concession made by the State that,
after the conviction and sentence, the appellant led a reasonable and exemplary
life and therefore was a good candidate for rehabilitation. On this basis, the
full court found that substantial and compelling circumstances were present
which warranted the setting aside of the sentence of life imprisonment imposed
by the trial court. It replaced it with a sentence of 20 years’ imprisonment. This
was done, despite the full court making a remark, correctly so, in my view, that
‘I am unable to say that the [c]ourt a quo misdirected itself when it sentenced the
appellant to imprisonment for life. Some of the factors I have referred to above
surfaced after the appellant was convicted and sentenced’.
[43] The less said about the reasons for reducing the sentence by the full court,
the better. It suffices to say that it is difficult to discern the full court’s reasoning
on the reduction of the sentence imposed by the trial court as it was based on
contradictory statements. It found no misdirection in the manner in which the
trial court exercised its sentencing discretion but yet it changed the sentence. As
to why the full court considered the facts which, it acknowledged, surfaced after
the appellant was convicted, boggles the mind. It is trite law that an appeal court
will only consider the facts and circumstances known when sentence was initially
imposed. But since there is no cross-appeal by the State against the sentence
imposed by the full court, nothing more needs to be said and there is no reason
to interfere with the sentence.
[44] In the result, the following order is made:
The appeal against both the conviction and sentence is dismissed.
_____________________
A M KGOELE
ACTING JUDGE OF APPEAL
APPEARANCES
For the appellant:
G Malindi SC (with X D Matyolo)
Instructed by:
Nkosi
Tshabalala
Inc,
Johannesburg
McIntyre
Van
Der
Post,
Bloemfontein
For the respondent:
M P Moleko
Instructed by:
Director of Public Prosecutions,
Johannesburg
|
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 July 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and
does not form part of the judgments of the Supreme Court of Appeal
Machi v The State (256/2020) [2021] ZASCA 106 (30 July 2021)
Today the Supreme Court of Appeal (SCA) dismissed the appeal against an order of the full
court of the Gauteng Division of the High Court, Johannesburg.
On 19 January 2007, the deceased, Mr Thusi, was fatally shot during the night in his office at
the Engen Diesel Depot (the depot) in Langlaagte, Johannesburg while on duty. The appellant,
Mr Machi, his co-worker at that time, was subsequently arrested and charged with murder on
the strength of the information the police received from Mr Ntunja and Mr Makholisa, who
were on duty during the night at the Engen garage situated next to the depot. Their evidence
relied on by State was that, on that fateful night, Mr Machi came to the garage around 20h30
driving a motor-vehicle accompanied by another person who was unknown to them. This
person after disembarking from the vehicle proceeded to the direction of the depot which was
situated at the back of the garage whilst Mr Machi, was talking to them. Mr Machi left the
garage .Shortly thereafter, sound of gunshots was heard coming from the back of the garage.
Subsequent to that, the same unknown person they had earlier observed, came back running
from the direction of the depot and climbed into the motor-vehicle driven by Mr Machi. The
motor-vehicle had at that time stopped next to the depot with its hazard lights flashing. They
both drove away. They learned later that Mr Thusi was shot dead.
Mr Machi raised an alibi defence during trial before the South Gauteng High Court (trial court).
This was rejected by the trial court and he was convicted of murder and sentenced to life
imprisonment. He successfully obtained leave to appeal to the full court of that Division against
the conviction and the resultant sentence. The full court dismissed the appeal against conviction
but set aside the sentence of life imprisonment imposed. It substituted it with one of 20 years’
imprisonment. This Court granted the appellant special leave to appeal against both the
conviction and sentence.
There were three issues for determination; whether the circumstantial evidence relied by the
state in view of the contradictions that were pointed out, was sufficient and reliable to prove
that Mr Machi was at the scene of crime; whether he acted in common purpose with the alleged
shooter; and whether the reduced sentence was harsh. The SCA held that there was no
demonstrable irregularity shown in the manner in which the trial court evaluated the evidence;
that the contradictions were not fatal to affect the credibility of Mr Makholisa and Mr Ntunja;
that the confirmation of the conviction by the full court could not be faulted; and that there was
no reason to interfere with the sentence reduced by the full court. In the result, the SCA
dismissed the appeal against both the conviction and sentence.
--------oOo--------
|
2682
|
non-electoral
|
2014
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 768/2013
In the matter between:
WILLOW WATERS HOMEOWNERS
ASSOCIATION (PTY) LTD Appellant
and
JERRY SEKETE KOKA NO First Respondent
CATHERINA ELIZABETH OOSTHUIZEN NO Second Respondent
TANIA OOSTHUIZEN NO Third Respondent
REGISTRAR OF DEEDS, PRETORIA Fourth Respondent
FIRSTRAND BANK LIMITED Fifth Respondent
And
ASSOCIATION OF RESIDENTIAL
COMMUNITIES CC
First Amicus Curiae
NATIONAL ASSOCIATION OF
MANAGING AGENTS
Second Amicus Curiae
Neutral citation: Willow Waters Homeowners Association (Pty) Ltd v
Koka (768/13) [2014] ZASCA 220 (12 December
2014)
Coram:
Maya, Theron, Saldulker JJA and Mocumie and
Gorven AJJA
Heard:
15 September 2014
Delivered:
12 December 2014
Summary:
Land – whether a condition of title in a title deed of immovable
property which prohibits the transfer thereof without a clearance certificate or the
consent of a homeowner’s association constitutes a real or personal right – whether
the embargo remains binding on the Master and trustees of the property owners in
sequestration.
________________________________________________________
ORDER
On appeal from: North Gauteng High Court, Pretoria (Bam AJ sitting
as a court of first instance)
1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the court below is set aside and replaced with the
following:
‘The application is dismissed with costs including the costs of two
counsel.’
JUDGMENT
Maya JA (Theron, Saldulker JJA, Mocumie and Gorven AJJA
concurring)
[1] The central issue in this appeal is whether embargo provisions in a
title condition registered against the title deed of immovable property
preventing the transfer thereof without a clearance certificate from a
homeowner’s association constitute real or personal rights. The North
Gauteng High Court, Pretoria (Bam AJ) held that the embargo is a mere
personal right which did not bind the trustees of an insolvent estate in
whom ownership of the immovable property sought to be transferred
vested. Consequently, the court allowed the fourth respondent (the
Registrar) to effect transfer of the property without a clearance certificate
from the appellant (the association). The appeal is with the leave of the
high court.
[2] The appellant, the Willow Waters Homeowners Association, (Pty)
Ltd, (the association) is duly incorporated in terms of s 21 of the
Companies Act 61 of 19731 in respect of the Willow Waters Estate (the
estate) in the estate of Van Riebeeckpark Extension 26. Its membership
comprises registered owners of property in the estate. All owners
automatically assume that status and are bound by the association’s
Articles of Association and Rules until such ownership ceases.2 The
estate consists of 13 full title erven and one erf with communal facilities.
The association owns the communal facilities and operates the estate’s
infrastructure
including
its
roads,
water,
electricity,
sanitation,
telecommunications network and security services as well as ingress and
egress to the development for the members’ benefit.
[3] The association recovers its costs from the members by way of
monthly levies3 as well as fines and penalties for breaches of its rules.4
No member is allowed to transfer his (perhaps ‘their’ then it is neutral
gender) property until the board of trustees has certified that the member
has at date of transfer fulfilled all financial obligations to the association.5
Furthermore, rule 2.5 entitles the association to refuse clearance of a
transfer in the event of any outstanding levies and penalties.
1 It is now deemed to be a non-profit company in terms of Item 4(1)(a) of Schedule 5 of the Companies
Act 71 of 2008.
2 In terms of Article 3.3 which provides that ‘[w]hen a member becomes the registered owner of a Unit,
he shall ipso facto become a member of the Association, and when he ceases to be the owner of any
Unit … he shall ipso facto cease to be a member of the Association’. ‘Unit’ is defined in Article 1.1 as
‘a dwelling unit for a single family…with or without outbuildings, and whether held under tenure in
terms of the Sectional Titles Act 66 of 1971, as amended, or situated on its own residential lot or
individual subdivision of a residential lot, tenure of which may be registered in the Land Register of the
Deeds registry’.
3 Article 4 empowers the trustees (directors) of the association to impose levies upon members for the
purpose of meeting all the expenses incurred or reasonably anticipated to be incurred in the attainment
of the association’s objects and to determine the rate of interest chargeable upon arrear levies in
accordance with the Limitation and Disclosure of Finance Charges Act 173 of 1968.
4 Article 5 vests the trustees of the association with the power to impose a system of fines and penalties
for the enforcement of any of the rules made for the running of the estate.
5 Article 46.
[4] In 2006, Mr Christiaan Petrus van der Walt and his wife, Lourette,
jointly purchased one of properties in the estate, Portion 7 of Erf 2461
(the property), which had an incomplete dwelling, for a sum of R900 000.
They took transfer of the property under Deed of Transfer T06/99802
dated 8 August 2006. The Van der Walts simultaneously caused a
mortgage bond to be registered over the property as security for a loan of
R1,6 million and an additional sum of R320 000 in favour of Firstrand
Bank Limited, the fifth respondent, which abides the decision of this
court in the appeal.
[5] In June 2006, the association had caused the Van der Walts to sign
an agreement in terms of which they bound themselves to its rules,
regulations and guidelines. According to this agreement they would, inter
alia, submit building plans for the association’s approval within two
months and finalise the renovation of the property as stipulated in the
approved building plans within nine months from its registration. They
further acknowledged that a breach of these timelines would result in the
imposition of a fine in accordance with the rules of the association.
[6] The Van der Walts failed to complete the renovations within the
prescribed period. They also fell behind with the payment of their levies
and
consequent
penalties
were?
imposed
by
the
association.
Subsequently, Mrs Van der Walt was sequestrated on 13 March 2009 and
her husband shortly thereafter, on 1 April 2009. The first to third
respondents (the trustees) were appointed joint trustees of their insolvent
estates. At that stage, the Van der Walts’ debt stood at R129 789. By the
launch of this? application in April 2012, it had increased to R771 049.
The market value of the property itself is not clear from the papers. On 9
September 2009, auctioneers had valued it at R1,1 million. A year later,
on 23 September 2010, the bank valued it for purposes of a forced sale at
R700 000. But a municipal valuation dated 2 November 2011 placed it at
R1 667 000. Nothing however turns on this uncertainty.
[7] In anticipation of a sale of the property, the association required the
new owner to accept and bind itself to its rules and regulations. It also
required payment of three months’ levies in advance from date of
registration and all outstanding levies and penalties up to the date of
registration prior to transfer of the property. The association’s demand
was made on the basis that the outstanding levies and building penalties
are akin to realisation costs stipulated in s 89(1) of the Insolvency Act 24
of 1936 (the Act)6 which gives a local authority or a body corporate under
the Sectional Titles Act7 the power to veto transfer of immovable
property until all moneys owing to them by the transferor are fully paid.
[8] For this stance, the association relied on one of the conditions
prescribed in the Deed of Transfer, title condition 5(B)(ii) (the embargo).
The embargo, which echoes the provisions of Article 46 and rule 2.5,
6 The section reads:
‘The cost of maintaining, conserving and realizing any property shall be paid out of the proceeds of
that property, if sufficient and if insufficient and that property is subject to a special mortgage,
landlord’s legal hypothec, pledge, or right of retention the deficiency shall be paid by those creditors,
pro rata, who have proved their claims and who have been entitled, in priority to other persons, to
payment of their claims out of those proceeds if they had been sufficient to cover the said cost and
those claims. The trustee’s remuneration in respect of any such property and a proportionate share of
the costs incurred by the trustee in giving security for his proper administration of the estate, calculated
on the proceeds of the sale of the property, a proportionate share of the Master’s fees, and if the
property is immovable, any tax as defined in subsection (5) which is or will become due thereon in
respect of any period not exceeding two years immediately preceding the date of the sequestration of
the estate in question and in respect of the period from that date to the date of the transfer of that
property by the trustee of that estate, with any interest or penalty which may be due on the said tax in
respect of any such period, shall form part of the costs of realization.’
7 Section 15B(3)(a)(i)(aa) of the Sectional Titles Act 95 of 1986 provides for a statutory embargo. This
court has held that the effect of that section is to create an ‘effective preference’ and to render the costs
of settling all arrear monies in respect of a unit as a cost of administration in an insolvent estate. See
Barnard NO v Regspersoon van Aminieen ‘n ander 2001 (3) SA 975 (SCA) para 15; Nel v Body
Corporate of the Seaways Building & another 1996 (1) SA 131 (A) at 140H-141A.
decrees that ‘[t]he owner of the [property] or any subdivision thereof, or
any person who has an interest therein, shall not be entitled to transfer the
[property] or any subdivision thereof or any interest therein without a
clearance certificate from the Home Owners Association that the
provisions of the Articles of Association of the Home Owners
Association have been complied with’. The association took the view that
the trustees had no power to transfer the property to any purchaser
without the clearance certificate envisaged in the embargo because (a) the
embargo vested it with a real right which diminished the rights of
ownership in relation to the property and bound the trustees too, as the
Van der Walts’ successors in title; (b) the trustees as successors to the
Van der Walts’ rights acquired no greater rights of ownership than those
held by the latter; and (c) the Van der Walts’ undisputed breach of their
obligation to keep their levies up to date under the association’s Articles
of Association entitled it to withhold the clearance certificate in terms of
the embargo.
[9] The bank, relying on the security provided by the mortgage bond,
had lodged and proved a claim against both estates of the Van der Walts.
The association’s attitude to that claim was that the bond was registered
pursuant to the Van der Walts’ acquisition of ownership in the property
and was therefore registered over the property subject to the association’s
real right and the concomitant diminution of the Van der Walts’ rights of
ownership in terms of the embargo. But, according to the trustees, the
association had no right to demand payment before transfer as the
embargo merely constituted a personal right which was not binding on
them but was limited to a concurrent claim in the insolvent estate.
[10] The trustees approached the high court seeking orders declaring
that the association’s claim in respect of the outstanding levies and
penalties against the insolvent estate did not constitute a claim in terms of
s 89(1) of the Act and that the Registrar could therefore pass transfer of
the property without the association’s consent. In the high court, and in
addition to the above contentions, the association, supported by the first
and second amici curiae, argued that the trustees’ interpretation of the Act
would result in an arbitrary deprivation of its real right in insolvency and
would be inconsistent with the constitutional provisions which entrench
the right to property. The parties agreed that if the embargo constitutes a
real right, the trustees’ application would fail and that the association
would, in law, be entitled to refuse to give its consent until the
outstanding amounts had been paid.
[11] As stated earlier, the high court found that the embargo is a mere
personal right which does not detract from the dominium of the property
or bind the trustees. The court rejected the amici curiae’s constitutional
argument and granted the declaratory relief sought by the trustees. This
decision, however, contradicted an earlier judgment of the high court8
which held that a similar title condition constituted a real right binding
upon the liquidators of an insolvent close corporation.
[12] The issues remain unchanged on appeal. The thrust of the
association’s argument was that the embargo is a real right intended to
bind the owner of the land and his successors in title in that it results in a
subtraction from dominium of the land against which it is registered. The
embargo thus remained binding on the Master and the trustees, so they
argued, because these parties stepped into the shoes of the insolvent
parties and acquired the same rights of ownership held by the insolvents.
8 Cowin NO v Kyalami Estate Homeowners Association [2013] ZAPGJHC 121 (25 February 2013).
[13] The trustees, on the other hand, submitted that whilst the embargo
prohibited the transfer of property by its owner, (a) there was no evidence
showing an intention to create a real right in the land; (b) that the true
object of the embargo was not to diminish ownership in the land but to
achieve specific performance of a contract by a member of the
association who also happens to be the owner of the land; (c) that the
right created by the embargo is a personal one attaching not to the land
but only to the current owner of the land, which is subject to the
concursus creditorum of insolvency; (d) that if a real right is created at
all, the envisaged transfer of land is voluntary and not a transfer
consequent upon a forced sale under insolvency law; and (e) that the
matter raises no constitutional issues.
[14] The amici curiae, the Association of Residential Communities CC
(ARC) and the National Association of Managing Agents (NAMA)
which are the only recognised representative bodies in South Africa for
homeowners associations and managing agents,9 participated in the
proceedings both in the high court and on appeal. Their contentions
before us related mainly to the constitutional implications of the matter
regarding the right to property of homeowners associations across the
country under ss 25(1) and 39(2) of the Constitution which respectively
entrench the right to property and require a statutory interpretation that
9 ARC was established to provide support, best practice and consulting services to the governing bodies
of residential estates such as homeowners associations, boards of directors and bodies corporate.
Governing bodies of about 45 per cent of all properties situated in residential estates in South Africa
are associated with it. NAMA was established with the primary objective of promoting and advancing
the interests of managing agents of residential communities in South Africa. It manages the affairs of
approximately 13 550 security estates representing approximately 495 000 individual property owners.
promotes the spirit, purport and objects of the Bill of Rights.10
[15] They argued that the interpretation of the Act for which the trustees
contended was inimical to these constitutional provisions because it
results in arbitrary deprivation of property. This is so, they contended,
because on this construction, upon an owner’s insolvency, the right of the
homeowners association to resist transfer without a clearance certificate
would be extinguished. Some of their further contentions were that
homeowners associations constitute a more recent form of communal
residential development for which no statutory protection, such as that
provided for municipalities and sectional title developments, has yet been
promulgated. Therefore the embargo, the insertion of which is a standard
and well-established practice, provides the associations with critical
protection as the only effective mechanism for ensuring the collection of
levies which are their lifeblood.
[16] To determine whether a right or condition in respect of land is real,
two requirements must be met: (a) the intention of the person who creates
the right must be to bind not only the present owner of the land, but also
successors in title; and (b) the nature of the right or condition must be
such that its registration results in a ‘subtraction from dominium’ of the
land against which it is registered.11 Whether the title condition embodies
a personal right or a real right which restricts the exercise of ownership is
a matter of interpretation.12 the intention of the parties to the title deed
10 In terms of the section 25(1) ‘[n]o one may be deprived of property except in terms of law of general
application, and no law may permit arbitrary deprivation of property.’ And s 39(2) provides: ‘[w]hen
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.’
11 Cape Explosive Works Ltd & another v Denel (Pty) Ltd & others 2001 (3) SA 569 (SCA) para 12;
Erlax Properties (Pty) Ltd v Registrar of Deeds and others 1992 (1) SA 879 (A) at 885B.
12 National Stadium South Africa (Pty) Ltd & others v Firstrand Bank Ltd 2011 (2) SA 157 (SCA) para
33.
must be gleaned from the terms of the instrument ie the words in their
ordinary sense, construed in the light of the relevant and admissible
context, including the circumstances in which the instrument came into
being.13 The interest the condition is meant to protect or, in other words,
the object of the restriction, would be of particular relevance.14
[17] Here, one of the pre-conditions which the developer of the
township was required to meet for the local authority to authorise the
subdivision of the erf on which the township was established (in terms of
s 92 of the Town-Planning and Townships Ordinance 15 of 1986) and the
Registrar to register the subdivision, was the insertion of the embargo in
all the title deeds of all the properties in the township. It was thus
common cause that the subdivision and the subsequent development of
the township would not have occurred without the insertion of the
embargo.
[18] According to the trustees, this meant no more than that the
township could not be subdivided without such title conditions being
inserted into the relevant title deeds. They disavowed any intention to
create a real right binding on successors in title, and trustees in the event
of insolvency, arguing that the embargo made no reference to successors
in title but instead required each new owner to bind himself and become a
member in his own right.
[19] In support of this contention, the trustees relied on the case of
Bodasing v Christie NO.15 There, a testator bequeathed a farm to each of
his two sons, subject to testamentary clause 24 which was registered
13 Bothma-Batho Transport v S Bothma & Seun Transport 2014 (2) SA 494 (SCA) paras 10-12.
14 Ibid. See also Willoughby’s Consolidated Co Ltd v Copthall Stores Ltd 1918 AD 1 at 16.
15 Bodasing v Christie NO 1961 (3) SA 553 (A) at 561.
against the respective title deeds. The clause granted each son a right of
pre-emption over the farm of the other to the effect that if either of them
wanted to sell he could do so only to the other at a specified price and on
specified terms and conditions. One son hypothecated his farm whereafter
his estate was sequestrated. The trustee subsequently sold the farm by
public auction to a third party against the other son’s objection that he
had a right to purchase the farm at the price fixed in the will which was
far less than that offered at the sale. The provincial division granted the
latter an interdict restraining transfer to the third party who appealed
successfully to the Full Bench. On further appeal to this court it was held
that the restraint imposed on the alienation of the immovable property,
which was bequeathed to each legatee giving each legatee a right of pre-
emption to the other legatee, bound the legatee only and not the trustee as
it only restrained a voluntary sale and not a sale made compulsory by the
law.
[20] Bodasing is, in my view, distinguished by its own facts and it does
not assist the trustees’ case. As this court pointed out, there was nothing
in clause 24 to indicate that the testator intended any right of pre-emption
to operate on the sequestration of the estate of either of the legatees. The
restraint imposed by clause 24 was intended for an entirely different
reason to that in this case ie to give a right of pre-emption specifically to
each of the legatees. Here, the underlying purpose of the embargo was to
create a general security for the payment of a debt as in the case of a lien
or a mortgage bond. Clearly, to achieve that purpose it had to bind all the
successive owners in the township. This object is also evident from the
plain language of the embargo which must be read with the provisions of
Article 46. It seeks to bind ‘the owner of the erf or any subdivision
thereof or any person who has an interest therein’. In so doing, it employs
generic, unqualified terms such as the ‘owner’ and ‘any person’. These
classes must, of necessity, include every owner or holder of a real right in
the property from time to time. This is further bolstered by the embargo
prohibiting transfer unless the purchaser has undertaken, on transfer, to
become a member of the association and to be bound by its rules. The
first aspect required for a real right is therefore satisfied.
[21] For a condition to be capable of valid registration as a real right,
the second aspect requires that it must carve out a portion of, or take
away something from, the dominium.16 This principle is embodied in
s 63(1) of the Deeds Registries Act 47 of 1937 in terms of which ‘[n]o
deed, or condition in a deed, purporting to create or embodying any
personal right, and no condition which does not restrict the exercise of
any right of ownership in respect of immovable property, shall be capable
of registration’.
[22] It is established that ownership comprises a bundle of rights or
competencies which include the right to use or exclude others from using
the property or to give others rights in respect thereof.17 One of these
rights or competencies is the right to freely dispose of the property, the
ius disponendi. If that ‘right is limited in the sense that the owner is
precluded from obtaining the full fruits of the disposition … [then] one of
his rights of ownership is restricted’.18 In this matter the embargo
registered against the property’s title deed ‘carves out, or takes away’
from the owner’s dominium by restricting its ius disponendi. Thus, it
16 Edelor (Pty) Ltd v Champagne Castle Hotel (Pty) Ltd 1972 (3) SA 684 (N) at 689F-690 B; Venter v
Minister of Railways 1949 (2) SA 178 (E); National Stadium SA fn 9 para 33.
17 Van den Berg v Dart & another 1949 (4) SA 884 (A) at 885; Geyser & another v Msunduzi
Municipality & others 2003 (5) SA 18 (N) at 37A-B; Mobile Telephone Networks (Pty) Ltd v SMI
Trading CC 2012 (6) SA 638 (SCA) para 17; National Stadium SA fn 9 para 31.
18 Pearly Beach Trust v Registrar of Deeds 1990 (4) SA 614 (C).
subtracts from the dominium of the land against which it is registered. It
satisfies the second aspect and is, therefore, a real right.
[23] I agree with the association and the amici curiae that the trustees’
argument that the embargo is meant to achieve specific performance of a
contract, which was accepted by the high court, conflates two distinct
rights – (a) the association’s claim for payment of the amounts due to it
by the Van der Walts, which is a personal contractual right ranking as a
mere concurrent claim in the insolvent estate; and (b) the association’s
right of veto in terms of the embargo which restricts the owner’s ius
disponendi. As pointed out above, the latter is the right in contention here
and it is a real right for the reasons set out above. As stated, the right
diminishes ownership in the property by entitling the association to
withhold a clearance certificate thus preventing the transfer of the
property until the Van der Walts’ outstanding debt has been paid. In that
case, the embargo remains binding on the trustees in whom the insolvent
estate now vests in terms of s 20 of the Act.19
[24] The effect of the embargo is akin to that of the embargos contained
in s 118 of the Local Government: Municipal Systems Act 32 of 2000
19 The section reads in relevant part:
(1) The effect of the sequestration of the estate of an insolvent shall be–
(a) To divest the insolvent of his estate and to vest it in the Master until a trustee has been appointed,
and, upon the appointment of a trustee, to vest the estate in him;
…
(1) For the purposes of subsection (1) the estate of an insolvent shall include–
(a) all property of the insolvent at the date of the sequestration, including property or the proceeds
thereof which are in the hands of a sheriff or a messenger under writ of attachment.’
(the Municipal Systems Act)20 and s 15B(3)(a)(i)(aa) of the Sectional
Titles Act 95 of 1986.21 These provisions respectively prohibit the
Registrar from registering the transfer of immovable property except on
production of a certificate issued by the municipality or a conveyancer
confirming that all moneys due to the municipality or a body corporate
have been fully paid.
[25] It is accepted that these statutory embargoes serve a vital and
legitimate purpose as effective security for debt recovery in respect of
municipal service fees and contributions to bodies corporate for water,
electricity, rates and taxes etc. Thus, they ensure the continued supply of
such services and the economic viability and sustainability of
municipalities and bodies corporate in the interest of all the inhabitants in
the country.22 And this is particularly so in the circumstances of
insolvency, when an effective legal remedy against an insolvent is most
needed.23
[26] These objects are precisely what the embargo in this case seeks to
achieve. Nothing in the law impedes this type of security. Neither is there
anything ‘insensible or unbusinesslike’ that undermines the apparent
20 The section reads:
(1) A registrar of deeds or other registration officer of immovable property may not register the
transfer of property except on production to that registration officer of a prescribed certificate–
(a) issued by the municipality in which that property is situated; and
(b) which certifies that all amounts due in connection with that property for municipal service fees,
surcharges on fees, property rates and other municipal taxes, levies and duties during the two years
preceding the date of application for the certificate have been fully paid.
(2) In the case of the transfer of immovable property by a trustee of an insolvent estate, the provisions
of this section are subject to s 89 of the Insolvency Act 24 of 1936.
21 The section provides:
‘(3) The registrar shall not register a transfer of a unit or of an undivided share therein, unless there is
produced to him–
(a) a conveyancer’s certificate confirming that as at date of registration–
(i)(aa) if a body corporate is deemed to be established in terms of section 36(1), that body corporate
has certified that all moneys due to the body corporate by the transferor in respect of the said unit have
been paid, or that provision has been made to the satisfaction of the body corporate for the payment
thereof’.
22 Geyser fn 14 at 37.
23 Barnard NO v Regspersoon van Aminie en ‘n ander fn 7 para 15.
purpose of the title condition in the interpretation contended for by the
association.24 In one of the cases postulated by trustees, where there may
be insufficient funds to meet the debt, there is no indication in the
association’s Articles of Association and rules that the association cannot
waive its veto right and issue the clearance certificate to ensure the sale of
the property. The Act provides its own safeguards to address possible
prejudice to creditors. For a start, a sequestration may not be ordered
unless it is shown that it will be to the advantage of creditors to do so.
And provision is made in a careful scheme for the disposition of an
insolvent estate including cases where there are insufficient assets to meet
the creditors’ claims.
[27] It must be borne in mind that homeowners associations are obliged
to provide services to all of their members. And so, similarly to
municipalities and bodies corporate which enjoy the statutory protection
afforded by the embargoes, they extend credit to all the homeowners in
their estates without the benefit of requiring security therefor. As was
contended by the amici curiae, there is no material difference between
homeowners associations and bodies corporate in terms of their objects,
activities and status. There is simply no basis to deprive the association of
the protection afforded by the embargo which has an identical purpose
and effect to that provided to bodies corporate (and municipalities) by a
law of general application.
[28] It bears mention that the embargo confers no preference on the
association’s claim which indeed remains a concurrent claim as
24 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18.
contended by the trustees.25 Its effect is merely to secure payment of the
claim. And, in insolvency, this is done only in so far as it is not
incompatible with the rights of other creditors. It is settled in the context
of statutory embargoes that an amount paid in order to enable property
sold by a trustee or liquidator to be transferred to the buyer is included in
the cost ‘of maintaining, conserving and realising’ property to which
reference is made in s 89(1) of the Act.26 Likewise, to discharge their
duty to sell the property, the trustees in this case must pay the outstanding
levies and penalties as part of ‘the cost of … realising any property’
within the meaning of s 89(1), out of the proceeds of the property, in the
manner contemplated in s 118(2) of the Municipal Systems Act.
[29] To hold otherwise would deprive the association of an effective
tool for ensuring the collection of levies. This would impose enormous
costs on it (and on other homeowners associations across the country,
whose services infrastructure installed in residential estates is valued at
more than R10 billion, particularly having regard to the evidence that just
35 members of NAMA are owed fees in excess of R28 million in respect
of members whose properties were subjected to forced sales) with dire
consequences on its ability to run the estate. One obvious example of
such consequences is that the credit standing and ability of homeowners
associations to secure finance would be adversely affected because of
their inability to collect debts owed to them.
25 As mentioned above, it confers an ‘effective preference’ in respect of the claim in that amounts due
form part of the costs of administration. See fn 7.
26 Rabie NO v Rand Townships Registrar 1926 TPD 286; Nel NO v Body Corporate of the Seaways
Building & another 1996 (1) SA 131(A) at 139D-140G; Eastern Metropolitan Substructure of Greater
Johannesburg Transitional Council v Venter NO 2001 (1) SA 360 (SCA) paras 32 -34; Barnard NO fn
19 paras 9-18. First Rand Bank Ltd v Body Corporate of Geovy Villa 2004 (3) SA 362 (SCA) paras 21-
27; BOE Bank Ltd v Tshwane Metropolitan Municipality 2005 (4) SA 336 (SCA) para 7; City of
Johannesburg v Even Grand 6 CC 2009 (2) SA 111 (SCA) para 14.
[30] A further consideration is that the Registrar has seen fit to register
this condition against the title deeds of the properties in the township.
Whilst this is, of course, not decisive, it is important to bear in mind the
approach of this court to actions taken by the Registrar. In Registrar of
Deeds (Transvaal) v The Ferreira Deep Ltd,27 De Villiers CJ said:
‘In Hollins v. Registrar of Deeds, supra, INNES, C.J., expressed the opinion that the
Court should be very careful in dealing with the Registry of Deeds. With that view I
entirely agree, and it is for that reason the more that it is satisfactory to be able to
arrive at this conclusion. It would be no light matter for the Court to declare of no
value rights which have been registered against title, which have been looked upon by
the public as valid, and upon the faith of which numerous transactions have been
entered into.’28
[31] As to the constitutional point raised by the amici curiae, which may
well have merit, it was properly conceded on their behalf that a finding
that the embargo constitutes a real right and is therefore enforceable
against the trustees as well would dispense with the need to address it.
Thus, nothing more need be said in that regard.
[32] For all these reasons, the appeal must succeed with costs to follow
the result in the ordinary course. There is, of course, no need to make any
costs award in respect of the amici curiae.29
[33] The following order is made:
1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the court below is set aside and replaced with the
following:
27 Registrar of Deeds (Transvaal) v The Ferreira Deep Ltd 1930 AD 169 at 181.
28 Hollins v. Registrar of Deeds 1904 TS 603.
29 Minister of Justice v Ntuli 1997 (3) SA 772 (CC) para 43; Mohunram and another v National
Director of Public Prosecutions and another (Law Review Project as Amicus Curiae) 2007 (1) SA 222
(CC) para 105.
‘The application is dismissed with costs including the costs of two
counsel.’
____________________________
MML MAYA
JUDGE OF APPEAL
APPEARANCES:
For 1St Appellant:
W Trengrove SC ( N Ferreira)
Instructed by: N Van der Walt Inc,
Pretoria
Symington & De Kok,
Bloemfontein
For 1St to 3rd Respondents:
MM Oosthuizen SC (L Meintjies)
Instructed by: Rorich, Wolmarans
Luderitz Inc, Pretoria
Kamer Weihman & Joubert Attorneys,
Bloemfontein
For Amicus Curiae:
S Budlender
Instructed by: Adams & Adams
Attorneys, Pretoria
Honey Inc, Bloemfontein
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
12 December 2014
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Willow Waters Homeowners Association (Pty) Ltd v Koka
(768/13) [2014] ZASCA 220 (12 December 2014)
Media Statement
Please note that the media summary is intended for the benefit of the media and does not form part
of the judgment of the Supreme Court of Appeal
Today the Supreme Court of Appeal (SCA) delivered judgment upholding the appeal against an order
of the North Gauteng High Court, Pretoria. The SCA set aside the order of the court below and
replaced it with an order dismissing the application.
The issue in this appeal was whether embargo provisions in a title condition registered against the
title deed of immovable property preventing the transfer thereof without a clearance certificate from a
homeowner’s association constituted a real or a personal right
The appellant’s (the association) membership comprised of registered owners of property in the
township. These owners automatically assumed that status and were bound by the association’s
Articles of Association and Rules until such ownership ceased.
In 2006, Mr Christiaan Petrus van der Walt and his wife, Lourette, jointly purchased one of properties
in the estate, Portion 7 of Erf 2461 (the property), which had an incomplete dwelling, for a sum of
R900 000. They couple caused a mortgage bond to be registered over it as security for a loan of R1,6
million and an additional sum of R320 000 in favour of Firstrand Bank Limited, the fifth respondent. In
June 2006, the association had caused them to sign an agreement in terms of which they bound
themselves to its rules, regulations and guidelines According to this agreement they would, inter alia,
submit building plans for the association’s approval within two months and finalise the renovation of
the immovable property as stipulated in the approved building plans within nine months from its
registration. They further acknowledged that a breach of these timelines would result in the imposition
of a fine in accordance with the rules of the association. The Van der Walts failed to complete the
renovations within the prescribed period and also fell behind with the payment of their levies and
penalty imposed by the association. Subsequently, Mrs Van der Walt was sequestrated on 13 March
2009 and her husband shortly thereafter, on 1 April 2009. The Bank then valued the property for a
forced a sale.
`
In anticipation of a sale of the property, the association required the new owner to accept and bind
itself to its rules and regulations. It also required payment of three months’ levies in advance from
date of registration and all outstanding levies and penalties up to the date of registration prior to
transfer of the property. For this stance, the association relied on one of the conditions prescribed in
the Deed of Transfer, title condition 5(B)(ii) (the embargo).
The Bank, relying on the security provided by the mortgage bond, had lodged and proved a claim
against both estates of the Van der Walts. The association’s attitude to that claim was that the bond
was registered pursuant to the Van der Walts’ acquisition of ownership in the property and was
therefore registered over the property subject to the association’s real right and the concomitant
diminution of the Van der Walts’ rights of ownership in terms of the embargo. But, according to the
trustees, the association had no right to demand payment before transfer as the embargo merely
constituted a personal right which was not binding on them but was limited to a concurrent claim in
the insolvent estate.
The trustees approached the high court seeking orders declaring that the association’s claim in
respect of the outstanding levies and penalties against the insolvent estate did not constitute a claim
in terms of s 89(1) of the Insolvency Act 24 of 1936 and that the Registrar could therefore pass
transfer of the property without the association’s consent.
The SCA held that it was accepted that statutory embargoes served a vital and legitimate purpose as
effective security for debt recovery in respect of municipal service fees and contributions to bodies
corporate for water, electricity, rates and taxes etc and that therefore there was simply no basis to
deprive the association of the protection afforded by the embargo.
The SCA held further that homeowners associations are obliged to provide services to all of their
members. And so, similarly to municipalities and bodies corporate which enjoy the statutory
protection afforded by the embargoes, they extend credit to all the homeowners in their estates
without the benefit of requiring security therefor
The SCA found therefore that the embargo registered against the property’s title deed ‘carves out, or
takes away’ from the owner’s dominium by restricting its ius disponendi. Thus, it subtracted from the
dominium of the land against which it was registered and was consequently a real right.
--- ends ---
|
1919
|
non-electoral
|
2011
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 130/11
In the matter between:
SELWYN WINSTON DE VRIES
First Appellant
VIRGIL LENNITHE DE VRIES
Second Appellant
JULIAN MICHAEL VAN HEERDEN
Third Appellant
LLEWELLYN SMITH
Fourth Appellant
ACHMAT MATHER
Fifth Appellant
and
THE STATE
Respondent
Neutral citation: De Vries v The State (130/11) [2011] ZASCA 162 (28 September
2011)
Coram:
Navsa, Mhlantla and Leach JJA
Heard:
29 August 2011
Delivered:
28 September 2011
Summary: Criminal law and procedure ─ cigarettes stolen in series of hijackings
sold to appellant for distribution ─ appellant guilty of theft of cigarettes as well as of
money laundering under POCA ─ those offenses also predicate offences justifying
racketeering conviction under s 2(1)(e) of POCA ─ State entitled to prosecute all
such offences in a single prosecution ─ such not an improper splitting of charges nor
leading to a duplication of convictions
__________________________________________________________________
O R D E R
___________________________________________________________________
On appeal from: The Western Cape High Court (Cape Town), (Bozalek J) sitting as
court of first instance):
The appeal is dismissed.
___________________________________________________________________
J U D G M E N T
___________________________________________________________________
LEACH JA (NAVSA AND MHLANTLA JJA concurring)
[1] The five appellants were among eleven accused tried in Western Cape High
Court, Cape Town on a plethora of charges, including several under the Prevention
Of Organised Crime Act 121 if 1998 („POCA‟). The trial commenced in August 2005
and ran in fits and starts for some three years. It resulted in all five appellants being
convicted on some or other of the charges. The fifth appellant, who was accused no
11, was convicted of three charges under POCA and two of theft and sentenced to
an effective 5 years‟ imprisonment. With leave of the trial court, the fifth appellant
appeals to this court against his convictions, both in respect the facts found proved
as well as in respect of two special entries recorded by the trial court. The remaining
appellants were granted leave solely in respect of the first special entry. But,
although they were represented at some stage and were responsible for having
prepared the record,1 they prosecuted their appeals no further and did not appear at
the hearing. Presumably they intend to abide this court‟s decision on the first special
entry. In any event, in the light of their failure to appear I intend to proceed on the
basis that the fifth appellant alone is before us on appeal, and shall thus refer to him
henceforth as „the appellant‟.
[2] During 2003 the British American Tobacco Company of South Africa (BATSA)
was the victim of a series of armed robberies carried out by an armed gang which
hijacked BATSA trucks at gunpoint and stole their cargoes of cigarettes. On each
1 This were informed from the bar.
occasion the truck was stopped by members of the gang masquerading as
policemen (they wore police uniforms and used a vehicle with a flashing blue police
light) who called on the driver to stop. When he complied, they held him up at
gunpoint while cases of cigarettes were transferred to a waiting truck and then
removed to Gauteng for sale. The first two of these robberies occurred in the
Western Cape; the initial incident on 24 June 2003 outside Worcester and the
second on 12 August 2003 near Darling. The value of the cigarettes stolen was
considerable; R690 285 on the first occasion and R719 351 on the second. Both
robberies were the brainchildren of Selwyn de Vries, who played an active part in
their organisation and execution, and who was aided and abetted by his younger
brother, Virgil de Vries. They were, respectively, the first and second accused in the
trial in the high court.
[3] It is often said that there is no honour among thieves, and that proved to be
the case in regard to a third robbery that occurred on 2 October 2003 at Kinkekbos
near Port Elizabeth in the Eastern Cape. It had been carefully planned by Selwyn de
Vries and other members of his gang who had travelled to the Eastern Cape to spy
out the land and had selected a place suitable to carry out a similar hijacking.
However when it was suspected that Selwyn de Vries had stolen a considerable
sum of money from the aunt of Julian van Heerden,2 one of his gang members,
members of the gang fell out with one another and Van Heerden and others went off
to carry out the third robbery without the De Vries brothers. They did so using the
same modus operandi as before. Disguising themselves as policemen, they flagged
down a BATSA truck near Kinkelbos and held up the driver at gunpoint. The truck‟s
cargo was transferred to another truck being driven by Vernon James Aspeling, who
had also driven the getaway truck during the first two robberies and who later played
a substantial role in the trial of the appellant and his co-accused. Van Heerden and
the other robbers then drove off towards Gauteng leaving Aspeling following behind
in the truck carrying the spoils. However the De Vries brothers had smelled a rat.
They hastened to the Eastern Cape, arriving on the scene shortly after the incident.
Aspeling had not gone far when they drew up alongside his truck and threatened to
shoot him if he did not stop. He did, and the De Vries brothers and a companion
assumed control of the truck and took it on a different route to Gauteng. Van
Heerden and his crew learned what had happened and, once both groups of robbers
2 He was the third accused and was initially cited as the third appellant in this appeal.
had returned to Gauteng, a confrontation between them took place which resulted in
a gun-battle during which Virgil de Vries sustained a severe gunshot wound. It also
attracted the attention of the police and, ultimately, led to the arrest of the De Vries
brothers and a number of the other miscreants.
[4] As a sequel to these events, the appellant and eleven others were arraigned
for trial in the high court on various charges. It was not suggested that the appellant
had personally participated in any of the robberies but the state alleged that he had
purchased the stolen cigarettes and had received them for the purpose of resale,
well knowing that they had been stolen. He was therefore charged with an alleged
contravention of s 2(1)(f) of POCA (count 1 of the indictment); an alleged
contravention of s 2(1)(e) of POCA (count 2 ); a number of counts of robbery with
aggravating circumstances; and three counts of „money laundering‟ in contravention
of s 4 of POCA.
[5] The matter was set down for trial on 1 August 2005. When the matter was
called that day, the prosecutor informed the court that she could not proceed as she
was still awaiting both the necessary written authority from the National Director of
Public Prosecutions („NDPP‟) required under s 2(4) of POCA and a centralisation
certificate under s 111 of the Criminal Procedure Act 51 of 1977. This led to the
matter being postponed for two weeks to enable the state to get these formalities in
order.
[6] When the matter resumed on 15 August 2005 it appeared, that following
representations received, the NDPP had decided not to authorise the prosecution of
the 11th accused cited in the charge, Denzil Boyles. The charges against him were
withdrawn and led to the appellant, who had until then been the 12th accused in the
indictment, becoming accused no 11 and the charge sheet being amended
accordingly. Following this, both the centralisation certificate and the requisite written
authority under s 2(4) of POCA, which by then had come to hand, were handed in
without objection from the defence. Thereafter the charges were duly put and the
trial eventually got under way.
[7] The trial turned into a marathon, hallmarked by unnecessarily lengthy and
tiresome cross-examination. It was also interrupted by a number of interlocutory
applications. Eventually, after some three years, it culminated in most of the accused
being convicted on various counts and sentenced to varying terms of imprisonment.
The appellant was convicted on two counts of theft arising from the two robberies in
the Western Cape, the court concluding although he had not participated in the
robberies himself, he had indeed purchased the stolen cigarettes a time when he
must have been aware that they were stolen goods. The court also concluded that
the appellant‟s actions in doing so for the purpose of resale amounted to „money
laundering‟ as envisaged in s 4 of POCA, and convicted him on two charges under
that section. Finally the court concluded that through his actions the appellant had
associated with the enterprise of the De Vries gang and had participated in its affairs
through a „pattern of racketeering activity‟ in contravention of s 2(1)(e) of POCA, and
convicted the appellant on count 2 of the indictment as well. The appellant was
sentenced to an effective total of five years‟ imprisonment with a further three years‟
imprisonment being conditionally suspended. It is not necessary to deal with the
individual sentences for purposes of this judgment as there is no appeal in that
regard.
[8] Immediately after sentence had been imposed, the appellant applied for leave
to appeal. He also applied for no less than14 special entries to be entered onto the
record of which the court a quo found all but two to be vexatious (I shall return to
them in due course). In regard to the application for leave to appeal, counsel for the
appellant indicated that a formal document containing the grounds of appeal was in
the process of being prepared and undertook to hand it in in due course. As the 27
grounds of appeal upon which the application for leave was based all related solely
to the conviction which had occurred several months earlier, it is inexplicable that a
written document containing the grounds of appeal had not been prepared. Be that
as it may, the learned judge in granting leave to appeal stated that he had decided
„not to attempt to sift the numerous grounds of appeal, many of which are interwoven
with others, but rather to allow the (appellant), through his notice of appeal, to
stipulate the grounds upon which he proposes to rely‟. Unfortunately neither the
promised grounds of appeal nor a notice of appeal were ever forthcoming, which
complicated matters both for this court as well as for his counsel who proceeded to
raise issues in respect of which leave to appeal had been neither sought nor
granted.
[9] The first issue to be decided is whether the court a quo erred in concluding
that the cigarettes stolen in the initial two robberies in the Western Cape were
indeed ultimately sold and delivered to the appellant as, if his denial of having
purchased them cigarettes is reasonably possibly true, his convictions cannot stand.
The principal state witness implicating the appellant was Aspeling. The holder of a
heavy-duty driver‟s licence who had in the past operated his own transport business,
Aspeling had also run a bottle store and a nightclub through which he had come to
know the De Vries brothers.
[10] According to Aspeling, about a month before the first robbery he was
approached by an acquaintance known as Zallie who introduced him to Julian van
Heerden (accused no 3 in the trial). At their request, he arranged the hire of a truck
which he agreed to drive in order to transport wrecked motor cars from Klerksdorp.
This proved to be a ruse on the part of Zallie and Van Heerden as they told him to
drive them to Cape Town rather than to Klerksdorp. On the way, they met the De
Vries brothers and, on arriving in the Western Cape, Aspeling eventually learned
that the reason the truck was required was to transport cigarettes which were to be
stolen from BATSA. He seems to have had no difficulty in falling in with the plan and
drove the truck not only to the scene where the robbery was carried out, but
thereafter back to Cape Town and, eventually, via a circuitous route back to
Gauteng.
[11] On reaching Gauteng, Aspeling drove directly to Selwyn de Vries‟ home in
Ennerdale where 163 cases containing cigarettes were initially offloaded but were
later repacked into the truck. Aspeling testified that he then drove the truck to
Lenasia, following Virgil de Vries and Van Heerden who were travelling in another
motor vehicle. They led him to a nursery in Lenasia where the cases of cigarettes
were offloaded onto pallets. While there, he saw Virgil de Vries together with the
appellant who was dressed in Muslim attire. At some stage Virgil de Vries addressed
the appellant as „Bra Achie‟ and told him he needed the parcel. The appellant
immediately produced a bundle of bank notes totalling exactly R10 000 and gave it
to Virgil de Vries. It was the exact amount needed to pay the balance due in respect
of the hire of the truck and Virgil de Vries, in turn, handed it to Aspeling to enable
him to make the payment. Several days later at a meeting held at Selwyn de Vries‟
home, Aspeling was paid R53 000 as his share of the proceeds of the robbery.
[12] Several weeks later, at the request of Selwyn de Vries, Aspeling again hired a
similar truck and agreed to participate in the second robbery. He described the
events surrounding the robbery in detail and how he had again driven back to
Gauteng in the truck bearing the stolen cigarettes which, once more, ended up being
finally offloaded at the appellant‟s nursery in Lenasia. Aspeling stated that the
appellant was there at the time and gave instructions to his workers to assist in the
unloading.
[13] For completeness, I should mention that Aspeling also testified about the
planning of the third robbery in the Eastern Cape, the execution of that robbery and
the subsequent hijacking of the hijacked cargo of cigarettes. He also described how
after the latter event he had been taken by the De Vries brothers to a house in
Comaro where the cigarettes were left in a garage, and that he had heard Virgil de
Vries making telephonic arrangements with the appellant for the cigarettes to be
collected. He later ascertained that the cigarettes had vanished from the garage and,
together with Van Heerden and others, went to confront the appellant at his place of
business and demanded to be paid. The appellant telephoned Virgil de Vries and an
arrangement was made for Aspeling, Van Heerden and the others to go to the home
of Selwyn de Vries. They were on their way there when the confrontation and gun
battle mentioned earlier took place.
[14] The appellant denied all the allegations involving him in these events and
suggested they were figments of Aspeling‟s imagination, probably designed to cover
up the true identity of the actual purchaser of the stolen cigarettes. Appellant‟s
counsel on appeal sought to criticise Aspeling‟s reliability, suggesting that as he had
not identified the appellant at an identification parade his identification of him in court
was no more than a so-called „dock identification‟ and thus inherently unreliable. Of
course the presence of an accused in the dock may sometimes cause a witness to
wrongly assume that he or she is the responsible person. But this is not such a case.
Aspeling testified about three occasions when he went to the appellant‟s premises
and saw the appellant. It is not the appellant‟s case that Aspeling could be mistaken.
He contends that Aspeling‟s testimony regarding the delivery of the cigarettes at his
nursery in Lenasia after the first two robberies and the approach Aspeling and Van
Heerden made to him to demand payment for the cigarettes stolen in the third
robbery, is deliberately false. In these circumstances there is no room for a possible
mistaken identification. Either Aspeling lied or he told the truth.
[15] The court a quo believed Aspeling. It subjected his testimony and credibility
as a witness to exhaustive scrutiny. In doing so, it emphasized that Aspeling had
testified in great detail in regard to the various roles that individual participants had
played in the material events. So great was his assurance in doing so that one of the
counsel who appeared for certain of the accused complemented him on the faultless
delivery of his evidence in chief. Importantly he was in no way shaken by lengthy
and harrowing cross examination and, as appears from the following extract of six
paragraphs from the judgment which are worthy of repetition, impressed the trial
judge as a witness:
„[73]
This Court had an extended opportunity to observe the witness. He was, as was put
to him on several occasions by counsel, clearly a man of considerable intelligence. He was,
furthermore, articulate with a confident and assertive personality. He appeared to bear no
particular malice or resentment against the accused despite oblique references to incidents
which he regarded as threatening to his or his wife‟s safety and that of his son by his first
marriage. This lack of malice was borne out by the fact that he had no hesitation in testifying
that certain of the accused were not involved in certain of the robberies. So for example (he)
testified that accused 6, 7 and 10 were not involved in the first robbery and that, in relation
to the third robbery, accused 10 did no more than pick up accused 1 at the Kroonvaal toll
plaza.
[74] For the most part Aspeling appeared to enjoy the battle of wits involved in his cross-
examination. This was manifest in his tendency to sometimes become somewhat
argumentative under cross-examination, to ask the cross-examiner questions and to argue
his own position or to seek to demolish the position being advanced by counsel on behalf of
one or other of the accused. Notwithstanding these criticisms Aspeling‟s evidence as a
whole and in cross-examination was most impressive. Counsel for accused 11, Mr
Spangenberg, placed great reliance on what he argued was Aspeling‟s failure to answer a
critical question in cross-examination. This incident must be seen in context, however. In the
first place it occurred towards the end of Aspeling‟s marathon stint in the witness box and
towards the end of his lengthy cross-examination. The cross-examination in question was at
times aggressive if not ill-tempered with neither the cross-examiner nor Aspeling prepared to
give an inch. Aspeling referred to it as a “tug of war”. Its tone was evidenced by State
counsel‟s objections to aspects of the cross-examination as being “bullying” and “sarcastic”.
[75] Towards the end of his eleventh day in the witness box Aspeling declined to answer
further questions concerning the issue of Zallie misleading him as to the true purpose of the
trip to Cape Town. He did so on the basis that the answer would become “too lengthy”. He
continued to answer all other questions until Court adjourned for the day shortly thereafter.
The following morning at the re-commencement of his cross-examination, Aspeling
immediately declared himself willing to answer any further questions on the topic. He
explained that he and the cross-examiner had “started on a rocky road” the previous day.
Asked by the cross-examiner why he had refused to answer the previous day he explained,
“but to me, it seemed as if we were at a type of war or something”. In my view the
explanation furnished by the witness for his refusal to answer the question the following day
after more mature reflection of his position largely negated any criticism that this incident
adversely affected his credibility or indicated an inability to answer was entirely credible.
Further, his preparedness to answer the question the following day after more mature
reflections of his position largely negated any criticism that this incident adversely affected
his credibility or indicated an inability to answer the question.
[76] Notwithstanding the extremely favourable impression which Aspeling made as a
witness, his evidence was not without fault. I have already alluded to the improbability of
aspects of his evidence relating to how he was drawn into the first robbery. A similar
criticism can perhaps be levelled at his evidence regarding his initial false explanation to his
accomplices as to what had happened to him whilst driving away from the scene of the
Kinkelbos robbery with the cargo of cigarettes. Aspeling‟s explanation of his behaviour in
this regard is that he did not want to disclose accused 1 and 2‟s role in the post-Kinkelbos
hijacking because he wished to avoid the spectre of his accomplices charging off to
Johannesburg to engage in a violent confrontation with accused 1 and 2. This explanation
cannot be rejected out of hand since, given his intelligence and the fact that he‟d already
made the suggestion to accused 1 and 2, it seems clear that Aspeling had already then
seen the possibilities of negotiating with accused 1 and 2 for a share of the proceeds of the
robbery.
[77] Aspeling impressed as someone who had decided to make a clean breast of things
and was quite prepared to admit to the criminal actions in which he had been involved. He
revealed himself as someone who kept cool in a situation of crisis or pressure and as
someone who would invariably talk his way out of a tight corner rather than resort to
violence or threats of violence. As far as accomplice witnesses are concerned, I have never
previously encountered a witness who testified over so wide a terrain and in such great
detail but with so little damage being done to his evidence. The above observations were
made and impressions formed, on a prima facie basis, after hearing Aspeling testify in
February 2006. Given the elapse of more than two years before argument was eventually
heard I re-read his transcribed evidence in full after hearing argument which transcription
was available to counsel throughout. If anything, this re-reading strengthened my first
impressions of his evidence arrived at more than two years before.
[78] In summary then, Aspeling‟s evidence, although not flawless, contained no material
contradictions or inconsistencies. What improbabilities there may be in his evidence are not
of such a degree as to render his veracity suspect . . ..‟
[16] I do not think that this assessment of Aspeling as a witness can be materially
faulted and it serves as a riposte to many of the criticisms levied against him on
appeal. Moreover, the learned judge was acutely aware of the danger of relying
upon the evidence of a single witness, particularly one who was an accomplice, and
therefore concluded that it would not be safe to rely on Aspeling‟s identification of
the various accused without some additional safeguard speaking for its reliability. In
the appellant‟s case he found such a safeguard in his untruthful evidence in regard
to the security arrangements at his business premises in Lenasia.
[17] A photograph of the entrance of the appellant‟s nursery in Lenasia was
produced which showed a high double storied building, referred to as the
„guardhouse‟, immediately adjacent to a large sliding gate. Aspeling testified that this
building and gate were there when the stolen cigarettes were taken there after the
robberies and had in fact been in existence long before then. This the appellant
denied. He alleged that the foundations of the guardhouse had only been laid in July
2003; that on 5 August 2003, his birthday, the wall was still only a few bricks high;
and that the guardhouse had only been finally completed in February 2004. In
purported proof of this, the appellant handed in an invoice relating to a payment
made for the construction of the guardhouse in September 2003 and called the
alleged builder, John Mangongwa, as a witness to testify that he had only built the
guardhouse during the second half of 2003. The appellant therefore alleged that
Aspeling was untruthful and that he had in fact never been to the appellant‟s
premises.
[18] In order to meet this, the state successfully applied to re-open its case to
prove certain aerial photographs, allegedly taken on 2 August 2003, as well as the
opinion of a photogrammetric surveyor who testified that examination of such
photographs showed that the guard-house had been completed when they were
taken. The court a quo accepted this evidence and concluded that the evidence of
both the appellant and Mangongwa in regard to when the guardhouse was
constructed was a fabrication. It was this finding that was attacked on appeal.
[19] I did not understand the appellant to dispute the photogrammetric analysis of
the photographs or that the guardhouse had indeed been built by the time they were
taken. What was disputed, however, was whether the photographs were taken on 2
August 2003 as the state alleged, the appellant arguing that the state had failed to
prove that to have been the case.
[20] The state sought to prove the date of the photograph through the evidence of
Meshack Thathane, an employee of AOC Geomatics, a company that had been
employed by the local authority to map the area. The records of that company reflect
that the photographs were taken on 2 August 2003 and that Thathane was the
camera operator who did so. He described the process used to take aerial
photographs and how the a film is then removed from the camera and conveyed to
the company‟s offices in a film canister. On each occasion a logbook with flight
details, including details of the film used, is completed. The logbook relating to 2
August 2003 was completed in his hand, save for certain entries made by the
laboratory technician including the film number, V13928. Thathane confirmed that he
had been the person who took the photographs on that day, and his evidence in that
regard was not really challenged. All that was put to him was that he relied on the
logbook to establish the date, to which he replied in the affirmative.
[21] The aerial photographs in question were processed from negatives on a film
bearing the number V13928. But as that number had been written into the logbook
by the technician and not by Thatane, and as the technician was not called, the
appellant argued that the entry was hearsay and that the state had therefore not
established that the photographs had indeed been taken when Thathane said they
were.
[22] Thathane not only described the customary process which was followed in
which the technician wrote the full number onto the log during the course of the
processing procedure, but went on to describe how he was involved in the checking
process after the films had been processed. This involved making copies of the
photographs and laying them out to see that all was in order for the purposes of
mapping; all of which was generally done within a few days. In these circumstances,
as it would have been readily apparent to all concerned in the mapping process if
photographs were printed that were not of the area photographed for mapping a few
days earlier, the inference is irresistible that the prints which were processed and
used in that process were those he had taken shortly before – and that the
company‟s records were therefore accurate. Moreover, it was never directly put to
Thathane that the photographs were in fact not taken on the day that he said. Had
he been specifically challenged in that regard, he might well have been able to
provide a satisfactory explanation. It was also the undisputed evidence of Mr Slough,
who had been involved in concluding contracts for AOC Geomatics, that the
company‟s contract to carry out the mapping of the area in question was carried out
in 2003. Bearing all of this in mind, I am of the view that the state satisfactorily
proved that the photographs were taken on 2 August 2003. That being the case, the
court a quo correctly rejected the appellant‟s evidence that the guard house had not
yet been fully built when Aspeling said he had gone to the appellant‟s premises.
[23] Counsel for the appellant argued that even if this court were to conclude that
to have been the case, it was merely established that the appellant had been
untruthful in that regard but did not render Aspeling‟s evidence any more reliable. On
the contrary, it is trite that regard may be had to untruthful evidence or mendacity on
the part of an accused as a factor reducing the risk of relying upon an accomplice‟s
evidence3 and I am not persuaded that the court a quo erred in its approach.
[24] In truth the entire issue in regard to whether the appellant lied about the
guard-house is something of a red herring. His untruthfulness in that regard was not
the sole factor relied upon by the trial court as a safeguard in accepting Aspeling‟s
evidence. This is apparent from the judgment of the court below in which it is stated
that Aspeling‟s evidence regarding the purchase of the cigarettes was accepted not
simply as the appellant had given false evidence „but also in the light of Aspeling‟s
evidence as a whole and the probabilities‟.
[25] Importantly, Aspeling‟s version was corroborated by a number of independent
objective facts. Thus, for example, the passenger list of the InterCape bus service
corroborated his allegation that one of the accused in the trial had travelled from
Cape Town to Port Elizabeth on 1 October 2003 as he testified; South African Police
Services insignia and several sets of police uniforms were found in a room on Virgil
de Vries‟ property when he was arrested; an invoice from the transport company
from which Aspeling had hired the truck in August 2003 reflected a payment made
by him as he had testified; a security officer at the Cape Town Waterfront confirmed
that he had clamped a red Jetta motor vehicle, an incident which Aspeling testified
had occurred when he had breakfasted there with Selwyn de Vries and others
shortly before the second robbery. All of this tends to corroborate the truth of
Aspeling‟s detailed version.
3 See S v Hlapezula 1965 (4) SA 439 (A) at 440F-G.
[26] In addition, it seems to me to be highly improbable that Aspeling would
implicate his other co-accused in events in which there can be no doubt that they did
participate, but for some unknown reason falsely implicate the appellant. It was
suggested that he did so probably in order to protect the identity of the person to
whom the cigarettes were in fact sold but it is improbable that he would have
endangered the acceptability of his entire evidence by implicating a wholly innocent
person whom he did not know and who might well be in a position to categorically
refute his allegations. Importantly, there is nothing externally visible at the
appellant‟s Lenasia nursery to indicate that he is a purveyor of cigarettes, and the
fact that he does operate a cigarette wholesaling business from those premises was
something which Aspeling was unlikely to have known unless he delivered the
cigarettes there as he said he did. It is also not without significance that he
described the appellant as being dressed in traditional Muslim attire, which the
appellant admitted he often did, and that the appellant is indeed known by the name
„Bra Achie‟, the name Aspeling said Virgil de Vries used when addressing him.
[27] In the light of all these circumstances, even without taking the appellant‟s
mendacity in regard to the guardhouse into account, I am satisfied that the trial court
correctly accepted Aspeling‟s identification of the appellant as the person to whom
the cigarettes stolen from the first two robberies in the Western Cape were
delivered. In the light of the quantity of cigarettes and the circumstances surrounding
their delivery, the appellant must have known that they had been stolen and, as theft
is a continuing crime, it was accepted that if this court found that Aspeling‟s version
of the delivery was acceptable, the appeal in respect of the theft charges should fail.
[28] That brings me to what may be loosely called the „technical defences‟ raised
by the appellant. At this stage it is necessary to revert to the application for leave to
appeal when the so-called „special entries‟ were entered on the record for decision
by this court. Posed in the form of questions, they read as follows:
(a)
„Did the State prosecute the accused without being in possession of a valid written
authority by the National Director of Public Prosecutions in terms of s 2(4) of the Prevention
of Organised Crime, Act 121 of 1998, the authority in question being too wide and therefore
invalid. Secondly, was the centralisation directive of the National Director of Public
Prosecutions in terms of s 111 of Act 51 of 1977 invalid by reason of being wide, vague and
inherently contradictory.‟
(b)
„Was accused 11‟s right to cross-examine within the trial/s-within-the-trial unfairly
limited or disallowed at any point?‟
[29] Unfortunately, neither of these are valid special entries. As this court has
recently been at pains to point out, the purpose of a special entry is to record an
irregularity affecting a trial that does not appear from the record; and an attack upon
a ruling made by a trial court during a course of proceedings does not qualify ─ see
Staggie v The State (38/10) [2011] ZASCA 88 para 16 and Masoanganye v The
State (252/11) [2011] ZASCA 119 para 10. In regard to the first special entry, the
alleged irregularities therein set out arise from exhibits A and B handed in without
objection at the commencement of the trial and which form part of the record.
Moreover, the argument that the two exhibits were invalid due to them having been
couched in wide and vague terms was ventilated in an interlocutory application
heard during the course of the trial, and rejected in a ruling which all forms part of
the record. The second special entry set out in (b) above, relating to a ruling in
respect of cross-examination, also relates to a matter of record. Clearly neither of
the special entries should have been made.
[30] As the appellant abandoned all reliance upon the second special entry and
did not refer thereto in argument, nothing more need be said about it. However, the
first special entry was made as both the appellants‟ legal representatives and the
learned judge in the court a quo were all under the mistaken impression that it was
appropriate to raise these issues by way of a special entry. In these circumstances it
would be unjust to penalise the appellant by refusing to hear argument on what is
raised in the first special plea, and the solution appears to me to be to regard it as a
ground of appeal and to determine the issues it raises in that way.
[31] I therefore turn to the issue of the s 2(4) POCA authorisation raised in the first
special plea. The section provides that „(a) person shall only be charged with
committing an offence contemplated in subsection (1) if a prosecution is authorised
by the National Director.‟ As already mentioned, the authority in question was
handed in without objection before the accused were asked to plead. As appellant‟s
counsel (who appeared for the appellant at the trial) freely conceded, at that stage
all concerned accepted it to be in proper form and related to the POCA charges
levied against the accused in the indictment. However shortly before the end of the
trial, a judgment in the Pietermaritzburg high court in the matter of Moodley and
others4 came to the ears of the appellant‟s legal representatives. The accused in
that matter, who were to be tried on s 2(1) POCA offences, contended that they had
been charged before the NDPP had given the necessary written authority required
by s 2(4), and launched an application seeking an order declaring the charges under
s 2(1) to be unlawful. The high court hearing the application mero motu raised the
issue that the written authorisation was too broad and „lacked the necessary
specificity‟ as details of the dates and places at which the offences were allegedly
committed had not been set out and, on that basis, upheld the application. The s
2(4) authorisation in the present case was in terms virtually identical to that in
Moodley, and so in October 2007 the appellant and each of his co-accused
launched interlocutory applications seeking orders that the POCA counts which they
were facing should similarly „be declared to have been invalidly instituted and be set
aside‟. In doing so, they relied squarely upon the high court‟s decision in Moodley
and an authorisation allegedly lacking in detail.
[32] For purposes of this application, a senior counsel was brought in to lead the
junior counsel who had been representing the appellant at the trial. He filed
extensive heads of argument which I shall mention later. On 18 February 2008, the
trial judge delivered his ruling. He found that that even assuming the high court‟s
judgment in the Moodley case to be correct, not only was it distinguishable on the
facts but the authorisation in the present case could only be challenged by way of an
application for a special entry to a higher court. Despite that, before dismissing the
application, he went on to express an obiter opinion that it was not the purpose of
the authorisation under s 2(4) to detail the nature and extent of the prosecution as
the indictment serves that purpose.
[33] It was presumably as a result of this ruling that the appellant sought his first
special entry, intending to rely on the high court decision in Moodley to attack the
certificate. Unhappily for the appellant, his argument was overtaken by events as the
high court‟s decision was set aside by this court on appeal to it by the state, the
judgment being reported as NDPP v Moodley 2009 (2) SA 588 (SCA). When the
state applied for leave to appeal, counsel for the accused abandoned the judgment
insofar as it declared the s 2(4) authorization by the NDPP to be invalid and of no
4 Subsequently reported as Moodley and Others v National Director of Public Prosecutions and
Others 2008 (1) SACR 560 (N)
force and effect. The issue was therefore not dealt with in detail by this court, but
Scott JA observed that the abandonment was clearly correct and the order of the
high court „is clearly not to be regarded as a precedent‟.5
[34] In my opinion Scott JA‟s view is clearly correct. As correctly observed by the
court a quo, the indictment contains the details of the charges upon which an
offender is to be prosecuted and I can see no good reason for those details to be
repeated in the s 2(4) authorisation. All that is necessary is for the NDPP to
authorise that the accused be charged with whatever offence under s 2(1) is alleged
in the indictment. As here the authorisation reflected the names of the appellant and
his various co-accused, and the NDPP authorised that they be prosecuted „in
respect of a contravention of ss 2(1)(e), 2(1)(f) and 2(g) of the Prevention of
Organised Crime Act 121 of 1998‟, all concerned understood that it related to the
proceedings in the court a quo. Accordingly, that is really the end of the matter.
[35] It was also argued that even if the s 2(4) authorization was in proper form, it
had been produced too late as the appellant had already been charged with
committing offences set out in the indictment at the time the indictment containing
the s 2(1) charges was served upon him some months before, when the matter was
postponed in the magistrates‟ court for hearing in the high court. The appellant
contended that the s 2(4) authorization should have been obtained by that stage and
that it was too late to obtain and produce it immediately before the trial commenced
in the high court. This argument had been raised by the appellant‟s leading
counsel‟s heads of argument in the interlocutory application in relation to the s 2(4)
authorisation but was not a ground of appeal. In any event, in the light of the facts of
the present case, it is devoid of merit.
[36] In Moodley this court held it to be unnecessary to decide at what precise
stage a person is „charged‟ as envisaged by s 2(4), but observed that until the
accused has pleaded, the state would be at liberty to withdraw the charge and
recharge the accused once the authorisation is available, an exercise that would
serve no purpose.6 I wholly agree with that sentiment and, indeed, it is a powerful
reason to conclude that the legislature only intended a person to be „charged‟ when
the indictment is put and he or she is asked to plead. But it is unnecessary to reach
5 At para 10.
6 At 594 para 12.
a final conclusion in that regard as in Moodley, a case in which the charge had not
yet been put to the accused, this court went on to hold that once the written
authorisation was granted the prosecution was lawful.7 Applied to the present
circumstances, as the authorisation was granted and handed in before the accused
were asked to plead, the proceedings from then on (the trial itself) were lawful.
[37] Despite this, appellant‟s counsel submitted further that a valid s 2(4)
authorisation was an essential element of an offence under s 2(1) of POCA; that it
was thus essential for the state to prove that the NDPP had properly applied his
mind to the issue; and that it could not do so merely by handing in the certificate as
that would offend the best evidence rule. Accordingly, as the NDPP had not been
called, he argued that the state had failed to prove a contravention of s 2(1).
[38] This was also not an issue raised in the grounds of appeal but an argument
set out in senior counsel‟s heads of argument filed at the stage of the interlocutory
application and repeated, apparently without thought, in the heads of argument filed
in this appeal. Strictly speaking the issue is thus not properly before this court. But
there is clearly no merit in the argument. An offence under s 2(1) is committed by the
actions of the offender, not those of the prosecuting authority. The s 2(4)
authorisation is simply a procedural requirement that has to be fulfilled. It was
fulfilled in time as set out above, and that was accepted to be the case by all the
accused, including the appellant. The fact that the NDPP did not testify is therefore
no reason to upset the appellant‟s conviction on count 2.
[39] I turn to the second part of the first special entry, namely, the contention that
the centralisation certificate under s 111 of the Criminal Procedure Act was too
widely framed. The principal argument in this regard was that only the 11 accused
who stood trial after the decision not to proceed against Boyles had been taken were
named in the certificate, although reference was also made to „accused 12‟ in certain
places. The centralization certificate was obviously a sloppy piece of work. Changes
were made to its wording in consequence of the decision to withdraw against
Boyles, and seemingly at that stage certain errors crept in. But those are clearly no
more than obvious typographical errors and, as counsel for the appellant conceded,
all concerned appreciated that the certificate related to the charges that were put to
the various individual accused. As the appellant clearly understood the certificate,
7 At 594 para 13.
and accepted it was in proper form, it hardly lies in his mouth to now complain that it
was too widely framed, and there is no room for an argument that he was
embarrassed by its vagueness.
[40] However, the appellant further argued that there was no proof that the deputy
NDPP who had signed the authorization had been duly and properly authorized to
do so. This argument, too, was one carried over into the appellant‟s argument from
the heads of argument filed by senior counsel in the interlocutory application but not
raised as a ground for appeal. It is also not an argument that can be determined by
the facts on record. The issue was therefore neither properly raised nor ripe for
decision by this court. If the appellant wished to contest the validity of the certificate,
he should have done so when it was first produced. At that stage he accepted it was
in order and for purposes for this appeal that is really the end of the matter.
[41] The appellant also argued that the manner in which he was charged resulted
in an impermissible so-called „splitting of charges‟ or „duplication of convictions‟,
leading to him being punished more than once for the same actions. This argument
was based on it being alleged in count 2 of the charge sheet that he had
contravened s 2(1)(e) of POCA by having wrongfully and unlawfully participated in
the affairs of an enterprise (the De Vries gang) through a pattern of racketeering
activity. Details of the pattern of racketeering activity relied on were set out in
annexure 8 to the indictment. This is a list of the alleged offences in the indictment,
excluding those under s 2(1). In the case of the appellant, those offences were the
charges of theft and charges of money laundering levied against him – including the
two counts of money laundering and two counts of theft on which he was ultimately
convicted. Essentially the appellant‟s argument is that it would amount to an
improper splitting charges or duplication of convictions for the offences of which he
has been convicted to be taken into account in deciding whether he was guilty of a
scheme of racketeering activity in count 2, and then to sentence him for each
conviction.
[42] In considering this argument it is necessary to turn to the provisions of POCA
itself. Section 2(1)(e) thereof makes it an offence if any person:
„whilst managing or employed by or associated with any enterprise, conducts or participates
in the conduct, directly or indirectly, of such enterprise‟s affairs through a pattern of
racketeering activity.‟
In s 1 „enterprise‟ is defined including „. . . any individual, partnership, corporation,
association, or other juristic person or legal entity, and any union or group of
individuals associated in fact, although not a juristic person or legal entity‟ while
„pattern of racketeering activity‟ is defined as meaning:
„. . . the planned, ongoing, continuous or repeated participation or involvement in any
offence referred to in Schedule 1 and includes at least two offences referred to in Schedule
1, of which one of the offences occurred after the commencement of this Act and the last
offence occurred within 10 years (excluding any period of imprisonment) after the
commission of such prior offence referred to in Schedule 1.‟
[43] POCA was largely modelled upon so-called „RICO‟ statute of the United
States of America,8 from which the definitions of „pattern of racketeering activity‟ and
„enterprise‟ were directly taken. Given the generic similarity of the two statutes, it is
somewhat surprising that neither party referred us to any American jurisprudence
relating to the issue, the representative for the state merely stating that her office
had insisted that the charge sheet be drawn in the way it was: by referring to the
theft and money laundering charges as being the „pattern of racketeering activity‟
relied on to prove the POCA charge, count 2. However, the jurisprudence of the
United States is of considerable assistance in understanding why indictments are
usually formulated in this way.
[44] The Fifth Amendment of the Constitution of the United States provides that no
person shall be „subject for the same offence to be put twice in jeopardy of life and
limb‟. This has given rise to the so-called defence of „double jeopardy‟, a multi-
facetted defence which, first, protects a citizen against a second prosecution for the
same events after an acquittal on the first charge (in effect what is known in this
country as autrefois acquit); secondly, bars a convicted offender being prosecuted
once again for the same offence (similar to the defence of autrefois convict) and,
thirdly, protects against multiple punishments being imposed for the same offence
(as does the defence of „splitting of charges‟ in our law). After the introduction of
RICO and other similar statutes9 intended to combat organised crime, which
introduced racketeering offences similar to those created by s 2 of POCA, many
8 Racketeer Influenced and Corrupt Organisations statute enacted as Title IX of the Organised Crime
Control Act of 1970, codified as 18 U.S.C. §§ 1961-1968.
9 Eg the CCE statute referred to below.
accused offenders in the United States raised pleas of double jeopardy in
circumstances similar to the present. In doing so they argued that the RICO charge
(sometimes referred to as an „umbrella‟ charge10) together with the underlying so-
called „predicate offences‟ relied on to prove the racketeering activities, led them to
face either being convicted again for earlier offences in respect of which they had
already been tried, or to being sentenced twice for the same unlawful action. The
arguments in respect of those pleas were essentially the same as that upon which
the present appellant relies, namely, that having been convicted in respect of the
predicate offences it is impermissible to either convict or sentence him for the
umbrella offence of racketeering in count 2.
[45] These arguments received short shrift in the United States. In a series of
decisions the courts of that country held the umbrella offences to be separate and
discrete from the underlying predicate offences – and capable of being punished
separately.11 The reasoning for doing so was set out as follows in United States v
Crosby 20 F. 3d 480 para 8:
„The Supreme Court's decision in Garrett conclusively established that Congress intended
CCE12 to be a separate offense from its predicate acts based on the language and history of
the CCE statute. . . . . We find the statutory language and legislative history of RICO dictate
a similar conclusion. . . . First, RICO itself defines “pattern of racketeering activity” to include
“at least two acts of racketeering activity, one of which occurred after the effective date of
this chapter and the last of which occurred within ten years (excluding any period of
imprisonment ) after the commission of a prior act of racketeering activity.” 18 U.S.C. §
1961(5) (emphasis added). The highlighted statutory language at least suggests that
Congress expressly contemplated that a RICO defendant might be incarcerated for one or
more of the predicate offenses before being prosecuted for the RICO violation. Further,
Congress's “Statement of Findings and Purpose” reinforces this intent, indicating that RICO
was enacted to supplement rather than replace the existing predicate crimes and penalties.
10 See eg Harvard Law Review [vol 122:276 2008] at 480.
11 Compare eg United States v Peacock, 654 F.2d 339, 349 (5th Cir. 1981); Garrett v United States,
471 U.S. 773, 105 S.Ct. 2407, 85 L.Ed.2d 764 (1985); United States v Pungitore, 910 F.2d 1084,
1108 n. 24 (3rd Cir. 1990); United States v Beale, 921 F.2d 1412, 1437 (11th Cir. 1991); United
States v Gonzalez 921 F.2d 1530, 1538 (11th Cir. 1991); United States v Cyprian, 23 F.3d 1189,
1198 (7th Cir.1994); United States v O‟Connor, 953 F.2d 338, 344 (7th Cir.1994); United States v
Crosby, 20 F.3r 480, 484 (D.C. Cir. 1994); United States v Morgano, 39 F.3d 1358, 1368 (7th Cir.
1994); United States v Baker, 63 F.3d 1478, 1494 (9th Cir. 1995); Susan S Brenner RICO, CCE, And
Other Complex Crimes: The Transformation of American Criminal Law? William And Mary Bill of
Rights Journal [Vol. 2.2] (1993) 239.
12 Continuing Criminal Enterprise statute 21 U.S.C. § 849 (1988) which makes it an offence to engage
in a 'continuing criminal enterprise‟ by way of a continuing series of drug offences.
See Organized Crime Control Act of 1970, Pub.L. No. 91–452, 84 Stat. 922, 923, reprinted
in 1970 U.S.C.C.A.N. 1073. (“It is the purpose of this Act to seek the eradication of
organized crime in the United States by strengthening the legal tools in the evidence-
gathering process, by establishing new penal prohibitions, and by providing enhanced
sanctions and new remedies to deal with the unlawful activities of those engaged in
organized crime.”). Accordingly, we hold, as have other circuits, that Congress intended that
a RICO violation be a discrete offense that can be prosecuted separately from its underlying
predicate offenses . . .‟ (certain authorities omitted).
[46] In my view the same reasoning applies with equal cogency to POCA. The
definition of pattern of racketeering activity, which the state is obliged to prove in
order to secure a conviction under s 2(1)(e) of POCA, includes offences for which
the offender may already have been convicted and sentenced ─ the legislature‟s
necessary intent in this regard is to be inferred from the phrase „excluding any period
of imprisonment‟ in the calculation of the 10 year period referred to in the definition
of „pattern of racketeering activity‟. In addition, the preamble to POCA also proclaims
as its intent the introduction of „. . . measures to combat organized crime, money
laundering and criminal gang activities‟ as „. . . the South African common law and
statutory law failed to deal effectively with organized crime, money laundering and
criminal gang activities, and also failed to keep pace with international measures
aimed at dealing effectively with organized crime, money laundering and criminal
gang activities . . .‟.
[47] Due to the similarities between RICA and POCA, and bearing in mind certain
of the decisions in the United States, this court in S v Dos Santos and another 2010
(2) SACR 382 (SCA) concluded:13
„Prosecutions under POCA, as also the predicate offences, would usually involve
considerable overlap in the evidence, especially where the enterprise exists as a
consequence of persons associating and committing acts making up a pattern of
racketeering activity. Such overlap does not in and of itself occasion an automatic invocation
of an improper splitting of charges or duplication of convictions. As should be evident from a
simple reading of the statute, a POCA conviction requires proof of a fact which a conviction
in terms of the Diamonds Act does not. I can conceive of no reason in principle or logic why
our approach should be any different to that adopted by our American counterparts . . . . „
13 At para 43.
[48] In order to secure a conviction under s 2(1)(e) of POCA, the state must do
more than merely prove the underlying predicate offences. It must also demonstrate
the accused‟s association with an enterprise and a participatory link between the
accused and that enterprise‟s affairs by way of a pattern of racketeering activity.14 In
the light of this, an offence under s2(1) of POCA is clearly separate and discrete
from its underlying predicate offences and, in my view the decision in Dos Santos in
regard to this issue is undoubtedly correct.
[49] This also effectively disposes of the appellant‟s allegation that he could not be
convicted on both of the s 2(1)(e) POCA offence (count 2) as well as the underlying
predicate offences of theft and money laundering. As POCA recognizes that past
convictions may be taken into account in establishing a pattern of racketeering, there
is no reason in either law or logic why that pattern cannot be established by proving
both the umbrella and predicate offences in the same trial, as was here the case.
This, too, was the conclusion in Dos Santos where Ponnan JA said:15
„Our legislature has chosen to make commission of two or more crimes within a specified
period of time, and within the course of a particular type of enterprise, independent criminal
offences. Here the two statutory offences are distinctly different. Since POCA substantive
offences are not the same as the predicate offences, the State is at liberty to prosecute
them in separate trials or in the same trial. It follows as well that there could be no bar to
consecutive sentences being imposed for the two different and distinct crimes, as the one
requires proof of a fact, which the other does not. Although a court in the exercise of its
general sentencing discretion may, with a view to ameliorating any undue harshness, order
the sentences to run concurrently. Thus, by providing sufficient evidence of the five
predicate acts, the State had succeeded in proving the existence of the “racketeering
activity” as defined in POCA.‟
[50] Despite this authority, the appellant persisted in an argument that it had been
impermissible for the state to have charged him with both count 2 and its predicate
offences by contending that once the prosecuting authority had decided to charge
him with an offence under s 2(1), it placed the trial procedurally into a category of
prosecution entirely different from a „normal prosecution‟ by reason of s 2(2) which
reads:
14 See eg the judgment of Cloete JA in S v Eyssen 2009 (1) SACR 406 (SCA).
15 At para 45.
„The court may hear evidence, including evidence with regard to hearsay, similar facts or
previous convictions, relating to offences contemplated in subsection (1), notwithstanding
that such evidence might otherwise be inadmissible, provided that such evidence would not
render a trial unfair.‟
[51] In the light of this section, the appellant contended that as s 2(2) makes
serious inroads into an accused‟s normal procedural rights by rendering admissible
evidence that would otherwise be inadmissible – including evidence of previous
convictions – the trial in respect of offences other than those contemplated by s 2(1)
would be unfair: and for that reason an accused cannot be charged in the same
indictment with both an offence under s 2(1) as well as the underlying predicate
offences.
[52] It was not suggested that any evidence otherwise inadmissible had in fact
been introduced to the prejudice of the appellant or which in any way compromised
his defence or rendered his trial unfair. To that extent the argument is purely
academic and it is unnecessary to consider it in any detail. Suffice it to say that the
trained judicial mind should be able to limit the effect of otherwise inadmissible
evidence to the charges in respect of which it is admissible – any s 2(1) charges –
and to exclude it from consideration in respect of charges in which it is not. Indeed
this is what occurs daily done by courts, eg in hearing trials within trials.
[53] It may well be that the state for some reason decides not to prosecute the
predicate offences in the same indictment as an umbrella charge, but that is a matter
of prosecutorial discretion which need not detain us here. Of course the state
should take care to ensure that the manner in which the indictment is drawn and the
evidence presented does not result in an unfair trial, but the mere framing of a
charge sheet to include both a POCA umbrella offence and its underlying predicates
does not in itself occasion unfairness. Without the appellant having established that
he was in any way prejudiced, it cannot be said that the manner in which the state
exercised its discretion in charging him was improper.
[54] In these circumstances I have concluded that there was no impermissible
splitting of charges nor duplication of sentences by reason of the appellant having
been charged on count 2 with an umbrella contravention of s 2(1)(e) of POCA as
well as the underlying predicate offences of theft and money laundering in respect
of which he was convicted.
[55] I should mention that as a ground of appeal the appellant relied on an alleged
splitting of charges involving the theft and money laundering offences, contending
that both flowed from his dealings with the cigarettes stolen during the first two
robberies and that, once convicted of money laundering, he ought not also to be
convicted of theft as well. This argument, quite correctly, was not pursued before this
court. The statutory offence of money laundering is created by s 4 of POCA which
provides:
„Any person who knows or ought reasonably to have known that property is or forms part of
the proceeds of unlawful activities and ─
(a)
enters into any agreement or engages in any arrangement or transaction with
anyone in connection with that property, whether such agreement, arrangement or
transaction is legally enforceable or not; or
(b)
performs any other act in connection with such property, whether it is performed
independently or in concert with any other person,
which has or is likely to have the effect ─
(i)
of concealing or disguising the nature, source, location, disposition or movement of
the said property or the ownership thereof or any interest which anyone may have in respect
thereof; or
(ii)
of enabling or assisting any person who has committed or commits an offence,
whether in the Republic or elsewhere ─
(aa)
to avoid prosecution; or
(bb)
to remove or diminish any property acquired directly, or indirectly, as a result of the
commission of an offence,
shall be guilty of an offence. „
[56] By receiving the cigarettes for himself well knowing they were stolen, the
appellant made himself guilty of theft as it is a continuing crime. By proceeding to
use the cigarettes as part of his stock in trade as a wholesaler as if they were goods
lawfully acquired, and thereby disguising or concealing the source, movement and
ownership of the cigarettes and enabling and assisting the robbers to either avoid
prosecution or to remove property acquired in the robberies, the appellant clearly
made himself guilty of a contravention of s 4. Doing so involved different actions and
a different criminal intent to that required for theft. In these circumstances there was
no improper splitting of charges.
[57] It was not suggested that if Aspeling‟s identification of the appellant was
accepted and the various technical defences I have dealt with did not succeed, the
appellant was not guilty of the charges of which he was convicted. As I have found
against the appellant on all these issues, in my judgment he was properly convicted
and, as he does not seek to assail his sentence, the appeal must fail.
[58] The appeal is accordingly dismissed.
___________________
L E Leach
Judge of Appeal
APPEARANCES
For Appellant
J P Spangenberg
Instructed by
High Court Unit, Cape Town Justice Centre
Cape Town
Bloemfontein Justice Centre,
Bloemfontein
For Respondent
H C Booysen
Instruction by
The Director of Public Prosecutions
Bloemfontein
|
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 28 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
De Vries v The State
The five appellants were among 11 accused tried in the high court on various charges under
the Prevention of Organised Crime Act 121 of 1998 (POCA) as well as various other
offences. The trial which commenced in August 2005 ran for some three years and resulted
in all five appellants being convicted on some or other of the charges.
The five appellants sought leave to appeal. Leave to appeal was granted only in respect of the
fifth appellant, Achmat Mather. However, the trial court also made two special entries
relating to the conviction of all five appellants. The first special entry related to the
provisions of the National Director of Public Prosecutions’ authorisation of the prosecution
under s 2(4) of POCA and the centralisation certificate issued under s 111 of the Criminal
Procedure Act 51 of 1977. Only the fifth appellant appeared before the Supreme Court of
Appeal, the first four appellants seemingly having decided to abide the decision of the court
in regard to the special entries.
The state’s case against the fifth appellant, Achmat Mather, was that he had purchased large
quantities of cigarettes which had been stolen in robberies when large vehicles had been
hijacked by members of a gang. The fifth appellant had been identified as the purchaser of
the cigarettes by a member of the gang who gave evidence on behalf of the state. His
identification was attacked on appeal but the Supreme Court of Appeal today found that the
fifth appellant had been properly identified as the recipient and purchaser of the stolen
cigarettes, and that he had done so well knowing that the cigarettes had been stolen. As theft
is a continuing crime, the court held the fifth appellant made himself guilty on two counts of
theft relating to the two incidents when he had purchased stolen cigarettes from the gang. It
also concluded that his actions in purchasing the cigarettes for resale amounted to ‘money
laundering’ as envisaged in s 4 of POCA, resulting in him being convicted on two counts
under that section as well.
It was the state’s case that, in addition to the two counts of theft and two counts of money
laundering, the fifth appellant had committed an offence of racketeering under s 2(1)(e) of
POCA. This argument had been accepted in the high court and the fifth appellant had been
convicted on that charge. It was argued before the Supreme Court of Appeal that it was
impermissible to do so as it would amount to a splitting of charges or duplication of
convictions between the racketeering charge on the one hand and the offences of theft of
money laundering on the other. This argument was rejected by the Supreme Court of Appeal
which found that the racketeering offence was a separate and discrete offence from the
underlying predicate charges of theft and money laundering.
The appeal was therefore dismissed.
---ends---
|
4115
|
non-electoral
|
2023
|
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 660/2022
In the matter between:
CHAIRPERSON OF THE WESTERN
CAPE GAMBLING AND RACING BOARD
FIRST APPELLANT
WESTERN CAPE
GAMBLING AND RACING BOARD
SECOND APPELLANT
VUKANI GAMING WESTERN
CAPE (PTY) LTD t/a V SLOTS
THIRD APPELLANT
GRAND GAMING WESTERN CAPE
(RF) (PTY) LTD t/a GRAND SLOTS
FOURTH APPELLANT
and
GOLDRUSH GROUP MANAGEMENT
(PTY) LTD
FIRST RESPONDENT
MEMBER OF THE EXECUTIVE
COUNCIL FOR FINANCE
(WESTERN CAPE) SECOND RESPONDENT
Neutral citation: Chairperson of the Western Cape Gambling and Racing
Board and Others v Goldrush Group Management (Pty) Ltd
and Another (660/2022) [2023] ZASCA 148 (10 November
2023)
Coram:
MAKGOKA, MABINDLA-BOQWANA, MEYER, GOOSEN and
MOLEFE JJA
Heard:
15 August 2023
Delivered: 10 November 2023
Summary: Review – Gambling – Provincial Gambling Board having licenced
two limited payout gambling machine operators and allocated limited payout
machines to them – decision taken to allocate additional limited payout machines
to existing operators in accordance with prior reservation to do so – party, which
was not part of the initial licencing and allocation process, lacking standing to
challenge the allocation on review – Board decision in any event lawful.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town
(Kusevitsky J, sitting as court of first instance):
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the high court is set aside and replaced with the following order:
‘The application is dismissed with costs, including the costs of two counsel
where so employed.’
_______________________________________________________________
JUDGMENT
_______________________________________________________________
Goosen JA (Makgoka, Mabindla-Boqwana, Meyer and Molefe JJA
concurring):
[1] The appeal concerns a decision taken by the Western Cape Gambling and
Racing Board (the Board) to allocate a number of limited pay out gambling
machines (LPMs)1 to two licenced operators. The Western Cape Division of the
High Court (the high court) set aside the decision. The appeal is with the leave of
the high court.
[2] The first appellant is the Chairperson of the Board. The second appellant
is the Board. I shall refer to them collectively as ‘the Board.’ The Board was
established in terms of the Western Cape Gambling and Racing Act 4 of 1996
(the Western Cape Act) and is the designated licencing authority for the Western
1Section 26 of the National Gambling Act 7 of 2004 (the National Gambling Act), read with s 46 of the Western
Cape Gambling and Racing Act 4 of 1996 (the Western Cape Act) define a limited payout machine as a
gambling machine with a restricted prize.
Cape Province.2 The third appellant is Vukani Gaming Western Cape (Pty) Ltd
t/a V-Slots (V-Slots). The fourth appellant is Grand Gaming Western Cape (RF)
(Pty) Ltd t/a Grand Slots (Grand Slots). V-Slots and Grand Slots are the licenced
operators of LPMs in the province. They are commonly referred to as ‘route
operators’.
[3] The first respondent is Goldrush Group Management (Pty) Ltd (Goldrush).
The second respondent is the Member of the Executive Council for Finance,
Western Cape (the MEC), who played no role in the matter, and was cited as the
provincial executive responsible for gambling in the Province. Goldrush is a
wholly owned subsidiary of Goldrush Group (Pty) Ltd (Goldrush Group), which
is a holding company of affiliated entities that have interests in the gambling
industry in several provinces. Goldrush described itself as a company specialising
in the management of licenced operators in the gambling industry. Goldrush
holds no interest in any licenced operators within the Western Cape Province.
The facts
[4] Regulations promulgated in terms of s 87(1) and (2) of the National
Gambling Act 7 of 2004 (the National Gambling Act), fix the maximum number
of LPMs to be licenced in the Western Cape Province at 9000. In the first phase
of licencing LPMs, the provinces were restricted to a maximum of 50 per cent of
the total number allowed.
[5] In 2004, the Board initiated the process of establishing the LPM gambling
sector in the province. Acting in terms of s 31 of the Western Cape Act, it
published a Request for Proposals (the RFP), inviting applications for the
allocation of ‘route operator licences’, ie licences to operate LMPs in the
2 Section 2 of the Western Cape Act read with s 30 of the National Gambling Act.
province. The Board had determined that it would make available 3000 LPMs to
be allocated to route operators. It indicated, in the RFP, that it intended to appoint
three operators and that each would be allocated 1000 LPMs.
[6] The Board received five applications in response to the RFP. Goldrush was
not an applicant. It did not exist at the time. Following its evaluation of the
applications, the Board decided to appoint only two route operators, namely V-
Slots and Grand Slots. It allocated its stated minimum of 1000 LPMs to each of
them, with the result that 1000 LPMs remained unallocated.
[7] During 2017, V-Slots and Grand Slots made written submissions to the
Board to allocate to them the remaining 1000 LPMs. The Board’s LPM
Committee considered the submissions and recommended to the Board that it
allocate the remaining 1000 LPMs, split as 500 LPMs to each. On 29 August
2017, the Board decided to allocate the remaining LPMs to V-Slots and Grand
Slots as recommended by the LPM Committee.
[8] On 13 December 2017, a delegation from Goldrush Group made a
presentation to the Board regarding the potential for the appointment of a third
route operator in the province. Nothing came of this. Just under a year later, on 4
December 2018, Goldrush’s attorneys wrote to the Board, that it had come to their
client’s attention that the Board either had or intended to increase the number of
LPMs allocated to V-Slots and Grand Slots. They sought confirmation of this and
raised several contentions regarding due process. On 12 December 2018, they
submitted a formal request for access to information in terms of the Promotion of
Access to Information Act 3 of 2000 (PAIA).
[9] On 13 December 2018, the Board replied to Goldrush’s letter of 4
December. It confirmed that it had issued the remaining 1000 LPMs as an equal
split to the two licenced route operators. The Board said that it did not intend
inviting applications for further route operators.
[10] On 12 December 2018, prior to the Board’s reply referred to above,
Goldrush submitted a request for reasons for the Board’s decision to allocate the
remaining 1000 LPM’s to V-Slots and Grand Slots. It also requested an
undertaking from the Board not to proceed with the allocation. It undertook to
institute a review application within 30 days and threatened an urgent application
to interdict the Board if no undertaking was provided. The Board replied on 21
December 2018, refusing to provide the undertaking.
In the high court
[11] On 25 March 2019, Goldrush launched an application in the high court to
review and set aside the Board decision taken in August 2017,3 to allocate the
remaining 1000 LPMs proportionally to V-Slots and Grand Slots. The notice of
motion was framed in two parts. In Part A, Goldrush sought an urgent interdict
pending the review relief sought in Part B. Goldrush did not, however, pursue the
relief it had sought in Part A, and instead set the matter down for hearing of the
review.
[12] Goldrush contended that when the Board decided to allocate the remaining
1000 LPMs, it was obliged to call for bids, and not simply to allocate them to V-
Slots and Grand Slots as it did. Goldrush averred that had the Board done so, it
would have applied for such allocation. It alleged that it had substantial
involvement and experience in the gambling industry and that this would have
ensured success in its application. In regard to its standing in the review
application, Goldrush asserted that its involvement in the industry gave it a direct
3 The notice of motion incorrectly refers to a decision taken in November. It was, however, common cause that
the decision was taken on 29 August 2017.
and substantial interest in matter. It advanced no claim to standing based on a
broader public interest.
[13] Two preliminary issues were raised in opposition to the application by all
of the appellants. They contended that Goldrush did not have standing to institute
the review proceedings. They also alleged that Goldrush had inordinately delayed
in bringing the review and had failed to make out a proper case for condonation
of the delay. Regarding the substantive grounds for review, the Board explained
that the RFP had expressly reserved the right to appoint fewer than three licenced
operators and, in that event, to allocate additional LPMs to the licenced operators.
It stated that the allocation of the remaining 1000 LPMs, was in accordance with
the terms of the RFP. Its decision to appoint only two licenced operators had been
taken pursuant to a rigorous selection process with full public participation and
remained extant. It was not obliged to invite applications for the award of further
route operator licences. Thus, its decision to allocate the remaining LPMs to V-
Slots and Grand Slots was within its power.
[14] In its judgment on 20 April 2021, the high court found that Goldrush’s
claim to own-interest standing was speculative and hypothetical. Accordingly,
the high court concluded, it lacked standing to challenge the Board’s decision. As
to the unreasonable delay issue, the high court found that there was no explanation
before it for the delay. It found that Goldrush must have known about the decision
to allocate the remaining LPMs in December 2017. It concluded that the delay in
instituting the review (in March 2019) was unexplained and unreasonable.
However, in considering whether the delay should be overlooked in the interests
of justice, it considered the ‘potential prejudice to affected parties’ and the
prospects of success. In regard to the latter, the high court found the decision to
be reviewable ‘under s 6(2)(e)(iii) of PAJA on the basis that the Board failed to
properly consider relevant considerations in deciding to approve Grand Slots and
V-Slots additional licences’.
[15] The high court set aside the Board’s decision to allocate the remaining
LPMs proportionally to V-Slots and Grand Slots. and granted the following
further orders:
‘2.
This order shall not affect existing LPM’s that have already been allocated and installed
at licenced site routes pursuant to the 2017 decision.
3.
In the event that there are non-operational LPM licences that are licenced and have not
been allocated to a site, the Board is ordered to advertise same should it be prudent to do so.’
[16] The high court made no order regarding the costs of the abandoned
interdict relief sought in Part A of the notice of motion. The learned judge ordered
the present appellants to pay the costs of the application. As indicated, leave to
appeal was granted by the high court. It also granted leave to Goldrush to cross-
appeal against certain findings. The high court granted an order in terms of s 18(3)
of the Superior Courts Act 10 of 2013, declaring its order operative pending the
appeal.
The issues on appeal
[17] As was the case in the high court, three issues arise on appeal. The first
concerns the standing of Goldrush. The second relates to the delay in prosecuting
the review. The third concerns the merits of the review challenge.
[18] The standing of a party to pursue a legal remedy is a matter of ‘procedural
justiciability’.4 The central question is whether the party who brings the suit is
one who is entitled to seek the remedy.5 In the context of judicial review, a claim
4 C Hoexter and G Penfold Administrative Law in South Africa 3 ed (2021) at 659.
5 Giant Concerts CC v Rinaldo Investments (Pty) Ltd and Others [2012] ZACC 28; 2013 (3) BCLR 251 (CC) para
34.
to standing must be determined with reference to the administrative conduct or
decision which the applicant seeks to bring under review. In Giant Concerts CC
v Rinaldo Investments (Pty) Ltd (Giant Concerts),6 the Constitutional Court held
that a litigant asserting own-interest standing in the context of administrative
review must ‘show that the decisions it seeks to attack had the capacity to affect
its own legal rights or interests’.
[19] In this matter, as in Giant Concerts, Goldrush made no claim to interest on
the basis of representation of any other party unable to assert its rights as
envisaged in s 38(b) of the Constitution or based on the public interest. The high
court’s finding that Goldrush did not establish a public interest standing was not
challenged. In argument before this Court, counsel for Goldrush accepted that it
had only asserted an own-interest claim to standing.
[20] In order to determine whether a decision has the capacity to affect a party’s
legal rights or interests, the nature and effect of the decision must be considered.
The decision under attack was one to allocate the remaining 1000 LPMs
proportionally to the licenced route operators. Goldrush sought the setting aside
of that decision. It sought no other related or consequential relief by which its
asserted rights might be vindicated. In its founding affidavit it claimed that the
decision affected its right to apply for a route operator licence in relation to the
remaining LPMs. It framed the ‘impugned decision’ as one which encompassed
a decision not to advertise the remaining 1000 LPMs for allocation to other parties
who may qualify for route operator licences. It asserted that, based on its
experience in the gambling industry, it was likely to qualify for a route operator
licence and therefore be entitled to allocation of the remaining LPMs.
6 Ibid para 30.
[21] The review challenge, however, was against the allocation of remaining
LPMs to the licenced route operators and not on the failure to invite applications
for route operator licences. Goldrush’s asserted commercial interest in applying
for a route operator licence was not implicated or affected by the allocation to
existing licenced operators. Those interests are only affected by the decision not
to invite applications for further route operator licences.
[22] Goldrush, in summary, had no demonstrable own-standing commercial
interest in the Board’s decision to allocate the remaining LPMs to existing
licenced route operators. The high court was therefore correct in its conclusion
that Goldrush lacked standing to bring the application. Counsel for Goldrush
submitted that, in any event, the high court had correctly accorded standing to
Goldrush on the basis of the interests of justice exception envisaged in Giant
Concerts. The Constitutional Court there observed:
‘. . . [T]hat the interests of justice under the Constitution may require courts to be hesitant to
dispose of cases on standing alone where broader concerns of accountability and
responsiveness may require investigation and determination of the merits. By corollary, there
may be cases where the interests of justice or the public interest might compel a court to
scrutinise action even if the applicant’s standing is questionable. When the public interest cries
out for relief, an applicant should not fail merely for acting in his or her own interest.’7
[23] What the dictum suggests is that if there are circumstances which would
justify a claim to standing based upon the public interest or the interests of justice
but that such claim is not made, the own-interest litigant should not fail merely
because their standing is questionable. The proposition is qualified by the fact
that ‘the public interest cries out for relief’. An indication of what those
circumstances may be is given at the conclusion of the judgment in Giant
7 Giant Concerts fn 5 above para 34.
Concerts where the Constitutional Court reaffirmed the principle that a party who
has no standing has no legal interest in the adjudication of the matter, and said:
‘When a party has no standing, it is not necessary to consider the merits, unless there is at least
a strong indication of fraud or other gross irregularity in the conduct of a public body.’8
[24] In this case, there is no suggestion of fraud or irregularity. There is equally
no indication of administrative conduct which is manifestly objectionable. The
process by which route operators were licenced complied with the statutory
requirements. The RFP declared the Board’s intention to appoint three suitably
qualified route operators and to allocate to them 1000 LPMs in the first phase of
establishing the industry. Applications were invited and those received were
subjected to a rigorous selection process. The RFP indicated that in the event that
fewer than three operators were licenced the available LPMs might be
proportionally allocated to those appointed. It reserved the right to do so. When
called upon to explain why it had allocated the remaining LPMs to the existing
route operators, the Board explained that it had acted in accordance with the RFP
issued at the time that route operators were appointed. The Board was not obliged
to invite further applications for route operator licences. It did so in 2004 and
decided then, as it was entitled to, to licence only two route operators. There is
no statutory requirement for the advertisement of available LPMs to be allocated
to route operators.
[25] These are all factors readily discernible from the context in which the
decision to allocate LPMs was challenged. Nothing cries out, in the public
interest, for investigation and adjudication. In the circumstances, the case was not
justiciable even on the ‘exception’ provided in Giant Concerts.
8 Ibid para 58.
[26] The finding that Goldrush did not establish own-interest standing and that
there is no basis to hold that the matter is nevertheless justiciable on the basis of
broader public interest or the interests of justice, means that the appeal must
succeed. The high court, however, ventured into the merits of the review when
dealing with the unreasonable delay in bringing the review. It concluded that the
review should succeed. On this basis it was prepared to countenance the delay
and found that the review was justiciable despite Goldrush’s lack of standing. In
effect, the high court conferred standing because it found that the review ought
to succeed. This approach is wrong.
[27] In any event, the high court’s conclusion on the merits is not sustainable.
Goldrush contended that the RFP did not permit the allocation of the initially
unallocated 1000 LPMs to V-Slots and Grand Slots in the absence of those LPMs
being advertised for allocation to other route operators. This stance resulted in a
tortured argument to the effect that the RFP had ‘run its course’ as far as the initial
3000 LPMs were concerned, but not in respect of LPMs to which the Province is
entitled and which may in due course be allocated.
[28] However, clause III of the RFP contained the following provisions:
‘The Board intends to issue a maximum of three licences and allocate a thousand limited
gambling machines per Licence holder. The intention therefore is not to issue less than a
thousand limited gambling machines per limited gambling machine operator – if fewer than
three Applicants are found suitable for licencing, the Board reserves the right to increase the
number of machines allocated per Applicant proportionally, subject to National norms, or to
re-advertise and invite other applications. Through this process the Board seeks to ensure that
only reputable and experienced Operators will be active in the Province. The Board is also
mindful of its duty to guard against over-stimulation of the latent demand for gambling, which
would have a negative impact on the social fabric of the Province.
Prospective Operators should also take note of the options which the Board has identified
regarding the possible future expansion of the industry in the Western Cape. If, once the
industry has become established, it appears that the market and social and economic conditions
then prevailing in the Province will accommodate the allocation of further limited gambling
machines, the Board may offer further machines to existing Licenced Operators, against
payment of such further fees as may be provided for by legislation at that time, after consulting
industry role-players. Should the Board elect to follow this course and should the existing
licenced Operators not take up the offer to expand their operations, the Board may invite
licence applications from other entities.’ (Emphasis added.)
[29] These provisions explain the Board’s intentions in the appointment of
licenced operators and the allocation of LPMs to them in unequivocal terms.
When it was published, the RFP served to outline the policy that the Board would
follow in relation to the development of the industry in the Province. It also served
to explain to prospective operators how the Board would approach the granting
of licences and what was expected of such operators. It is important to recall that
each Province is entitled to a specified number of LPMs. In the case of the
Western Cape that number was set at 9000. In the first phase of the development
of the LPM industry, provinces were restricted to making available only 50
percent of the total number. The Board, however, elected to make available only
3000. As it turned out, the Board only appointed two operators and only allocated
2000 LPMs to them.
[30] Counsel for Goldrush conceded that at the time that V-Slots and Grand
Slots were appointed as operators, the Board would have been entitled, pursuant
to the RFP, to have allocated to each of them the whole of 3000 LPMs, ie 1500
LPMs each, Counsel also accepted that in respect of the allocation of ‘further’
LPMs, the Board was entitled to offer those LPMs to existing licence holders as
provided in the RFP. However, so the argument went, the Board was not entitled
to allocate the remaining 1000 LPMs to V-Slots and Grand Slots as it had done,
without advertising. The argument need only be stated to be rejected.
[31] The lawfulness of the RFP was not challenged. Nor was there a challenge
to the Board’s reservation of the right to allocate LPMs as provided by the RFP.
The absence of a challenge to the lawfulness of the RFP, and the administrative
decisions which underpin it, is an insurmountable obstacle in the path of
Goldrush’s review.9 The Board was entitled to set out its policy objectives in the
RFP and was entitled to exercise its powers in accordance with such objectives.
It reserved the right to appoint licenced route operators and to make allocations
of LPMs in the manner provided by the RFP. It acted in accordance with such
reservation, as it was entitled to do.
[32] The high court failed to take cognisance of the fact that the Board had acted
within its powers. It appears to have considered that the allocation of LPMs
involved ‘additional licences’ and that such allocation required a process initiated
by way of advertisement. In this the high court erred. It is so that the appointment
of licenced operators requires publication of an invitation to apply. That process,
however, had already run its course when the RFP was issued and when the Board
decided to appoint V-Slots and Grand Slots. The allocation of LPMs to licenced
operators requires no licencing process. LPMs can only be allocated to operators
who have been licenced.
[33] In the circumstances, the high court’s conclusion that the Board’s decision
was unlawful, cannot stand. The order granted by the high court went further than
the relief sought. Goldrush’s conditional cross-appeal against paragraph 3 of the
high court order was abandoned. Its cross-appeal relating to the high court finding
9 Compare Peermont Global (North West) (Pty) Ltd v Chairperson of the North West Gambling Review Tribunal
and Others and Two Other Cases [2022] ZASCA 80 para 43-44.
that it lacked own-interest standing must fail for the reasons set out above. In the
light of the conclusion to which I have come, nothing further need be said about
the high court orders, save in respect of costs. The relief that was initially sought
in Part A of the notice of motion was not pursued before the high court. Goldrush
abandoned that relief after a full set of affidavits had been filed. The high court
made no order in relation to those costs. In the light of the outcome of the appeal,
Goldrush must also bear those costs. The substituted order below must be read to
include all of the costs of the application before the high court.
[34] I make the following order:
1 The appeal is upheld with costs, such costs to include the costs of two counsel
where so employed.
2 The order of the high court is set aside and replaced with the following order:
‘The application is dismissed with costs, including the costs of two counsel where
so employed.’
_______________________
G GOOSEN
JUDGE OF APPEAL
Appearances
For first and second appellants: R T Williams SC
Instructed by:
Fairbridges Wertheim Becker Attorneys, Cape
Town
Lovius Block Attorneys, Bloemfontein
For third appellant:
I Jamie SC (with M Adhikari)
Instructed by:
Edward Nathan Sonnenbergs Inc., Cape Town
Lovius Block Attorneys, Bloemfontein
For fourth appellant:
K Pillay SC (with G Solik)
Instructed by:
Bernadt Vukic Potash and Getz Attorneys, Cape
Town
Lovius Block Attorneys, Bloemfontein
For first respondent:
B Roux SC (with I B Currie)
Instructed by:
Cliffe Dekker Hofmeyr Inc., Sandton
Noordmans 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:
10 November 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
The Chairperson of the Western Cape Gambling and Racing Board and Others v Goldrush Group
Management (Pty) Ltd and Another (660/2022) [2023] ZASCA 148 (10 November 2023)
The Supreme Court of Appeal (SCA) today upheld an appeal against an order of the Western Cape
Division of the High Court, Cape Town (the high court) setting aside a decision to allocate additional
limited payment gambling machines to two licenced operators. The appeal was brought by the Western
Cape Gambling and Racing Board (the Board), with the leave of the high court.
In 2004, the Board granted licences to Vukani Gaming Western Cape (Pty) Ltd t/s V-Slots (V-Slots) and
Grand Gaming Western Cape (RF) (Pty) Ltd t/s Grand Slots (Grand Slots), to operate limited payment
gambling machines (LPMs) in the Province. The licences were granted following a Request for
Proposals (RFP) and a competitive bidding process. The Board stated in the RFP that its intention was
to permit the operation of 3000 LPMs by three operators. The RFP, however, reserved to the Board the
right to allocate more than 1000 LPMs to each operator in the event that fewer than three operators
were licenced. V-Slots and Grand Slots were each allocated 1000 LPMs. In 2017, the Board decided
to allocate the unallocated 1000 LPMs to V-Slots and Grand Slots, equally.
In 2019, Goldrush Group Management (Pty) Ltd (Goldrush) launched a review application in the high
court to set aside the allocation. It contended that the allocation was unlawful since the Board was
obliged to advertise the LPMs for allocation to other prospective operators.
The high court application was opposed on the basis that Goldrush lacked the legal standing to
challenge the decision; that there was in any event an inordinate and unexplained delay in challenging
the decision; and that the Board was not obliged to invite applications for the appointment of other
licenced operators.
The high court found that Goldrush had no legal standing. It also found that the delay was unreasonable
and not explained. It nevertheless found, in considering whether to overlook the delay in the interests
of justice, that the decision was unlawful and irrational. It therefore decided to adjudicate the review and
set aside the decision. It ordered the Board to advertise any unallocated LPMs if it thought it prudent to
do so.
The SCA found that Goldrush could establish no own-interest legal standing in relation to the allocation
of LPMs to existing licenced operators. Its commercial interest related to an interest in applying to be
licenced as an operator. However, the Board had decided to allocate only two operators following its
RFP bid process. It had decided not to invite further applications. That decision stood and was not
challenged in the review. The SCA found that the high court had erred in conferring standing to Goldrush
based on its conclusion that the review ought to succeed. It further held that the high court’s conclusion
on the merits of the review was not sustainable. It held that the Board was entitled to act in accordance
with the RFP. This permitted it to allocate the additional LPMs to the licenced operators.
The SCA therefore upheld the appeal, set aside the high court order and replaced it with an order
dismissing the application with costs, including those of two counsel.
--------ends--------
|
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